Form 1-K Winc, Inc. For: Dec 31

Article

FREE Breaking News Alerts from StreetInsider.com!

StreetInsider.com Top Tickers, 4/25/2024

1. META
2. CMG
3. LRCX
4. IBM
5. HCP

6. SPY
7. BSX
8. PI
9. NOW
10. ORCL

Top News Most Read Special Reports

May 11, 2021 5:00 PM EDT

E-mail



  
    1-K
    
      LIVE
      
        
          0001782627
          XXXXXXXX
        
      
      
        N
        N
      
      12-31-2020
    
  
  
    
      Annual Report
      12-31-2020
      12405 Venice Blvd. #1
      Los Angeles
      CA
      90066
      855-282-5829
      Series D Preferred Stock
      Series E Preferred Stock
    
    
      Winc, Inc.
      0001782627
      DE
      45-2988960
    
    
      true

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 1-K

ANNUAL REPORT PURSUANT TO

REGULATION A OF THE SECURITIES ACT OF 1933

For the fiscal year ended December 31, 2020

Winc, Inc.

(Exact name of registrant as specified in its charter)

Delaware		45-2988960
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12405 Venice Blvd., #1 Los Angeles, California (Address of principal executive offices)		90066 (Zip Code)

(855) 282-5829

Registrant’s telephone number, including area code

Series D Preferred Stock

Series E Preferred Stock
(Title of each class of securities issued pursuant to Regulation A)

In this report, the term “Winc,” “we,” “us” or “the Company” refers to Winc, Inc. and its consolidated subsidiary.

This report may contain forward-looking statements and information relating to, among other things, the Company, its business plan and strategy, and its industry. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to the Company’s management. When used in this report, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements, which constitute forward looking statements. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those contained in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company does not undertake any obligation to revise or update these forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence.

Item 1. Business

THE COMPANY’S BUSINESS

Overview

We founded our company in 2011 as Club W, Inc., a third-party provider wine club with the mission to make wine more accessible to the next generation of wine drinkers. We sent wine recommendations to our members based on their preferences generated from the results of their Palate Profile Quiz. Members could subscribe to receive three wines per month for a monthly fee of $39.00. All the wines we distributed to members were sourced from outside wineries. The membership program also evolved, now directing customers to enroll in a monthly-charge program called Insider Access, described in detail below.

Using our growing database of customer feedback about wine preferences, we began to transition in 2013 to becoming a vertically integrated direct-to-consumer (“DTC”) online winery. We evaluated our data to determine where there were gaps in the market to design wines that would appeal to our members. Since mid-2014, the Company has exclusively distributed its own wines, developed by its in-house team of winemakers. In 2016, we rebranded our website as “Winc” to consolidate and simplify our brand structure, including changing the Company’s name to Winc, Inc.

Vertical integration, which is permitted for wineries under California law, allows us to operate with less friction and lower costs in two distribution channels of the traditional “three-tier” distribution business model for production and distribution of alcoholic beverages throughout the United States. The three-tier distribution business model requires alcohol to pass from manufacturer to wholesaler to retailer in each state before it can be sold to a consumer. Vertical integration has allowed us to distribute our wines directly to premium restaurants and retailers in the state of California, while continuing to follow the three-tier distribution business model in order to sell our core brands to wholesalers who deliver them to premium retailers and restaurants nationwide. We also sell our wines DTC in 43 states. The direct connection to our consumers also provides us with valuable feedback that we use in product development.

Our Products and Services

Wines

We believe we are building the most exciting brands in wine. We sell a variety of premium, super-premium and ultra-premium wines in small batches that we produce at third-party vineyards and wineries from grapes we source in California, Latin America, Europe, South Africa, Australia and New Zealand. Based on the customer feedback we receive from our members, our winemakers develop a changing variety of wines, including our core brands:

	●	Summer Water, a rosé, the accessory of the summer;
	●	Wonderful Wine Company, clean wine for better living;

●

Folly of the Beast, in search of pure pinot noir at an unbeatable price;

●

Chop Shop, the perfect cabernet for pairing with meats;

●

Pacificana, a truly well-balanced California chardonnay; and

●

DIME, the “perfect 10” red blend.

Our wine prices start at $15.00, or $12.99 for members; the most expensive wines we produce are priced at $54.99, or $46.00 for members.

Subscriptions

Customers can make à-la-carte purchases from the Winc website or enroll in a membership, our Insider Access program. Upon membership enrollment, Winc members will receive new recommendations of wine every month at discounted pricing and will be charged an automatic monthly fee of $59.95 in exchange for credits that are redeemable at any time. The cost of members’ purchases will be deducted from their credit balance based on wines selected, plus applicable tax and shipping. Members choose their order size and price range per bottle. We do not charge additional membership fees and members have the option to skip a monthly delivery, to make their own selection from the wines available on our website and to change the frequency of deliveries.

We also offer promotional and seasonal subscriptions, such as the limited edition three-month rosé subscription for Summer Water that we began offering in early 2017. We typically offer approximately 50 wines on our website. Members are asked to rate their wines in order to get better recommendations in the future. Using member ratings and ordering patterns, we have developed a database of wine and taste preferences that we use to guide our winemaking.

Content

Our websites, winc.com and wonderfulwine.com, include rich content. We publish a blog that features backstories on our wines, interviews with our winemakers, and recipes.

Wine Supply and Production

Production

We produce our wines in winery and bottling facilities in California where we hold licenses under alternating proprietorship agreements with one-year terms. The activities conducted at these outside facilities include crushing, fermentation, storage, blending, and bottling. One facility in Summerland, California, provided 42% and 73% of our production capacity in fiscal year 2020 and 2019, respectively. The Company has been able to satisfy production requirements to date and considers its sources to be adequate at this time. However, if any of these providers are not able to satisfy our requirements or choose not to renew their contracts, it could adversely affect our operations.

Grape and Wine Contracts

Most of the Company’s annual domestic grape requirements are satisfied by purchases from each year’s harvest, which normally begins in the United States (“US”) in August and runs through October. We purchase bulk wine from large scale wineries as a component for blending or finishing wines to satisfy our remaining domestic requirements.

We enter into grape contracts with terms generally of one to two years, which require us to pay an agreed-upon price per ton, or, in the case of bulk wine contracts, per gallon, that vary according to the type of grape, its appellation and in certain cases, the vineyard block in which the grapes are grown. Contracts are typically terminable after a specified term, unless earlier terms are mutually agreed by the parties.

Our foreign wines are produced entirely from bulk wines that we purchase at spot prices abroad and have shipped to California for winemaking. We do not have any commitments to purchase these bulk wines.

Production Materials

We use glass and other materials such as corks, labels and cardboard in the bottling and packaging of our wines. Consistent with our commitment to reducing our impact on the environment, we minimize the use of bottle capsules in our packaging.

Sales and Marketing

The Company employs full-time, in-house marketing and sales teams. We supplement our customer service capabilities as needed with outsourced customer service organizations. The sales and marketing team use a range of marketing strategies, with our largest focus on social media and internet ads. We also use co-marketing arrangements and promotions in which we offer discounts on the first month of a subscription. We have found success by entering into sponsorship agreements, including being the official wine sponsor of the Hollywood Bowl since March 2016 and the Philadelphia Eagles beginning in 2020.

The Company’s sales are comprised of two channels, DTC, and wholesale. DTC sales take place on our website. We commenced wholesale distribution in 2015, distributing a subset of our brands to premium retailers and restaurants throughout the country.

Market

Wine market segments are defined by the suggested retail prices charged to consumers as follows:

●

Super Value (sometimes referred to as Jug Wines or Ultra Value) = wines priced $3.99 or under per 750-ml bottle;

●

Value = wines priced between $4.00 – $5.99 per 750-ml bottle;

●

Fighting Varietal (sometimes referred to as Economy) = $6.00 – $9.99 per 750-ml bottle;

●

Popular Premium = wines priced between $10.00 – $14.99 per 750-ml bottle;

●

Premium = wines priced between $15.00 – $19.99 per 750-ml bottle;

●

Super Premium = wines priced between $20.00 – $29.99 per 750-ml bottle;

●

Ultra-Premium = wines priced between $30.00 – $49.99 per 750-ml bottle; and

●

Luxury = wines priced $50.00 and over per 750-ml bottle.

The Company predominantly produces and sells premium, super-premium, and ultra-premium wines.

Competition

We compete with online DTC wine retailers, such as Naked Wines, Blue Apron, Firstleaf, Bright Cellars, Tasting Room, and Plonk Wine Club, which curate wines based on customers’ preferences, and online wine clubs. However, unlike Winc, none of these companies function as fully-integrated wineries with nationally distributed brands. We believe our exclusive wine selections attract member loyalty and give us a competitive advantage.

Increasingly, we are competing with other wineries that ship directly to consumers and distribute their wines through third parties to restaurants and brick-and-mortar retailers. The wine industry is intensely competitive. The wines we produce and distribute compete with domestic and foreign wines in the premium, super-premium and ultra-premium wine market segments.

Our wines also compete with other alcoholic and, to a lesser degree, non-alcoholic beverages, for shelf space in retail stores and for marketing focus by independent distributors, many of which carry extensive brand portfolios.

Employees

We currently have 90 full-time employees. We use third-party service providers to staff our customer service organization and to supplement our fulfillment teams as needed.

Regulation

The production, importation, distribution, sale, and shipment of wine in the United States is regulated by the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury (“TTB”) and by each state government. As a California winery, we are regulated by the California Department of Alcoholic Beverage Control (“ABC”). Each state maintains its own regulatory system for alcoholic beverages, and there is little uniformity among state laws. Business models that are national in scope must account for the state-by-state rules to achieve compliance. For example, the laws regarding direct wine shipments have continued to evolve since direct shipping was permitted by the Supreme Court in Granholm v. Heald (2005), and each state that permits wineries to ship wine DTC has its own permits and rules regarding such shipments. We are able to ship wine directly now to online consumers in 43 states and the District of Columbia, and can distribute to a total of 48 states through the traditional three-tier distribution network. We seek to expand our service area when laws permit.

The Company’s wholly-owned subsidiary, BWSC, LLC is licensed by TTB and ABC and meets the bonding requirements for wine production. Sales of wine are subject to federal alcohol excise tax, payable at the time wine is removed from the bonded area of the winery for shipment to customers. In 2017, Congress passed the Craft Beverage Modernization and Tax Reform Act (“CBMA”), which provided tax credits for certain amounts of wine produced in the 2018 and 2019 calendar years. On December 20, 2019, the President signed into law the Further Consolidated Appropriations Act, 2020, which among other things, extended the provisions of the CBMA related to alcohol for one year, through December 31, 2020.

The Company also pays excise tax in California and in all states in which wines are sold. Payments of these taxes are the responsibility of the supplier or distributor depending upon the channel in which the wine is sold. Finally, in December 2020, Congress made the CBMA permanent as part of the federal COVID-19 (defined below) relief spending bill.

The promotion and marketing of wine, including pricing in some markets, is also regulated by federal and state regulations. For example, wine advertising and social media, sampling, sponsorships, and promotions are regulated differently in each state and by the federal government, with many states restricting excessive discounts and certain types of promotions on wine. To assist with federal and state regulatory compliance, the Company relies on various internal and external personnel with relevant experience.

Intellectual Property

Our ability to protect our intellectual property rights, including our proprietary technology and our customer data, will be an important factor in our strategy and the success of our business. We seek to protect our intellectual property rights through a combination of trademark and trade secret protection, and other intellectual property protections under applicable law. We register domain names, trademarks, and service marks in the United States and abroad. We also seek to protect and avoid disclosure of our intellectual property through confidentiality, non-disclosure and invention assignment agreements with our employees, and through appropriate agreements with our suppliers and others. Several of our wine brands, services and accessories are under registered U.S. trademarks. Each registration is renewable indefinitely so long as the Company is making a bona fide usage of the trademark. As of December 31, 2020, the Company had 108 registered trademarks and 12 pending.

Litigation

The Company is involved, from time to time, in disputes that are incidental to its business. In management’s opinion, none of these legal matters, individually or in the aggregate, are likely to have a material adverse effect on the Company’s financial position or results of operations.

The Company’s Property

Winc currently leases its headquarters and owns no significant plant or equipment. Winc produces its wines as a licensed winery at third-party facilities. The Company also leases two warehouses, one in California and one in Pennsylvania, from which it distributes its wines.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included in this report. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Unless otherwise indicated, the latest results discussed below are as of December 31, 2020.

Overview

The Company produces and sells premium, super-premium, and ultra-premium wines. Approximately 74% of the wine comes from grapes purchased from California-based growers. In addition, the Company purchases semi-finished bulk wine under contract in partnership with domestic and foreign wineries and growers. The Company’s wines are sold at a variety of price points via two distinct distribution channels: DTC and three-tier wholesale. The Company owns, designs, and develops its brands. The brands are differentiated and marketed through label designs.

The DTC channel consists of online subscription sales of products produced by the Company. Wines in the three-tier wholesale channel are sold to distributors with programs available to the broad market.

Results of Operations

Factors Affecting Operating Results

We generate net revenues from DTC and wholesale sales of wine. Net revenues are affected by advertising, discounts and promotions, merchandising, packaging, and, in the wholesale channel, the availability of display space at retailers, all of which have a significant impact on consumers’ buying decisions. We deduct promotional discounts and refunds expected to be issued to determine net revenue. Members who receive a damaged order or are dissatisfied with an order may receive a full or partial refund, full or partial credit against future purchase, or replacement, at our sole discretion. Continued growth of net revenues and profits will depend, substantially, on the continued popularity of new and existing brands, the ability to effectively manage the sales channels, and the ability to maintain sufficient product supply to meet expected growth in demand. We also periodically provide promotional offers, including discounts, such as percentage discounts off current purchases and other similar offers. These offers are treated as a reduction to the purchase price of the related transaction and are reflected as an adjustment to arrive to net revenues. Such offers are discretionary, and we expect incentive offers to vary from period to period as a percentage of sales for the foreseeable future.

Historically, customer acquisition slows down in July and August and picks up rapidly from October-December.

Cost of revenues consists of:

Wine-related inputs, such as grapes and semi-finished bulk wine;

Bottling materials (bottles, corks, and labeling materials);

Boxes/packaging;

Fulfillment costs (costs attributable to receiving, inspecting, warehousing inventories, picking, packaging, and preparing customer orders for shipment, including the variable costs of employing hourly employees and temporary staff provided by agencies at our fulfillment centers);

Customer service costs (third-party staffing to respond to inquiries from customers);

Credit card fees related to DTC transactions;

Inbound and outbound freight;

Storage; and

Barrel depreciation.

Operating expenses largely consist of marketing, personnel, and general and administrative expenses.

	●	Our marketing expenses consist primarily of costs incurred to acquire new customers, retain existing customers, build our brand awareness through various offline and online paid advertising channels, including television, digital and social media, direct mail, radio and podcasts, email, brand activations, and strategic brand partnerships.
	●	Our personnel expenses consist primarily of payroll and related expenses, including share-based compensation.

●

Our general and administrative expenses consist of: (i) costs associated with general corporate functions, such as depreciation expense and rent relating to facilities and equipment and insurance expense; (ii) professional fees and other general corporate costs; and (iii) travel-related expenses.

Other income and expense consist primarily of interest expense associated with our credit facilities, interest income on cash balances, rental income from sublease agreements, and changes in fair value of warrants to purchase preferred shares of the Company that were issued in connection with past financing transactions. See “—Liquidity and Capital Resources – Credit Facilities.” The Company classifies the warrants as liabilities, subject to re-measurement at each balance sheet date from issuance, and any change in fair value is recognized as a component of other expense.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

The following table presents select consolidated financial data:

Consolidated Statements of Operations

For the Years Ended December 31, 2020 and 2019

(dollars in thousands)

							Change
	2020			2019			$			%
DTC revenues	$	54,854		$	29,628		$	25,226			85.1	%
Wholesale revenues		8,237			6,819			1,418			20.8	%
Other revenues		1,616			-			1,616			100	%
Net revenues		64,707			36,447
Less:
Cost of revenue		(39,312	)		(21,827	)		(17,485	)		80.1	%
Gross profit		25,395			14,620
Operating expenses
Marketing		17,388			8,578			8,810			102.7	%
Personnel		7,582			6,328			1,254			19.8	%
Production and operations		169			88			81			92.0	%
Creative development		83			177			(94	)		(53.1	%)
General and administrative		6,585			6,541			44			0.7	%
Total operating expenses		31,807			21,712
Loss from operations		(6,412	)		(7,092	)
Other (expense) income
Interest expense		(834	)		(1,364	)		530			(38.9	%)
Change in fair value of warrant		(208	)		(137	)		(71	)		51.8	%
Other income		523			559			(36	)		(6.4	%)
Total other expense, net		(519	)		(942	)
Loss before income taxes		(6,931	)		(8,034	)
Income tax expense		27			15			12			80.0	%
Net loss	$	(6,958	)	$	(8,049	)

Net Revenues

Net revenues for the year ended December 31, 2020 were $64.7 million, an increase of 77.5% from net revenues of $36.4 million for the year ended December 31, 2019.

Net revenues from DTC sales increased 85.1%, to $54.9 million in fiscal year 2020. This was primarily driven by the increase in new customers and existing customer sales. Order volumes began to increase substantially starting in March 2020 as states and localities imposed shelter-in-place orders in connection with the coronavirus (“COVID-19”) pandemic discussed further below. Volumes leveled out in May and June 2020 as such orders were lifted around the United States. We define “existing customers” as customers who have placed two or more orders on our website. “New customers” are those that have placed their first order with Winc.

Net revenues from wholesale sales grew 20.8%, to $8.2 million for the year ended December 31, 2020. Growth in wholesale sales was primarily driven by the addition of new retail accounts and the investment we made in personnel for the wholesale channel during fiscal year 2019. While wholesale distributors had reduced demand from restaurants, they had increased demand from off-premise retailers for the Company’s products. During fiscal year 2020, one wholesaler accounts for approximately 14% of sales in the wholesale channel.

Other revenues relate to products sold outside of the DTC or wholesale channels.

Cost of Revenues

Cost of revenues for the year ended December 31, 2020 was $39.3 million, compared to $21.8 million for the year ended December 31, 2019, an increase of 80.1%. The increase in cost of revenues is primarily related to the increase in fiscal year 2020 net revenues and increased fulfillment costs as the Company had to hire temporary staff to support sales volumes and incurred additional costs to institute safety measures to comply with federal, state, and local COVID-19 guidelines at our fulfillment centers.

Operating Expenses

Marketing expenses increased 102.7%, to $17.4 million for the year ended December 31, 2020, from $8.6 million for the year ended December 31, 2019. Marketing expenses include advertising costs of $16.7 million and $8.1 million for the years ended December 31, 2020 and 2019, respectively. Advertising costs increased year-over-year as we continue to invest in digital media spend to attract new customers.

Personnel expenses increased 19.8%, to $7.6 million in 2020, from $6.3 million in 2019. This increase is primarily attributable to investment in our Brand/Creative teams and additional hires to support our Wholesale channel.

Production and operations expenses, which consist of warehouse supplies and equipment expenses, did not materially change from fiscal year 2019 to fiscal year 2020.

Creative development expenses, which includes photography and content development for print and digital media, did not materially change from fiscal year 2019 to fiscal year 2020.

General and administrative expenses increased 0.7%, to $6.6 million in 2020, from $6.5 million in 2019. This increase is primarily attributable to increased insurance premiums, consulting fees, and rental-related costs, partially offset by decreased travel-related costs.

Other income (expense) increased $0.4 million or 44.9%, to a total net expense of $0.5 million in 2020. The increase in other income (expense) was primarily driven by decreased interest expense as we paid down and terminated our line of credit with Western Alliance Bank (see “—Liquidity and Capital Resources” below).

Liquidity and Capital Resources

Our operations have been financed to date by a combination of cash generated from operations, bank debt, and investment capital. Our primary cash needs have been to fund working capital requirements (primarily marketing to increase growth and inventory to support that growth), debt service payments (interest and principal payments), and operating expenses. As of December 31, 2020, we had cash on hand of $7 million, inventory of $11.9 million, and total liabilities of $22.6 million. Our $7 million line of credit also remains undrawn. We expect that our liquidity needs for the next twelve months will be met by continued use of operating cash flows, funds generated from the Series F Preferred Stock offering in April 2021, through which net proceeds of $9.1 million were raised, and the 2020 Regulation A Offering discussed below. We believe that we will be able to continue to operate our business for the foreseeable future.

Issuances of Preferred Stock

From 2013 through 2018, the Company utilized preferred stock offerings to raise capital, which resulted in over $39.5 million of net proceeds from the issuance of Series Seed, Series A, Series B, and Series B-1 Preferred Stock.

During fiscal year 2019 and 2020, the Company raised net proceeds of $15.4 million through the sale of Series C Preferred Stock in a private placement pursuant to Regulation D of the Securities Act, of 1933, as amended (the “Securities Act”) and Series D Preferred Stock in an offering pursuant to Regulation A of the Securities Act. On September 26, 2019, the Company commenced an offering pursuant to Regulation A (the “2019 Regulation A Offering”), pursuant to which it offered to sell up to 10,611,205 shares of its Series D Preferred Stock, convertible into shares of Common Stock, at a price of $1.4136 per share. The Company utilized the net proceeds from the 2019 Regulation A Offering to increase its marketing, expand inventory through purchases of additional grapes and fund acquisitions of brands to add to the Winc portfolio. The 2019 Regulation A Offering terminated on May 29, 2020. As of December 31, 2020, the Company had issued 6,583,273 shares of Series D Preferred Stock and received net proceeds of $5.9 million in connection with the 2019 Regulation A Offering.

On August 17, 2020, the Company commenced an offering pursuant to Regulation A (the “2020 Regulation A Offering”), pursuant to which it is offering to sell up to 10,000,000 shares of its Series E Preferred Stock, convertible into shares of Common Stock, at a price of $1.75 per share. The Company intends to utilize, and has already begun utilizing, the net proceeds from the 2020 Regulation A Offering to increase its marketing, expand inventory through purchases of additional grapes and fund acquisitions of brands to add to the Winc portfolio. The 2020 Regulation A Offering terminated on January 5, 2021. As of December 31, 2020, the Company had issued 1,603,681 shares of Series E Preferred Stock and received net proceeds of $1.6 million in connection with the 2020 Regulation A Offering. As of the date of this report, the Company raised net proceeds of $7.5 million through the sale of Series E Preferred Stock.

In March 2021, the Company raised net proceeds of $9.1 million through the sale of Series F Preferred Stock in a private placement pursuant to Regulation D.

Credit Facilities

Western Alliance Bank

In October 2015, we entered into a loan and security agreement with Western Alliance Bank, which provided the Company with a revolving line of credit for up to $12 million (the “WAB Line of Credit”). The maturity was subsequently extended to May 2020 and the WAB Line of Credit was reduced to $7 million. As of December 31, 2019, $6 million remained outstanding under the WAB Line of Credit. The amount outstanding was fully repaid during fiscal year 2020, at which time the agreement was terminated. Accordingly, there was no outstanding balance as of December 31, 2020. See Note 7 to the consolidated financial statements for additional information.

Under the WAB Line of Credit, we had agreed to a number of financial covenants, including:

	●	To maintain defined minimum required EBITDA targets, determined in accordance with GAAP and measured on a quarterly basis (the “quarterly EBITDA covenant”).
	●	To maintain a minimum revenue, measured on a monthly basis (the “minimum revenue covenant”). The Company’s trailing three months’ revenue (determined in accordance with GAAP), measured on a monthly basis, is required to be at least 90% of its projected revenue during that period as set forth in board-approved annual financial projections that the Company is required to deliver to Western Alliance Bank.

●

To maintain an unrestricted cash balance at Western Alliance Bank that is equal to the greater of $1 million or six (6) times the Company’s “operating burn,” defined as the average monthly EBITDA loss for the trailing three (3) month period (the “unrestricted cash balance covenant”).

Under the revolving WAB Line of Credit, as of August 1, 2019, we were in default for failing to comply with the quarterly EBITDA covenant in the first two quarters of fiscal year 2019 and the minimum revenue covenant measured at the end of March, April, May, and June 2019. On August 2, 2019, we entered into a modification agreement with Western Alliance Bank whereby Western Alliance Bank waived the existing defaults and agreed not to exercise its remedies under the WAB Line of Credit. To remedy the breach of the quarterly EBITDA covenant, we requested, and Western Alliance Bank agreed, to modify the quarterly EBITDA covenant to reset the targets for the remainder of fiscal year 2019. To remedy the breach of the minimum revenue covenant, we submitted a revised set of board-approved financial projections for the remainder of fiscal year 2019, which Western Alliance Bank accepted.

As of August 31, 2019 and September 30, 2019, we were in default for failing to comply with the unrestricted cash balance covenant. On October 31, 2019, we entered into a modification agreement with Western Alliance Bank whereby Western Alliance Bank waived the defaults and agreed not to exercise its remedies under the WAB Line of Credit. To remedy the breach of this covenant, we drew down a sufficient amount under the WAB Line of Credit to increase the unrestricted cash balance that we maintain at Western Alliance Bank.

Pacific Mercantile Bank

In December 2020, we entered into a Credit Agreement with Pacific Mercantile Bank for a new $7 million line of credit (the “PMB Line of Credit”). The PMB Line of Credit bears interest at a variable annual rate equal to 1.25% plus the Prime Rate. The Company had no outstanding balance under the PMB Line of Credit as of December 31, 2020.

Multiplier Capital

In December 2017, the Company entered into a loan and security agreement with Multiplier Capital II, LP (“Multiplier”) for a term loan of $5 million, all of which was disbursed to the Company at the time of execution. The loan matures in June 2022 and bears interest at a variable annual rate equal to the greater of 6.25% above the Prime Rate (as defined in the loan and security agreement), with a minimum interest rate of 11.5% per annum and a maximum interest rate of 14% per annum (11.5% as of December 31, 2020). In connection with the loan and security agreement, the Company granted Multiplier warrants to purchase shares of the Company’s Series B-1 Preferred Stock (see Note 9 to the consolidated financial statements). As of December 31, 2020, $2.5 million was outstanding under the Multiplier Capital loan. The loan is secured by all of the assets of the Company.

Paycheck Protection Program Loan

The Company applied for loans being administered by the Small Business Administration under the Coronavirus Aid, Relief, and Economic Recovery Act of 2020 (“CARES Act”) to assist in maintaining payroll and operations through the period impacted by the COVID-19 pandemic. On April 20, 2020, the Company received a $1.4 million loan from Western Alliance Bank under the Paycheck Protection Program (“PPP”). The company applied for and was granted loan forgiveness in March 2021 by utilizing the funds in accordance with defined loan forgiveness guidance issued by the government.

Trend Information

Our primary goal is to add customers in our DTC sales channel as well as adding customers in our wholesale sales channel. As we add customers, we will be able to grow our brands. Increasing demand, along with media coverage in the United States, has driven and continues to drive an increase in sales of our wines.

Sales trends for the year ended December 31, 2020 showed strong demand across the Company’s portfolio, with the Company experiencing increased demand as a result of the COVID-19 pandemic. We continue to find media channels to advertise our products and acquire new customers. We are also growing our sales team in order to increase our wholesale channel. We have found that large retailers such as Target, Walmart, Total Wine, Cost Plus World Market, Vons, and Whole Foods Market have long sales pipelines but lead to significant business over time. As we continue to have more successful products and brands in our portfolio our ability to grow gains positive momentum.

The wine industry is a sizable market topping over $70 billion in the United States. We believe Winc is one of the few wine companies that is connecting with the next generation of consumers and that should lead to a significant and expanding market opportunity. With a strong portfolio of brands, a world class sales team, and a world class performance marketing team we believe Winc has the potential to seize a larger portion of the US wine market.

COVID-19

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic. There is uncertainty around the duration and impact of the pandemic. COVID-19 has been a highly disruptive economic and societal event that has affected our business and has had a significant impact on consumer shopping behavior. To serve our customers while also providing for the safety of our team members, we have adapted aspects of our logistics, transportation, supply chain, and purchasing processes. On March 15, 2020, the Company issued a shelter-in-place order to its employees based in our Los Angeles headquarters. As the Company qualified as an essential business as defined by state regulations, we continued to operate our Pennsylvania and California fulfillment centers with approximately 80% occupancy to maintain social distancing. At the same time, we have taken a variety of safety measures following federal, state and local guidelines at our fulfillment centers. These safety measures include enhanced daily cleaning and disinfection policies, enhanced personal hygiene efforts, and implementing social distancing efforts and awareness throughout the fulfillment centers. The reduced manpower in warehouses, together with increased DTC orders, led to minor delivery delays but we have not experienced any significant disruptions in our supply chain or any carrier interruptions or delays. In order to prevent delivery delays, we added an additional shift to our Pennsylvania fulfillment center operations and adjusted our marketing spend. If, as a result of the COVID-19 pandemic, we face disruptions in our supply chain, or are unable to continue to operate one or more of our fulfillment centers or timely deliver orders to our customers, we may not be able to retain our customers or attract new customers. Since late March 2020, we have experienced a significant increase in demand primarily as a result of changes to consumer behaviors resulting from the various stay-at-home and restaurant restriction orders and other restrictions placed on consumers throughout much of the United States in response to the COVID-19 pandemic. This increased demand may not continue at current levels, if at all, depending on the duration and severity of the COVID-19 pandemic, the length of time stay-at-home and restaurant restriction orders stay in effect, whether economic and operating conditions, and consumer behaviors resume to levels prior to the COVID-19 pandemic, and numerous other uncertainties. While wholesale sales declined in April and May 2020, they have since returned to pre-COVID-19 levels and have not had a material effect on the company’s revenue. We cannot predict the duration or severity of the economic impact of the COVID-19 pandemic or its ultimate impact on our wholesale operations. The ultimate impact on the Company’s future operating results and consolidated financial statements cannot be reasonably estimated at this time. However, as of the date of this report, the Company has experienced increased overall demand for its products and it does not expect this matter will have a material negative impact on its business, results of operations, or financial position.

Item 3. Directors and Officers

The Company’s executive officers, directors and significant employees are listed below. The executive officers and significant employees are full-time employees.

Name	Current Position	Age	Date Appointed to Current Position
Executive Officers
Geoffrey McFarlane	Chief Executive Officer and Founder	37	May 2, 2018
Brian Smith	Chief Operating Officer, President, and Founder	47	May 2, 2018
Matthew Thelen	General Counsel and Chief Strategy Officer	35	April 16, 2021
Directors
Geoffrey McFarlane	Management Director	37	August 11, 2011
Brian Smith	Management Director and Chairperson of the Board	41	August 11, 2011
Laura Joukovski	Independent Director	47	July 1, 2019
Kent Bennett	Series A Director	43	June 25, 2018
Xiangwei Weng	Series B Director	52	June 15, 2015
Shuhei Ohashi	Series C Director	35	April 26, 2019
Patrick DeLong	Independent Director	56	December 10, 2019
Alesia Pinney	Independent Director	57	April 6, 2021
Significant Employees
Carol Brault	Chief Financial Officer	56	April 16, 2021

Geoffrey McFarlane, Chief Executive Officer, Director and Vice President

A serial entrepreneur, Geoff’s versatile background has allowed him to be a successful founder, executive, and advisor for a wide variety of companies. Prior to Winc, he was founder and CEO of a restaurant and hotel group, Pizza Republica and the Jet Hotel, with seven locations and over 200 employees, where he fell in love with food and wine. In 2008, Geoff purchased a struggling payments Company, Banctek Solutions, and turned it around, growing to over 80 employees and exiting the business within 24 months. In mid-2011 Geoff co-founded Winc to make the wine experience better. Since then, Geoff served as COO, then as CEO, and implemented the strategy for Winc to become a vertically integrated winery.

Brian Smith, Chief Operating Officer and President

The role of Winc co-founder and President furthers Brian’s mission to create and connect great products with today’s consumer. Brian combines his years of experience as a sommelier, winemaker, brand builder, and entrepreneur to oversee what we believe is the world’s most innovative and culturally relevant wine program. Prior to Winc, Brian founded and exited Jolie Folle (2008-2017), a millennial focused wine brand. As an Advanced Sommelier, he has deep experience in developing high tech wine driven hospitality concepts such as Clo Wine and Aureole (2007-2010). Brian began his career in finance at Man Group PLC. In 2004 he founded his first company, Meritage Group, a Virgin Islands based commodities brokerage that catered to hedge funds and commodity traders (2004-2006). Today he invests in and advises companies in the consumer space. Brian graduated from the University of Vermont with a bachelor’s degree in Cultural Anthropology.

Carol Brault, Chief Financial Officer

Carol Brault joined the Company in 2018. Before joining Winc, Carol was Accounting Director at The Honest Company, a consumer products company that supplies baby, personal, beauty, and home products for ethical consumerism. Prior to that she served as controller for Bare Escentuals from 2013 until 2016 and held leadership roles in several prominent multi-national companies including Bath & Body Works, LBrands, The Longaberger Company, and Honda of America Manufacturing, Inc. Besides these corporate roles, her extensive career includes consulting for various companies providing financial and organization guidance to start-up, mid-size, and multimillion-dollar organizations. Carol has a Bachelor of Science in Business Administration/Accounting from The Ohio State University Fisher College of Business.

Matthew Thelen, General Counsel and Chief Strategy Officer

Matt joined the Company in 2014 and is responsible for providing legal guidance and defining corporate strategy. As general counsel, Matt oversees all aspects of Winc’s legal matters, including beverage regulatory compliance, corporate, commercial transactional, intellectual property, consumer protection, employment, litigation, and privacy practice areas. In this role, he acts as Company liaison for all communications, actions, and inquiries with relevant regulatory agencies such as the Alcohol and Tobacco Tax Trade Bureau and California Department of Alcoholic Beverage Control. Further, he is responsible for the development of core business infrastructure and strategic initiatives. Previously, Matt was an intellectual property strategy and valuation professional for Ocean Tomo, a San Francisco based merchant banc. He received a JD/MBA from the University of Notre Dame and a B.A. of Economics from the University of San Diego.

Laura Joukovski, Director

Laura is the Chief Media Officer at TechStyle Fashion Group, a portfolio of digital fashion brands based in Los Angeles. She leads an internal agency for advertising across all TechStyle brands, including: JustFab, ShoeDazzle, Fabletics, Fabkids and Savage X Fenty. Laura’s organization is an innovative, data-driven, in-house team that runs from concept to execution on creatives, media buying and marketing sciences. The team deploys more than $150 million in global advertising to drive growth across the brands. She has been a pioneer in building TechStyle, since joining as part of the FabKids acquisition in 2013. She was the original general manager for Fabletics at launch, built the backbone for TechStyle’s data-driven culture developing a global analytics team, and now drives growth across TechStyle brands in her CMO role.

Kent Bennett, Director

Since 2008, Kent Bennett has been a partner in Bessemer Venture Partners’ (“Bessemer”) Cambridge office focusing on consumer products and services as well as software sold to consumer-facing verticals. Before his career in venture capital, Kent was a creative executive for an entertainment production company, where he developed and sold original material including a network television pilot and a feature film. He began his career with Bain & Co., where he worked on projects in industries spanning IT, retail, consumer products, healthcare, and biotech. Kent earned an MBA from Harvard Business School, where he was a Baker Scholar, and graduated summa cum laude in systems engineering from the University of Virginia, where he was a Jefferson Scholar.

Xiangwei Weng, Director

Xiangwei Weng is the founder of Shining Capital Management (“Shining Capital”). Mr. Weng has an extensive experience in investment banking and private equity investment. Before founding Shining Capital in 2008, he served as an Executive Director at the Corporate Finance Department and Head of Mergers & Acquisitions for China at Goldman Sachs (Asia) L.L.C. From January 2005 to January 2007, he served as General Manager and In Charge of Corporate Operations at Gome Electrical Appliances Holding Limited. He also worked at Morgan Stanley from June 1998 to January 2005, where he was a Vice President in the M&A and Restructuring Group. He received a Bachelor's degree in Physics from Peking University in 1989 and a Ph.D. degree in Biophysics from University of California at Berkeley in 1996.

Shuhei Ohashi, Director

Shuhei Ohashi is Vice President at Cool Japan Fund, a public-private fund with the aim of supporting and promoting the development of demand overseas for excellent Japanese products and services. Previously, he acted as a consultant at Deloitte Touche Tohmatsu Limited in the Netherlands (2015-2016) and PricewaterhouseCoopers in Japan (2010-2015). Mr. Ohashi received a BA in Business and Commerce from Keio University (2008), a Master’s degree in Accounting and Finance from Keio University (2010) and a Master’s certificate in Operational Research from University of Southampton in (2015).

Patrick DeLong, Director

Patrick DeLong is the Founder and Principal of Azur Associates, a fine beverage consultancy firm. Pat has over 30 years of experience working with consumer brands across private and public companies. Pat has served in a number of roles including Chief Executive Officer, President, Chief Operating Officer and Chief Financial Officer at some of the leading consumer beverage companies, including Crimson Wine Group, Constellation Brands, Robert Mondavi Corporation and Francis Ford Coppola Companies. As part of his role in these organizations, Pat led, managed and/or assisted in some of the most significant acquisition transactions in the wine space. Pat’s early career work at Deloitte and later with a small boutique wine industry consulting firm provided him significant experience in advisory work as well. Pat completed the Strategic Planning Executive Program at the University of Michigan, post graduate studies in the Master’s of Applied Economics Program at the University of Seattle and his Bachelor’s Degree in Business Administration with a Concentration in Finance & Accounting from California Polytechnic State University, San Luis Obispo. In his early career, Pat earned his Certified Public Accounting license in both California and Washington.

Alesia Pinney, Director

Alesia Pinney is the Executive Vice President and General Counsel at Avalara Inc., a publicly traded company that provides sales tax management solutions. Alesia has almost 30 years of experience in legal, advisory, and operational leadership roles. Prior to joining Avalara, she was the General Counsel and Secretary of Radiant Global Logistics, Inc, a publicly traded third-party logistics provider. Alesia has served as a member of the board of directors for various entities, including the Washington State Trust for Public Land and Motiga, Inc., and is a current board of directors member at Sharkbite Games, Inc. She received her Bachelor’s Degree in Accounting from Seattle University, Master’s of Taxation from the University of Denver, and Juris Doctor from Seattle University’s School of Law.

Compensation of Directors and Executive Officers

For the fiscal year ended December 31, 2020 we compensated our three highest-paid executive officers as follows:

Name	Capacities in which compensation was received	Cash compensation (in thousands)		Other compensation (in thousands)		Total compensation (in thousands)
Geoffrey McFarlane	CEO	$	261	$	62	$	323
Brian Smith	President		263		67		330
Matthew Thelen	General Counsel		188		36		224

Other compensation represents non-cash stock-based compensation.

For the years ended December 31, 2020 and 2019, we did not pay any of our directors for their board service. There were seven directors in this group during those periods.

Item 4. Security Ownership of Management and Certain Securityholders

The following table sets out, as of December 31, 2020, the voting securities beneficially owned by (1) any individual director or officer who beneficially owns more than 10% of any class of our capital stock, (2) all executive officers and directors as a group and (3) any other holder who beneficially owns more than 10% of any class of our capital stock:

Title of class	Name and address of beneficial owner	Amount and nature of beneficial ownership		Amount and nature of beneficial ownership acquirable⁽¹⁾			Percent of class
Common Stock	Geoff McFarlane ⁽²⁾ 12405 Venice Blvd. #1 Los Angeles, CA 90066		1,477,500		7,325,775	⁽³⁾		19.53	%
Common Stock	Alexander Oxman PO Box 3455 Jackson, WY 83001		1,659,617		622,086			21.93	%
Common Stock	Wavemaker Partners 1438 9^th Street Santa Monica, CA 90401		1,019,231					13.47	%
Common Stock	All officers and directors as a group (9 people)		1,782,500		13,049,755	⁽⁴⁾		23.56	%
Series Seed Preferred Stock	CrossCut ⁽⁶⁾ 373 Rose Avenue Venice, CA 90291		3,466,809					26.18	%
Series Seed Preferred Stock	All officers and directors as a group (9 people)⁽⁶⁾		4,761,409					36.00	%
Series A Preferred Stock	Entities affiliated with Bessemer ⁽⁵⁾ 1865 Palmer Avenue Suite 104 Larchmont, NY 10538		5,957,867					71.98	%
Series A Preferred Stock	All officers and directors as a group (9 people)⁽⁵⁾		0					0	%
Series B Preferred Stock	Entities affiliated with Bessemer ⁽⁵⁾ 1865 Palmer Avenue Suite 104 Larchmont, NY 10538		4,198,483					31.43	%
Series B Preferred Stock	Shining Capital Suite 8101, Level 81 International Commerce Centre 1 Austin Road West Kowloon, Hong Kong Hong Kong		6,870,244					51.43	%

Series B Preferred Stock	Xiangwei Weng ⁽⁷⁾ 12405 Venice Blvd. #1 Los Angeles, CA 90066	6,870,244	51.43	%
Series B Preferred Stock	All officers and directors as a group (9 people)⁽⁵⁾⁽⁷⁾	6,870,244	51.43	%
Series B-1 Preferred Stock	Entities affiliated with Bessemer ⁽⁵⁾ 1865 Palmer Avenue Suite 104 Larchmont, NY 10538	1,620,330	23.58	%
Series B-1 Preferred Stock	Shining Capital Suite 8101, Level 81 International Commerce Centre 1 Austin Road West Kowloon, Hong Kong Hong Kong	1,195,032	17.39	%
Series B-1 Preferred Stock	Xiangwei Weng ⁽⁷⁾ 12405 Venice Blvd. #1 Los Angeles, CA 90066	1,195,032	17.39	%
Series B-1 Preferred Stock	Pacific Continental Insurance Co. 832 Willow St Reno, NV 89502	1,908,397	27.78	%
Series B-1 Preferred Stock	All officers and directors as a group (9 people)⁽⁵⁾⁽⁷⁾	1,195,032	17.39	%
Series C Preferred Stock	Cool Japan Fund 17F Roppongi Hills Mori Tower, 6-10-1 Roppongi, Minato-ku Tokyo, 106-6117 Japan	8,209,586	100.00	%
Series C Preferred Stock	Shuhei Ohashi ⁽⁸⁾ 12405 Venice Blvd. #1 Los Angeles, CA 90066	8,209,586	100.00	%
Series C Preferred Stock	All officers and directors as a group (9 people)⁽⁸⁾	8,209,586	100.00	%
Series D Preferred Stock	New Direction IRA, Inc. 1070 West Century Drive Louisville, CO 80027	3,336,905	50.69	%
Series D Preferred Stock	All officers and directors as a group (9 people)	0	0	%
Series E Preferred Stock	All officers and directors as a group (9 people)	0	0	%

(1)

Represents shares of Common Stock issuable upon exercise of options.

(2)

Includes 1,227,500 shares of Common Stock held by the McFarlane Family Trust, of which Mr. McFarlane is one of the two trustees and not currently a beneficiary.

(3)

Includes 3,532,334 options subject to vesting over the next 48 months with vesting contingent upon continued service with the Company.

(4)

Includes 7,118,834 options subject to vesting over the next 48 months with vesting contingent upon continued service with the Company.

(5)

Consists of 2,116,963 shares of Series A Preferred Stock and 1,114,897 shares of Series B Preferred Stock held of record by Bessemer Venture Partners VIII Institutional (“BVP VIII Inst.”).

Consists of 2,080,646 shares of Series A Preferred Stock and 1,457,500 shares of Series B Preferred Stock held of record by 15 Angels II LLC (“15A”). 15A is a wholly owned subsidiary of BVP VIII Inst.

Consists of 381,680 shares of Series B Preferred Stock and 884,700 shares of Series B-1 Preferred Stock held of record by GoBlue Ventures LLC (“GoBlue”). GoBlue is a wholly owned subsidiary of BVP VIII Inst.

Consists of 1,760,258 shares of Series A Preferred Stock, 1,244,406 shares of Series B Preferred Stock and 735,630 shares of Series B-1 Preferred Stock held of record by Wahoowa Ventures LLC (“Wahoowa”). Wahoowa is a wholly owned subsidiary of Bessemer Venture Partners VIII L.P. (“BVP VIII,” together with BVP VIII Inst., the “Funds”).

Deer VIII Co. Ltd., is the general partner of Deer VIII & Co. L.P, which is the general partner of each of the Funds. Each of Deer VIII & Co. L.P. and Deer VIII & Co. Ltd. may be deemed to have voting and dispositive power over the shares held by the Funds (and their respective subsidiaries). Robert M. Stavis, J. Edmund Colloton, David J. Cowan, Byron B. Deeter, Robert P. Goodman and Jeremy S. Levine are the directors of Deer VIII & Co. Ltd. Investment and voting decisions with respect to shares held by the Funds are made by the directors of Deer VIII & Co. Ltd.

Mr. Bennett has a passive economic interest in the shares held by BVP VIII Inst., 15A, GoBlue and Wahoowa, through an interest in (1) BVP VIII and (2) Deer VIII & Co. L.P. Mr. Bennett, a member of our board of directors, disclaims beneficial ownership of such shares held by BVP VIII Inst., 15A, GoBlue and Wahoowa except to the extent of his pecuniary interest in such shares.

The address for BVP VIII Inst., 15A, GoBlue and Wahoowa is c/o Bessemer Venture Partners, 1865 Palmer Avenue, Suite 104, Larchmont, NY 10538.

(6)

Represents holdings of CrossCut Ventures 2, LP and C2 Club W Holdings LLC. The general partner of such funds may be deemed to have voting and dispositive power over the shares held by these funds. Ms. Joukovski, a member of our board of directors, does not individually own any securities of the Company and disclaims beneficial ownership of such shares held by CrossCut Ventures 2, LP and C2 Club W Holdings LLC.

(7)

Includes shares of Preferred Stock beneficially owned by Shining Capital over which Mr. Weng exercises voting control. Mr. Weng does not individually own any securities of the Company.

(8)

Includes shares of Preferred Stock beneficially owned by Cool Japan Fund over which Mr. Ohashi exercises voting control. Mr. Ohashi does not individually own any securities of the Company.

Item 5. Interest of Management and Others in Certain Transactions

Between February and April 2021, the Company entered into full recourse promissory notes with its CEO, General Counsel, President and CFO related to stock option exercises for 3,982,233 shares, 683,617 shares, 2,334,625 shares, and 299,718 shares, respectively. The aggregate principal balance of the promissory notes was $1.1 million. The promissory notes are prepayable at any time at the option of the employee. Interest accrues at 2.25% per annum, compounding annually, and is payable at the earlier of: (i) the date of any sale, transfer or other disposition of all or any portion of the shares, (ii) five years from the date of the promissory note, or (iii) the latest date repayment must be made in order to prevent a violation of Section 13(k) of the Securities Exchange Act of 1934.

Item 6. Other Information

In December 2020, the Company entered into the PMB Line of Credit. A copy of the credit agreement is filed as Exhibit 6.4 to this report.

Item 7. Financial Statements

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditor’s Report	18

Consolidated Balance Sheets	19

Consolidated Statements of Operations	20

Consolidated Statements of Stockholders’ Deficit	21

Consolidated Statements of Cash Flows	22

Notes to Consolidated Financial Statements	23

INDEPENDENT AUDITOR’S REPORT

Board of Directors

Winc, Inc.

Playa Vista, California

We have audited the accompanying consolidated balance sheets of Winc, Inc. and Subsidiary (collectively, the “Company”) as of December 31, 2020 and 2019 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Winc, Inc. and Subsidiary as of December 31, 2020 and 2019 and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

BAKER TILLY US, LLP

Los Angeles, California

May 7, 2021

WINC, INC.

CONSOLIDATED BALANCE SHEETS

December 31, 2020 and 2019

(in thousands, except share and per share data)

	December 31,
	2020			2019
Assets
Current assets
Cash	$	7,008		$	6,418
Accounts receivable, net of allowance for doubtful accounts and sales returns of $0.2 million and $0.3 million as of December 31, 2020 and 2019, respectively		1,505			1,368
Employee advances		34			18
Inventory		11,880			8,489
Prepaid expenses and other current assets		3,012			2,631

Total current assets		23,439			18,924
Property and equipment, net		654			804
Other assets		131			88

Total assets	$	24,224		$	19,816

Liabilities, Convertible Preferred Stock, and Stockholders’ Deficit
Current liabilities
Accounts payable	$	3,673		$	3,799
Accrued liabilities		4,759			2,511
Contract liability		8,691			1,138
Current portion of long term debt		1,526			1,416
Line of credit		–			6,000

Total current liabilities		18,649			14,864
Deferred rent		223			309
Warrant liabilities		1,067			859
Paycheck Protection Program note payable		1,364			–
Long term debt		812			2,339
Other liabilities		496			–

Total liabilities		22,611			18,371

Commitments and contingencies (Note 10)

Convertible Preferred stock, $0.0001 par value, 71,512,354 and 61,512,354 shares authorized as of December 31, 2020 and 2019, respectively, 58,144,584 and 51,212,274 shares issued and outstanding as of December 31, 2020 and 2019, respectively, aggregate liquidation preference of $71,746,475, and $61,407,451 as of December 31, 2020 and 2019, respectively		56,462			49,629
Stockholders’ Deficit
Common stock, $0.0001 par value, 106,910,000 shares authorized, 7,566,479 and 7,116,479, shares issued and outstanding as of December 31, 2020 and 2019, respectively		1			1
Treasury stock (1,350,000 shares outstanding as of December 31, 2020 and 2019)		(7	)		(7	)
Additional paid-in capital		2,229			1,936
Accumulated deficit		(57,072	)		(50,114	)

Total stockholders’ deficit		(54,849	)		(48,184	)

Total liabilities, convertible preferred stock, and stockholders’ deficit	$	24,224		$	19,816

The accompanying notes are an integral part of these consolidated financial statements.

WINC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2020 and 2019

(in thousands, except per share data)

	Year Ended December 31,
	2020			2019
NET REVENUES	$	64,707		$	36,447
COST OF REVENUES		39,312			21,827

GROSS PROFIT		25,395			14,620

OPERATING EXPENSES
Marketing		17,388			8,578
Personnel		7,582			6,328
Production and operations		169			88
Creative development		83			177
General and administrative		6,585			6,541

Total operating expenses		31,807			21,712

LOSS FROM OPERATIONS		(6,412	)		(7,092	)
OTHER (EXPENSE) INCOME
Interest expense		(834	)		(1,364	)
Change in fair value of warrants		(208	)		(137	)
Other income		523			559

Total other expense, net		(519	)		(942	)

LOSS BEFORE INCOME TAXES		(6,931	)		(8,034	)
INCOME TAX EXPENSE		27			15

NET LOSS	$	(6,958	)	$	(8,049	)

NET LOSS PER COMMON SHARE – BASIC AND DILUTED	$	(0.97	)	$	(1.11	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED		7,138,671			7,232,041

The accompanying notes are an integral part of these consolidated financial statements.

WINC, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

For the Years Ended December 31, 2020 and 2019

(in thousands, except share data)

	Convertible Preferred Stock				Common Stock					Treasury Stock

		Number of Outstanding Shares		Amount		Number of Outstanding Shares			Amount		Number of Outstanding Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
Balance as of December 31, 2018		41,748,044	$	39,500		7,294,387		$	1		(1,350,000	)	$	(7	)	$	1,804		$	(42,065	)	$	(40,267	)
Repurchase of common stock		—		—		(177,908	)		—		—			—			(90	)		—			(90	)
Stock-based compensation		—		—		—			—		—			—			222			—			222
Issuance of Series C Preferred Stock, net of $500 of issuance costs		8,209,586		9,500		—			—		—			—			—			—			—
Issuance of Series D Preferred Stock, net of $1,145 of issuance costs		1,254,644		629		—			—		—			—			—			—			—
Net loss		—		—		—			—		—			—			—			(8,049	)		(8,049	)

Balances as of December 31, 2019		51,212,274		49,629		7,116,479			1		(1,350,000	)		(7	)		1,936			(50,114	)		(48,184	)
Stock-based compensation		—		—		—			—		—			—			275			—			275
Stock option exercises		—		—		450,000			—		—			—			18			—			18
Issuance of Series D Preferred Stock, net of $2,285 of issuance costs		5,328,629		5,248		—			—		—			—			—			—			—
Issuance of Series E Preferred Stock, net of $1,121 of issuance costs		1,603,681		1,585		—			—		—			—			—			—			—
Net loss						—			—		—			—			—			(6,958	)		(6,958	)

Balances as of December 31, 2020		58,144,584	$	56,462		7,566,479		$	1		(1,350,000	)	$	(7	)	$	2,229		$	(57,072	)	$	(54,849	)

The accompanying notes are an integral part of these consolidated financial statements.

WINC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2020 and 2019

(in thousands)

	Year Ended December 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(6,958	)	$	(8,049	)
Adjustments to reconcile net loss to net cash provided by (used) in operating activities:
Depreciation and amortization of property and equipment		510			633
Amortization of debt issuance costs		251			338
Stock-based compensation		275			222
Change in fair value of warrant		208			137
Changes in operating assets and liabilities:
Accounts receivable		(137	)		(321	)
Inventory		(3,391	)		614
Prepaid and other current assets		(381	)		(701	)
Other assets		(43	)		–
Accounts payable		(126	)		871
Accrued liabilities		2,248			764
Contract liability		7,553			(324	)
Deferred rent		(86	)		(55	)
Other liabilities		496			(101	)
Net cash provided by (used in) operating activities		419			(5,972	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(359	)		(385	)
Payments received on (loans to) employee advances		(16	)		91
Net cash used in investing activities		(375	)		(294	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock		–			(90	)
Borrowings (payments) on line of credit, net		(6,000	)		1,575
Proceeds received for the issuance of common stock		18			–
Payments on notes payable		–			(833	)
Proceeds from issuance of Paycheck Protection Program note payable		1,364			–
Repayments of long-term debt		(1,669	)		–
Proceeds from issuance of preferred stock, net of issuance costs		6,833			10,129
Net cash provided by financing activities		546			10,781
Net increase in cash		590			4,515
Cash - beginning of year		6,418			1,903
Cash - end of year	$	7,008		$	6,418
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	597		$	796
Income taxes paid	$	27		$	15

The accompanying notes are an integral part of these consolidated financial statements.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

1. DESCRIPTION OF BUSINESS

Winc, Inc. (the “Company” or “Winc”) is a Delaware Corporation, which was incorporated on August 11, 2011. The Company offers personalized consumer recommendations, delivering a shipment of wine per month for a monthly fee. The Company has a direct-to-consumer model, which involves the Company bottling, labeling, and distributing wine under its own winery license. The Company also features wines at select retailers and restaurants nationwide. A variety of the wines offered online and through retailers are produced at third-party vineyards and wineries.

The Company sources from vineyards and works with winemakers and ships all wine, domestic and international, in bulk containers to a centralized winemaking and bottling facility on California’s Central Coast.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Winc and its wholly-owned subsidiary. The Company prepares its consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States (“GAAP”). All significant intercompany transactions have been eliminated.

Reclassifications

Certain reclassifications have been made to the prior periods’ consolidated financial statements in order to conform to the current period presentation. These reclassifications did not impact any prior amounts of net loss or cash flows.

Correction of Prior Period Accounting for Warrants

In connection with the preparation of its annual financial statements for the year ended December 31, 2020, the Company identified an error in its previously filed annual financial statements related to the classification and measurement of warrants to purchase its Series B-1 Preferred Stock that were issued in conjunction with a previous debt instrument. The Company did not allocate a portion of the proceeds from the debt instrument to the warrant at issuance based on the stand-alone fair value of the warrant. The error impacts the years ended December 31, 2017, 2018, and 2019.

Management assessed the materiality of the error in accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 99, Materiality, as codified in Accounting Standards Codification (“ASC”) 250 (“ASC 250”), Presentation of Financial Statements, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Consolidated Statements of Income, Balance Sheets, Shareholders Equity and Cash Flows, also as codified in ASC 250. Based on such analysis of quantitative and qualitative factors, the Company concluded that the error does not represent a material misstatement of previously issued consolidated financial statements and, therefore, no amendments to previously filed reports with the SEC are required.

While the impact of the error was not a material misstatement to any previously issued consolidated financial statements, correcting the aggregate impact of the error in the results of operations for the year ended December 31, 2020 would result in a material misstatement of the consolidated financial statements for the year ended December 31, 2020. Accordingly, the Company concluded it was appropriate to correct the consolidated financial statements as of and for the year ended December 31, 2019 within this 2020 Form 1-K filing. Therefore, the Company recognized an adjustment to decrease its previously stated accumulated deficit by $0.6 million as of January 1, 2019 to recognize the aggregate impact on the Company’s results of operations through that date and an adjustment to increase its previously stated interest expense by $0.3 million for the year ended December 31, 2019.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Liquidity Matters

The Company has incurred losses and has an accumulated deficit of $57.1 million as of December 31, 2020. The Company’s primary liquidity sources are operating cash flow, cash on hand, and short-term investments. Although the Company did not experience a substantial decrease in cash flow from operations as a result of the impact of the COVID-19 pandemic, it obtained relief under the CARES Act in the form of a $1.4 million “Paycheck Protection Program” (“PPP”) loan in April 2020. The loan was subsequently forgiven in March 2021 prior to any principal or interest payments being made. Through fiscal year 2020, the Company has been dependent on debt, equity financing, and the PPP loan to fund its operations. During the second quarter of fiscal year 2021, the Company issued and sold 5,714,286 shares of Series F convertible preferred stock, for net proceeds of $9.1 million.

The Company’s management believes it will continue to obtain third party financing to support future operations until the Company itself achieves profitability on a stand-alone basis. However, there can be no assurance that projected revenue growth and improvement in operating results will occur or that the Company will successfully implement its plans. In the event cash flow from operations and borrowings are not sufficient, additional sources of financing, such as equity offerings, will be required in order to maintain the Company’s current operations. Based upon the Company’s current operating plan, management believes that the Company’s existing cash as of December 31, 2020, plus the net proceeds from its Series E and Series F convertible preferred stock financings during the second quarter of fiscal year 2021, is sufficient to support operations for at least the next 12 months following issuance of these consolidated financial statements.

COVID-19 Pandemic

On March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended containment and mitigation measures. Since then, extraordinary actions have been taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions throughout the world. These actions include travel bans, quarantines, “stay-at-home” orders, and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. As a result of COVID-19, the Company has taken precautionary measures in order to minimize the risk of the virus to its employees and the communities in which it operates, including the suspension of all non-essential business travel of employees. However, there has been minimal disruption in the Company’s ability to ensure the effective operation of its business. While the broader implications of the COVID-19 pandemic on the Company’s results of operations and overall financial performance remain uncertain, the COVID-19 pandemic has, to date, not had a material adverse impact on its results of operations or the ability to raise funds to sustain operations. The economic effects of the pandemic and resulting societal changes are currently not predictable, and the future financial impacts could vary from those foreseen.

Risks and uncertainties

The Company's future results of operations involve risks and uncertainties. Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, continued demand for the Company's products, stability of global financial markets, cybersecurity breaches and other disruptions that could compromise the Company’s information or results, business disruptions that are caused by natural disasters or pandemic events, competition from substitute products and larger companies, government regulations and oversight, patent and other types of litigation, ability to protect proprietary technology, and dependence on key individuals.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash. The Company’s cash is held by financial institutions in the United States (“U.S.”), which management believes to be financially sound, and, accordingly, minimal credit risk exists with respect to the financial institutions. At times, the Company’s deposits held in the U.S may exceed the Federal Depository Insurance Corporation insured limits. No losses have been experienced related to such amounts.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Segments

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company determined that the CEO and President act together as the Company’s CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in two reportable segments. See Note 14 for disaggregated revenue by reportable segment.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying Notes. Significant estimates include, but are not limited to, allowance for sales returns, inventory reserves, warrant liabilities, and stock-based compensation. Actual results may differ materially from these estimates.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable is stated as the amount billed, net of an allowance for doubtful accounts and sales returns. The Company’s allowance for doubtful accounts is adjusted periodically and is based on management’s consideration of the age, nature of the past due accounts, historical losses, existing economic conditions, and specific analysis of each account. Changes in the Company’s estimate to the allowance for doubtful accounts are recorded through bad debt expense and individual accounts are charged against the allowance when all reasonable collection efforts are exhausted. Collections of previously written off accounts are recognized as an offset to bad debt expense in the period they are received. As of December 31, 2020 and 2019, the allowance for doubtful accounts and sales returns was $0.2 million and $0.3 million, respectively.

The following table summarizes the allowance for doubtful accounts (in thousands):

	December 31,
	2020			2019
Beginning balance	$	272		$	109
Provision		2,667			1,289
Write-offs, net		(2,701	)		(1,126	)
Ending balance	$	238		$	272

Inventory

Inventory consists primarily of finished products (ready for sale), boxes/packaging, and raw materials (juice, wine, bottles, labels, etc.) and all inventories are stated at the lower of cost or net realizable value, using the first-in, first-out method. All inventories are classified as current assets in accordance with recognized industry practice, although a portion of such inventories will be aged for periods longer than one year. The Company periodically reviews inventory for obsolete, spoiled, or slow-moving items based on prior sales, forecasted demand, and historical experience, and as of December 31, 2020 and 2019, no allowance was required. However, inventory is reduced for estimated losses related to shrinkage, which is based on historical losses verified by physical inventory counts. As of December 31, 2020 and 2019, there was no material shrinkage allowance.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives. Leasehold improvements are amortized over the shorter of the lease term or the estimate useful lives of the assets. The following table presents the estimated useful lives generally assigned to each asset category:

Category		Useful Life
Machinery and equipment		2 - 5 years
Computers and server equipment		3 – 5 years
Furniture and fixtures		5 years
Leasehold improvements		5 years
Purchased software and licenses		5 years
Capitalized software		3 – 5 years
Website development		2 years

Expenditures associated with upgrades and enhancements that improve, add functionality, or otherwise extend the life of property and equipment are capitalized, while expenditures that do not, such as repairs and maintenance, are expensed as incurred. Total repairs and maintenance amounted to $0.1 million for both the years ended December 31, 2020 and 2019.

Impairment of Long-lived Assets

The Company reviews its depreciable long-lived assets for impairment when there is evidence that events or changes in circumstances indicate that the carrying values may not be recoverable. An impairment loss may be recognized when the undiscounted cash flows expected to be generated by a long-lived asset (or group assets) are less than its carrying value. Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value and would be recorded as a reduction in the carrying value of the related asset and charged against earnings. There was no impairment of long-lived assets recognized by the Company during the years ended December 31, 2020 or 2019.

Leases and Deferred Rent

The Company accounts for leases in accordance with ASC 840, Leases. The Company categorizes leases at their inception as either operating or capital. Under ASC 840, a lease arrangement is classified as a capital lease if at least one of the following criteria are met: (i) transfer of ownership to the Company prior to or shortly after the end of the lease term, (ii) the Company has a bargain purchase option during or at the end of the lease term, (iii) the lease term is equal to 75% or more of the underlying asset’s economic life, or (iv) the present value of future minimum lease payments (excluding executory costs) is equal to 90% or more of the fair value of the leased property.

Rent expense is recorded on a straight-line basis over the lease term. Deferred rent is the difference between rent payments and rent expense in any period and is recorded as a liability in the consolidated balance sheets and amortized as a reduction of rent expense over the term of the lease.

Warrant Liabilities

The Company has issued warrants to purchase convertible preferred stock in conjunction with certain debt and equity financings. The Company accounts for its issued warrants as liabilities in the consolidated balance sheets, initially measured at fair value, and a reduction in proceeds from the financing arrangement. Changes in the fair value of the warrants are recognized in earnings during each period.

For each of the years ended December 31, 2020 and 2019, the Company recognized other expense of $0.2 million and $0.1 million, respectively, related to the change in the fair value of issued warrants. See Note 9 for description of warrant liabilities and the related valuations.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Revenue Recognition

The Company adopted the revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2019. ASC 606 provides that revenues are to be recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services. Revenue is recognized when or as the performance obligation has been satisfied and control of the product has transferred to the customer. In evaluating the timing of the transfer of control of products to customers, the Company considers several indicators, including significant risks and rewards of products, the right to payment, and the legal title of the products. Deferred revenue represents billings or payments received in advance of services performed.

The Company generates revenue from the following revenue streams:

Online Sales: Wine sales direct to customers through monthly membership or individual orders of bottles. Customers can skip a month and a membership is not required to purchase wine.

Wholesale Sales: Direct-to-buyer wine sales in large quantities to various businesses and other wholesale customers.

Breakage Sales: Sales recognized from the unused gift cards and prepaid credits.

The Company’s primary performance obligation is to transfer a specific quantity of wine to the customer, whether that be to the consumer directly or through wholesale. The Company’s principal terms of DTC sales are FOB destination and the Company transfers control and records revenue for online wine sales upon receipt of the wine by the customer. Wholesale revenue is recognized when the wholesale customer picks up the wine from one of the Company’s distribution points. Accordingly, revenues from online and wholesale sales are recognized at a point in time, when the customer obtains control of the wine. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the transfer of wine and is generally based on a fixed price according to a contract. Shipping and handling fees charged to customers are reported within revenue and the Company elected to exclude sales tax assessed by a government authority from the transaction price. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract are expensed as incurred when the amortization period is less than a year.

Sales allowances related to returns are generally not material to the consolidated financial statements. Estimates for sales allowances are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce revenue in the period of sale.

Gift cards and prepaid credits are recorded as a contract liability when sold and recorded as revenue when the customer redeems the gift card or prepaid credit. Based on historical redemption rates, a percentage of gift cards and prepaid credits will not be redeemed, which is referred to as "breakage." Breakage revenue is recognized in proportion to the pattern of redemption by the customer, which the Company determined to be the historical redemption rate.

Cost of Revenues

Cost of revenues consists of wine-related costs, bottling materials, packaging, fulfillment costs, customer service costs, credit card fees, shipping costs, storage costs, and barrel deprecation.

Advertising Costs

Advertising costs are expensed in the period incurred (as marketing expenses in the consolidated statements of operations) and amounted to $16.7 million and $8.1 million for the years ended December 31, 2020 and 2019, respectively.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Stock Compensation. The Company accounts for all stock-based awards granted to employees and non-employees as stock-based compensation expense based on the grant date fair value. Stock-based compensation is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided. The Company recognizes stock-based compensation expense for employees on a straight-line basis over the requisite service period. Forfeitures are accounted for as they occur. Compensation expense totaled $0.3 million and $0.2 million, for the years ended December 31, 2020 and 2019, respectively.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on the following subjective assumptions:

Expected Term — The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term.

Volatility — Because the Company is privately held and does not have an active trading market for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants.

Risk-free Rate —The risk-free rate assumption is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

Dividends —The Company has never paid, and does not anticipate paying, dividends on its common stock. Therefore, the Company uses an expected dividend yield of zero.

Income Taxes

The Company provides for income taxes using the asset and liability method. Deferred income taxes are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted statutory tax rates in effect for years in which differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to reflect uncertainty associated with their ultimate realization. The Company’s net deferred tax assets have a full valuation allowance against them due to such uncertainty.

The Company evaluates its uncertain tax positions in a two-step process. First, the Company determines whether it is more likely than not that a tax position will be sustained upon examination by the taxing authorities. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the consolidated financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company currently does not have any unrecognized tax benefits.

Fair Value of Financial Instruments

The Company’s financial instruments include cash, accounts receivable, employee advances, accounts payable, accrued liabilities, line of credit, and notes payable. The Company believes that the fair value of these financial instruments approximates their carrying amounts based on current market indicators, such as prevailing market rates and the short-term maturities of certain financial instruments.

The Company measures the fair value of financial assets and liabilities recorded at fair value based on the guidance of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy, which requires an entity to expand disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Level 2 – Observable inputs other than quoted prices in active markets for identical assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Inputs that are unobservable and supported by little or no market activity.

The Company’s warrants are measured on recurring basis using Level 3 inputs (see Note 9). The Company did not have any other assets or liabilities that were measured using Level 3 inputs on a recurring or nonrecurring basis during the years ended December 31, 2020 and 2019, except for warrant liabilities. There was no transfer between levels during the years ended December 31, 2020 and 2019.

Internally Developed Software Costs

Computer software development costs are expensed as incurred, except for internal use software or website development costs that qualify for capitalization as described below, and include compensation and related expenses, costs of computer hardware and software, and costs incurred in developing features and functionality.

For computer software developed or obtained for internal use, costs that are incurred in the preliminary project and post implementation stages of software development are expensed as incurred. Costs incurred during the application and development stage are capitalized. Capitalized costs are amortized using the straight-line method over a three-year estimated useful life, beginning in the period in which the software is available for use. Capitalized software development costs, net of accumulated amortization, totaled $0.5 million and $0.6 million, as of December 31, 2020 and 2019, respectively. Amortization of software costs was $0.4 million for both the years ended December 31, 2020 and 2019.

Earnings per Share

Basic earnings (loss) per share attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted earnings (loss) per share attributable to common stockholders is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock and if-converted methods.

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This guidance supersedes the revenue recognition requirements of Topic 605, including most industry-specific revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, which amended ASU 2014-09 to defer the effective date for implementation for nonpublic entities to fiscal years beginning after December 15, 2018, and interim reporting periods beginning after December 15, 2019.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update affect only the narrow aspects of Topic 606, which include the following:

Collectability criterion

Presentation of sales taxes and other similar taxes collected from customers

Noncash consideration

Contract modifications at transition

Completed contracts at transition

The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements of Update 2014-09.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

The Company adopted the new standard effective January 1, 2019 using the modified retrospective approach applied to those contracts which were not completed as of January 1, 2019. As part of the adoption of the ASU, the Company elected the following transition practical expedients: (i) to reflect the aggregate of all contract modifications that occurred prior to the date of initial application when identifying satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price; (ii) to recognize the incremental costs of obtaining a contract as an expense when the period is one year or less; and (ii) to apply the standard only to contracts that are not completed at the initial date of application. Because contract modifications are minimal, there is not a significant impact as a result of electing these practical expedients. The adoption of this guidance in fiscal year 2019 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The Company adopted this standard as of January 1, 2019, which did not have a material impact on its consolidated financial statements.

New Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. The new standard requires the lessees to classify leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee, and such classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which revised the effective date for ASU No. 2016-02, Leases (Topic 842) for fiscal years beginning after December 15, 2020. In June 2020, the FASB issued ASU No. 2020-05, Revenue From Contracts With Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, further delaying the effective date for ASU No. 2016-02, Leases (Topic 842) to fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The Company adopted ASU No. 2019-10 and ASU No. 2020-05 upon issuance by the FASB. The Company currently is assessing the impact of ASU No. 2016-02 on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), as amended, which sets forth a “current expected credit loss” (CECL) model that requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to certain off-balance sheet credit exposures. The standard is effective for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements once adopted.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The new standard removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. The standard is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

3. INVENTORY

Inventory consists of the following as of December 31, 2020 and 2019 (in thousands):

	December 31,
	2020		2019
Raw materials	$	4,753	$	3,099
Finished goods		6,980		5,281
Packaging		147		109
Total Inventory	$	11,880	$	8,489

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following as of December 31, 2020 and 2019 (in thousands):

	December 31,
	2020		2019
Prepaid wine crushing services	$	1,252	$	1,939
Prepaid insurance and benefits		372		343
Prepaid software licenses		151		130
Prepaid marketing		151		103
Deposits		19		14
Prepaid other		1,067		102
Total Prepaid Expenses and Other Current Assets	$	3,012	$	2,631

5. PROPERTY AND EQUIPMENT

Property and equipment, net consists of the following as of December 31, 2020 and 2019 (in thousands):

	December 31,
	2020			2019
Capitalized software	$	1,966		$	1,680
Furnitures and fixtures		643			643
Leasehold improvements		304			299
Machinery and equipment		262			211
Website development		168			168
Computers and server equipment		153			135
Purchased software and licenses		132			132
		3,628			3,268
Less: accumulated depreciation and amortization		(2,974	)		(2,464	)
Total Property and equipment, net	$	654		$	804

Depreciation and amortization expense totaled $0.5 million and $0.6 million during the years ended December 31, 2020 and 2019, respectively.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

The following table summarizes amortization expense to be recognized for the company’s Capitalized software as of December 31, 2020 (in thousands):

Years ending December 31,
2021	$	289
2022		147
2023		52
Total	$	488

6. ACCRUED LIABILITIES

Accrued liabilities consisted of the following as of December 31, 2020 and 2019 (in thousands):

	December 31,
	2020		2019
Inventory received not billed	$	1,944	$	1,086
Accrued payroll liabilities		659		174
Accrued marketing		634		351
Accrued shipping		472		89
Alcohol and tobacco tax		318		111
Other		732		700
Total Accrued Liabilities	$	4,759	$	2,511

7. DEBT

In October 2015, the Company entered into a Loan and Security Agreement with Western Alliance Bank for a revolving line of credit of up to $12 million (the “WAB Line of Credit”). The WAB Line of Credit was subsequently amended to reduce the capacity to $7 million and extend the maturity to May 2020, at which point it was terminated. In December 2020, the Company entered into a Credit Agreement with Pacific Mercantile Bank for a new $7 million line of credit (the “PMB Line of Credit”). The PMB Line of Credit bears interest at a variable annual rate equal to 1.25% plus the Prime Rate (3.25% as of December 31, 2020). The combined balance of the Company’s lines of credit as of December 31, 2020 and 2019 was zero and $6 million, respectively. The Company was in compliance with the line of credit covenants as of December 31, 2020.

In December 2017, the Company entered into a Loan and Security Agreement with Multiplier Capital for a term loan of $5 million. The loan has a maturity date of June 29, 2022 and bears an interest at a variable annual rate equal to 6.25% above the Prime Rate, with a minimum interest rate of 11.5% and a maximum interest rate of 14% (11.5% as of December 31, 2020). The balance as of December 31, 2020 and 2019, net of unamortized debt issuance costs, was $2.3 million and $3.8 million, respectively.

Interest expense on the Company’s line of credit and term loan for the years ended December 31, 2020 and 2019 totaled $0.8 million and $1.1 million, respectively.

The following table summarizes the Company’s stated debt maturities and scheduled principal repayments as of December 31, 2020 (in thousands):

Years ending December 31,
2021	$	1,667
2022		833
Total	$	2,500

In connection with entering into and amending certain debt agreements, the Company granted warrants to purchase a fixed number of the Company’s preferred shares, all of which remain outstanding as of December 31, 2020. See Note 9 for further information.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

8. RELATED PARTY TRANSACTIONS

During the years ended December 31, 2020 and 2019, the Company collected zero and $0.1 million, respectively, of receivables from employees and gave no advances in either year. The receivables are presented as employee advances in the accompanying consolidated balance sheets.

During each of the years ended December 31, 2020 and 2019, the Company paid a related party $0.1 million for brand consulting services.

9. WARRANT LIABILITIES

In connection with certain past debt and equity financings, the Company issued the following warrants, all of which were exercisable upon issuance:

Date Issued	Number of Shares		Preferred Stock Series	Price per Share		Expiration Date
July 3, 2013		54,745	Series Seed	$	0.27400	July 3, 2023
April 15, 2016		22,901	Series B	$	1.30997	April 15 2026
December 7, 2017		6,679	Series B-1	$	1.31000	December 7, 2024
December 29, 2017		859,644	Series B-1	$	1.31000	December 29, 2027

The warrants are recognized as liabilities in the consolidated balance sheets and are subject to re-measurement at each balance sheet date from issuance. Any change in fair value is recognized as a component of other expense in the period of change. As of December 31, 2020, all warrants remain outstanding.

The valuation of the Company’s warrants contained unobservable inputs that reflected the Company’s own assumptions for which there was little market data. Accordingly, the Company’s warrants were measured at fair value on a recurring basis using unobservable inputs and were classified as Level 3 inputs. The fair value of the warrant liabilities was determined using the Black-Scholes option pricing model and the following assumptions:

	Year Ended December 31,
	2020	2019
Risk free interest rate	0.25%	1.36%
Expected term (in years)	2.50 – 6.99	3.50 – 7.99
Dividend yield	—	—
Expected volatility	60%	60%
Fair value of common stock	$1.75	$1.41

As of December 31, 2020 and 2019, the Company estimated the fair value of warrants using Black-Scholes model to be $1.1 million and $0.9 million, respectively.

10. COMMITMENTS AND CONTINGENCIES

Operating Leases

As of December 31, 2020, the Company had two non-cancelable operating leases for various facilities, which expire in December 2022 and January 2023, respectively. Minimum future rental commitments under non-cancelable operating leases, primarily for equipment and office facilities, as of December 31, 2020 are as follows (in thousands):

Years ending December 31,
2021	$	1,081
2022		1,069
2023		28
Total	$	2,178

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

The Company is also party to two non-cancelable sublease agreements and had one additional sublease agreement expire in April 2020. Both subleases are set to expire in December 2022. Minimum future sublease rental income under the non-cancelable operating subleases as of December 31, 2020, are as follows (in thousands):

Years ending December 31,
2021	$	762
2022		785
Total	$	1,547

Rent expense was $1.2 million and $1.1 million for the years ended December 31, 2020 and 2019, respectively, and is included in general and administrative expenses on the accompanying consolidated statements of operations. Included in other income in the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019 is rental income from sublease agreements of $0.6 million and $0.3 million, respectively.

Legal

The Company is involved, from time to time, in disputes that are incidental to its business. Management has reviewed these matters to determine if reserves are required for losses that are probable to materialize and reasonable to estimate in accordance with the authoritative guidance on accounting for contingent losses. Management evaluates such reserves, if any, based upon several criteria including the merits of each claim, settlements discussions, and advice from outside legal counsel, as well as indemnification of amounts expended by the Company’s insurers or others, if any.

In management’s opinion, none of these legal matters, individually or in the aggregate, are likely to have a material adverse effect on the Company’s combined financial position or results of operations.

11. STOCK-BASED COMPENSATION

All employees are eligible to be granted options to purchase common stock under the Company’s 2012 and amended 2013 Equity Incentive Plans (the “Equity Plans”). Under provisions of the 2012 and 2013 Equity Plans, the Company is authorized to issue up 409,565 shares and 21,995,249 of its common stock, respectively, of which 20,372,067 have been granted under stock option awards as of December 31, 2020. The purpose of the Company’s stock-based compensation awards is to incentivize employees and other individuals who render services to the Company by providing opportunities to purchase stock in the Company.

All options granted under the 2012 and 2013 Equity Incentive Plans will expire five and ten years, respectively, from their date of issuance. Stock options generally have a four-year vesting period from their date of issuance.

The Company’s Board of Directors administer the Equity Plans, select the individuals to whom options will be granted, determine the number of options to be granted and the term and exercise price of each option. Incentive stock options and non-statutory stock options granted pursuant to the terms of the Equity Plans cannot be granted with an exercise price of less than 100% of the fair market value of the underlying Company stock on the date of the grant (110% if the award is issued to an individual that owns 10% or more of the Company’s outstanding stock). The term of the options granted under the Equity Plans cannot be greater than 10 years (five years for incentive stock options granted to optionees who have greater than 10% ownership interest in the Company). Options granted generally vest 25% on the one-year anniversary of the date of grant with the remaining balance vesting equally on a monthly basis over the subsequent three years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model for incentive stock options granted to employees and on the reporting date for non-employees. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent the weighted average of the applicable assumption used to value stock options at their grant date. The Company estimates expected volatility based on historical and implied volatility data of comparable companies. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated using the “simplified method.”

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The following table summarizes the key valuation assumptions for options granted during the years ended December 31, 2020 and 2019:

	Year Ended December 31,
	2020	2019
Risk free interest rates	0.34% - 0.44%	1.69% - 1.87%
Expected lives (in years)	5.46 – 6.09	5.52 – 6.25
Dividend yield	—	—
Expected volatility	36.20% - 36.76%	34.80% - 35.55%
Fair value of common stock	$0.17 - $0.24	$0.06 - $0.19

The following tables summarize the activity of the Company’s stock options for the years ended December 31, 2020 and 2019:

	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contract Term (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding as of December 31, 2018		7,540,709		$	0.35		6.77
Exercised		–			–		–		–
Granted		11,073,886			0.17		9.11		3,694
Forfeited		(1,010,140	)		0.34		–		158
Expired		(11,457	)		0.50		–		1
Options outstanding as of December 31, 2019		17,592,998		$	0.16		8.02
Exercised		(450,000	)		0.21		4.99		173
Granted		2,855,500			0.50		9.42		252
Forfeited		(65,953	)		0.48		–		7
Expired		(1,108,925	)		0.21		–		424
Options outstanding as of December 31, 2020		18,823,620		$	0.21		7.51

The weighted average grant date fair value per share of stock options granted during the years ended December 31, 2020 and 2019 was $0.19 and $0.06, respectively. During the year ended December 31, 2020, the aggregate intrinsic values of stock option awards exercised was $0.2 million, determined at the date of option exercise. There were no stock option awards exercised during fiscal year 2019.

The aggregate intrinsic value was calculated as the difference between the exercise prices of the underlying stock option awards and the estimated fair value of the Company’s common stock on the date of exercise. Total unvested shares under options as of December 31, 2020 and 2019, totaled 10,569,732 and 8,481,034, respectively.

The total fair value of shares vested as of December 31, 2020 and 2019 was $4.9 million and $1.8 million, respectively.

Total stock-based compensation expense for the year ended December 31, 2020 and 2019 was $0.3 million and $0.2 million, respectively, and is recognized as a personnel expense in the consolidated statements of operations. Total unrecognized compensation cost related to unvested stock options as of December 31, 2020 is $0.7 million and is expected to be recognized over a weighted average period of 1.45 years.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

12. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) defined contribution plan which permits participating U.S. employees to defer up to a maximum of 100% of their compensation, subject to limitations established by the Internal Revenue Service. Employees aged 21 and older are eligible to contribute to the plan starting 30 days after their employment date. Once eligible, participants are automatically enrolled to contribute 6% of eligible compensation or may elect to contribute a whole percentage of their eligible compensation subject to annual Internal Revenue Code limits. The Company made no contributions for the years ended December 31, 2020 and 2019.

13. STOCKHOLDERS’ EQUITY

Eighth Amended and Restated Certification of Incorporation

In accordance with the Eighth Amended and Restated Certificate of Incorporation dated December 8, 2020, the Company is authorized to issue two classes of stock, common stock and preferred stock. As of December 31, 2020, the Company shall have authority to issue 106,910,000 shares of common stock with par value of $0.0001 per share and 71,512,354 shares of preferred stock with par value of $0.0001 per share.

Preferred Stock

Convertible preferred stock consisted of the following (in thousands, except share data):

	December 31, 2020
	Shares Authorized		Shares Issued and Outstanding		Net Carrying Value		Aggregate Liquidation Preference		Common Stock Issuable on Conversion
Series Seed Preferred Stock		13,296,372		13,241,627	$	3,628	$	3,628		13,241,627
Series A Preferred Stock		8,276,928		8,276,928		9,458		10,006		8,276,928
Series B Preferred Stock		13,381,711		13,358,810		17,472		17,499		13,358,810
Series B-1 Preferred Stock		7,736,552		6,870,679		8,942		13,501		6,870,679
Series C Preferred Stock		8,209,586		8,209,586		9,500		15,000		8,209,586
Series D Preferred Stock		10,611,205		6,583,273		5,877		9,306		6,583,273
Series E Preferred Stock		10,000,000		1,603,681		1,585		2,806		1,603,681
Total		71,512,354		58,144,584	$	56,462	$	71,746		58,144,584

	December 31, 2019
	Shares Authorized		Shares Issued and Outstanding		Net Carrying Value		Aggregate Liquidation Preference		Common Stock Issuable on Conversion
Series Seed Preferred Stock		13,296,372		13,241,627	$	3,628	$	3,628		13,241,627
Series A Preferred Stock		8,276,928		8,276,928		9,458		10,006		8,276,928
Series B Preferred Stock		13,381,711		13,358,810		17,472		17,499		13,358,810
Series B-1 Preferred Stock		7,736,552		6,870,679		8,942		13,501		6,870,679
Series C Preferred Stock		8,209,586		8,209,586		9,500		15,000		8,209,586
Series D Preferred Stock		10,611,205		1,254,644		629		1,773		1,254,644
Total		61,512,354		51,212,274	$	49,629	$	61,407		51,212,274

During fiscal year 2019, the Company raised capital of up to $9.5 million (net of issuance costs) through the sale of 8,209,586 shares of Series C convertible preferred stock (the “Series C Preferred Stock”) at $1.2181 per share.

During fiscal year 2019 and 2020, the Company raised capital of up to $5.9 million (net of issuance costs) through the sale of 6,583,273 shares of Series D convertible preferred stock (the “Series D Preferred Stock”) at $1.4136 per share.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

During fiscal year 2020, the Company raised capital of up to $1.6 million (net of issuance costs) through the sale of 1,603,681 shares of Series E convertible preferred stock (the “Series E Preferred Stock”) at $1.75 per share.

Unless otherwise indicated, all attributes described below applied to Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock.

Voting Rights

The holders of common stock are entitled to one vote for each share of common stock.

The holders of preferred stock are entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of preferred stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by other provisions of the Certificate of Incorporation, holders of preferred stock shall vote together with holders of common stock as a single class.

Dividends

The Company shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on shares of common stock payable in shares of common stock) unless the holders of preferred stock shall simultaneously receive a dividend on each outstanding share of preferred stock in an amount at least equal to (i) in the case of a dividend on common stock or any class or series that is convertible into common stock, that dividend per share of preferred stock as would equal the product of (a) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common stock and (b) the number of shares of common stock issuable upon conversion of a share of preferred stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into common stock, at a rate per share of preferred stock determined by (a) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (b) multiplying such fraction by an amount equal to the applicable original issue price; provided that, if the Company declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Company, the dividend payable to the holders of preferred stock pursuant to Section 1 of the Company’s Seventh Amended and Restated Certificate of Incorporation shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest preferred stock dividend.

As of December 31, 2020 and 2019, there were no dividends declared, paid, or set aside.

Conversion

The holders of preferred stock have conversion rights. Each shares of preferred stock shall be convertible, at the option of the holder at any time and without the payment of additional consideration by the holder into such number of fully paid and non-assessable shares of common stock as is determined by dividing the applicable original issue price by the applicable conversion price at the time of conversion. The Series Seed conversion price is equal to $0.274. The Series A conversion price is equal to $1.2089. The Series B conversion price is equal to $1.3099. The Series B-1 conversion price is equal to $1.31. The Series C conversion price is equal to $1.2181. The Series D conversion price is equal to $1.4136. The Series E conversion price is equal to $1.75. Such initial conversion price, and the rate at which shares of preferred stock may be converted into shares of common stock, shall be subject to adjustments as provided in the Eighth Amended and Restated Certificate of Incorporation.

No fractional shares of common stock are issued upon conversion of the preferred stock. In lieu of any fractional shares, the Company shall pay cash equal to such fraction multiplied by the fair market value of a share of common stock as determined in good faith by the Board of Directors of the Company.

At conversion, any shares of preferred stock shall be retired and cancelled and may not be reissued as shares of such series.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

Liquidation Rights

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, and Series B-1 Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of Series B Preferred Stock, Series A Preferred Stock, Series Seed Preferred Stock or Common Stock

The holders of shares of preferred stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to the greater of (i) one and one-half times the original issue price (for Series C and Series B-1 Preferred Stock) and one times the original issue price (for Series E, Series D, Series B, Series A, and Series Seed Preferred Stock), plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of preferred stock been converted into common stock.

After the payment of all preferential amounts required to be paid to the holders of shares of preferred stock, the remaining assets of the Company available for distribution to its stockholders shall be distributed among the holders of shares of common stock, pro rata based on the number of shares held by each such holder.

Deemed liquidation events include: (a) a merger or consolidation or (b) the sale, lease, transfer, exclusive license, or other disposition of substantially all of the Company’s assets.

As of December 31, 2020 and 2019, no liquidation events had occurred.

14. SEGMENT INFORMATION

The Company evaluates its business and allocates resources based on its two reportable business segments: Direct to Consumer (“DTC”) and Wholesale. The Company has a non-reportable segment that is comprised of a small business line focused on testing new products to determine if they have long-term viability prior to integration into the DTC and/or Wholesale distribution channels. The accounting policies of the segments are the same as those described in Note 2. The Company does not report asset information by segment because that information is not used to evaluate Company performance or allocate resources between segments.

The Company evaluates performance based on Adjusted Contribution Margin, which is defined as Gross Margin (calculated in accordance with GAAP), plus cash received for unused credits from monthly subscriptions, less estimated product costs attributable to unused monthly credits.

Management believes Adjusted Contribution Margin is an important supplemental measure because it provides relevant and useful information by reflecting the performance of each segment adjusted for the impact of non-refundable subscriptions, even when a customer chooses to delay using their credits. Management believes that gross profit is the most directly comparable GAAP measure to Adjusted Contribution Margin and Adjusted Contribution Margin should not be viewed as an alternative measure of operating performance to gross profit as defined by GAAP.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

The following tables summarize information for the reportable segments (in thousands):

For the year ended December 31, 2020:

	DTC			Wholesale			Other non- reportable			Corporate non-segment			Total
Net revenue	$	54,854		$	8,237		$	1,616		$	–		$	64,707
Cost of revenues		(32,759	)		(5,844	)		(709	)		–			(39,312	)
Gross profit		22,095			2,393			907			–			25,395
Other adjustments⁽¹⁾		3,002			–			–			–			3,002
Adjusted Contribution Margin		25,097			2,393			907			–			28,397
Add back: Other adjustments		(3,002	)		–			–			–			(3,002	)
Operating expenses		(17,488	)		(2,748	)		(1,257	)		(10,314	)		(31,807	)
Interest expense		–			–			–			(834	)		(834	)
Change in fair value of warrants		–			–			–			(208	)		(208	)
Other income		–			–			–			523			523
Loss before income taxes	$	4,607		$	(355	)	$	(350	)	$	(10,833	)	$	(6,931	)

For the year ended December 31, 2019:

	DTC			Wholesale			Other non- reportable		Corporate non-segment			Total
Net revenue	$	29,628		$	6,819		$	–	$	–		$	36,447
Cost of revenues		(17,450	)		(4,377	)		–		–			(21,827	)
Gross profit		12,178			2,442			–					14,620
Other adjustments⁽¹⁾		–			–			–		–			–
Adjusted Contribution Margin		12,178			2,442			–		–			14,620
Add back: Other adjustments		–			–			–		–			–
Operating expenses		(9,192	)		(1,121	)		–		(11,399	)		(21,712	)
Interest expense		–			–			–		(1,364	)		(1,364	)
Change in fair value of warrants		–			–			–		(137	)		(137	)
Other income		–			–			–		559			559
Loss before income taxes	$	2,986		$	1,321		$	–	$	(12,341	)	$	(8,034	)

(1)

Represents cash received for unused credits from monthly subscriptions related to the Company’s Insider Access Program, less estimated product costs attributable to unused monthly credits. The Company’s Insider Access Program was established at the end of fiscal year 2019.

15. BASIC AND DILUTED NET LOSS PER SHARE

Basic net loss per share is based upon the weighted average number of common shares outstanding. Dilution is computed by applying the treasury stock method. Under this method, common stock options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of convertible securities is antidilutive. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. The convertible preferred stock are considered participating securities; however, they were excluded from the computation of basic loss per share in the periods of net loss as there is no contractual obligation or terms for the holders to share in the losses of the Company. See Note 13 for additional information regarding the rights of preferred stockholders.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

The following securities were excluded due to their anti-dilutive effect on the loss per common share recorded in each of the years:

	Year Ended December 31,
	2020		2019
Stock options		18,823,620		17,592,998
Convertible preferred stock		58,144,584		51,212,274
Warrants to purchase convertible preferred stock		943,969		943,969
Total		77,912,173		69,749,241

16. INCOME TAXES

The components of income tax expense are as follows for the years ended December 31, 2020 and 2019 (in thousands):

	Year Ended December 31,
	2020		2019
Current:
Federal	$	—	$	—
State		27		15
Total current		27		15
Total provision for income taxes	$	27	$	15

The Company establishes a valuation allowance when it is more likely than not that the Company’s recorded net deferred tax asset will not be realized. In determining whether a valuation allowance is required, the Company takes into account all positive and negative evidence with regard to the utilization of a deferred tax asset. As of December 31, 2020 and 2019, the valuation allowance for deferred tax assets totaled approximately $15.4 million and $14.2 million, respectively.

The Company plans to continue to provide a full valuation allowance on future tax benefits until it can sustain an appropriate level of profitability and until such time, the Company would not expect to recognize any significant tax benefits in its future results of operations.

As of December 31, 2020, the Company has net operating loss carryforwards for federal and state income tax purposes of approximately $47.9 million and $46.5 million, respectively. As of December 31, 2019, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $42.9 million and $44.0 million, respectively. The net operating loss carryforwards begin to expire in 2022. The utilization of net operating loss carryforwards may be limited under the provisions of Internal Revenue Code Section 382 and similar state provisions due to a change in ownership.

The Company has not recognized any liability for unrecognized tax benefits. The Company expects any resolution of unrecognized tax benefits, if created, would occur while the full valuation allowance of deferred tax assets is maintained; therefore, the Company does not expect to have any unrecognized tax benefits that, if recognized, would affect the effective tax rate.

The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2020, the Company had no accrual for the payment of interest or penalties. For Federal purposes, the year’s subject to examination are 2017 through 2020. For state purposes, the year’s subject to examination are 2016 through 2020. In addition, the utilization of net loss carryforwards is subject to Internal Revenue Service review for the periods in which those net losses were incurred. The Company is not under audit by any taxing jurisdictions at this time. The Company does not anticipate any significant decreases in unrecognized tax benefits within the next twelve months.

WINC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

17. SUBSEQUENT EVENTS

Employee Promissory Notes

Between February and April 2021, the Company entered into full recourse promissory notes with its CEO, General Counsel, President, and CFO related to stock option exercises for 3,982,233 shares, 683,617 shares, 2,334,625 shares, and 299,718 shares, respectively. The aggregate principal balance of the promissory notes was $1.1 million. The promissory notes are prepayable at any time at the option of the employee. Interest accrues at 2.25% per annum, compounding annually, and is payable at the earlier of: (i) the date of any sale, transfer or other disposition of all or any portion of the shares, (ii) five years from the date of the promissory note, or (iii) the latest date repayment must be made in order to prevent a violation of Section 13(k) of the Securities Exchange Act of 1934.

PPP Loan Forgiveness

Under the CARES Act, PPP loan recipients were able to apply for forgiveness of a portion or the loan in its entirety. In March 2021, the Company’s PPP loan of $1.4 million was forgiven in its entirety prior to any interest payments or repayments of principal. Accordingly, upon forgiveness of the PPP loan in March 2021, the Company recognized other income of $1.4 million.

Series F Preferred Stock Issuance

In April 2021, the Company raised net proceeds of $9.1 million through the sale of 5,714,286 shares of Series F Preferred Stock.

The Company has evaluated subsequent events through May 7, 2021, the date the consolidated financial statements were available to be issued and concluded that no other events have occurred subsequent to December 31, 2020 that require consideration as adjustments to or disclosure in its consolidated financial statements, other than those disclosed above.

Item 8. Exhibits

The documents listed in the Exhibit Index of this report are incorporated by reference or are filed with this report, in each case as indicated below.

2.1	Ninth Amended and Restated Certificate of Incorporation
2.2	Bylaws (1)
2.3	Second Amendment to Amended and Restated Bylaws (2)
3.1	Form of Seventh Amended and Restated Voting Agreement
3.2	Form of Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement
3.3	Form of Seventh Amended and Restated Investors’ Rights Agreement
3.4	Form of Series F Warrant
3.5	Series F Preferred Stock and Warrant Purchase Agreement
4.1	Form of subscription agreement (3)
6.1	Loan and Security Agreement with Multiplier Capital (4)
6.2	Pay-off letter from Western Alliance Bank (5)
6.3	Broker-Dealer Agreement with Dalmore Group, LLC (6)
6.4	Credit Agreement dated December 15, 2020 with Pacific Mercantile Bank
6.5	Stock Pledge Agreement and Secured Promissory Note of Geoffrey McFarlane
6.6	Stock Pledge Agreement and Secured Promissory Note of Brian Smith
6.7	Stock Pledge Agreement and Secured Promissory Note of Matthew Thelen
6.8	Stock Pledge Agreement and Secured Promissory Note of Carol Brault
8.1	Escrow Services Agreement with Prime Trust, LLC (7)

(1) Filed as an exhibit to the Winc, Inc. Regulation A Offering Statement on Form 1-A (Commission File No. 024-11050) and incorporated herein by reference. Available at, https://www.sec.gov/Archives/edgar/data/1782627/000114420419036465/tv525510_ex2-3.htm

(2) Filed as an exhibit to the Winc, Inc. Current Report on Form 1-U dated December 18, 2019 and incorporated herein by reference. Available at, https://www.sec.gov/Archives/edgar/data/1782627/000110465919073676/tm1926345d1_ex2-3.htm

(3) Filed as an exhibit to the Winc, Inc. Regulation A Offering Statement on Form 1-A (Commission File No. 024-11266) and incorporated herein by reference. Available at, https://www.sec.gov/Archives/edgar/data/1782627/000110465920082696/tm2024262d1_ex4.htm

(4) Filed as an exhibit to the Winc, Inc. Regulation A Offering Statement on Form 1-A (Commission File No. 024-11050) and incorporated herein by reference. Available at, https://www.sec.gov/Archives/edgar/data/1782627/000114420419036465/tv525510_ex6-2.htm

(5) Filed as an exhibit to the Winc, Inc. Regulation A Offering Statement on Form 1-A (Commission File No. 024-11266) and incorporated herein by reference. Available at, https://www.sec.gov/Archives/edgar/data/1782627/000110465920082696/tm2024262d1_ex6-7.htm

(6) Filed as an exhibit to the Winc, Inc. Regulation A Offering Statement on Form 1-A (Commission File No. 024-11266) and incorporated herein by reference. Available at, https://www.sec.gov/Archives/edgar/data/1782627/000110465920082696/tm2024262d1_ex6-5.htm

(7) Filed as an exhibit to the Winc, Inc. Regulation A Offering Statement on Form 1-A (Commission File No. 024-11266) and incorporated herein by reference. Available at, https://www.sec.gov/Archives/edgar/data/1782627/000110465920082696/tm2024262d1_ex8.htm

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountain View, California, on May 11, 2021.

	Winc, Inc.

	/s/ Geoffrey McFarlane
	By Geoffrey McFarlane, Chief Executive Officer
	Date: May 11, 2021

Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the date indicated.

/s/ Geoffrey McFarlane
By Geoffrey McFarlane, Chief Executive Officer and Director
Date: May 11, 2021

/s/ Brian Smith
By Brian Smith, President and Chairperson
Date: May 11, 2021

/s/ Carol Brault
By Carol Brault, Chief Financial Officer and Principal Accounting Officer
Date: May 11, 2021

/s/ Laura Joukovski
By Laura Joukovski, Director
Date: May 11, 2021

/s/ Kent Bennett
By Kent Bennett, Director
Date: May 11, 2021

/s/ Xiangwei Weng
By Xiangwei Weng, Director
Date: May 11, 2021

/s/ Shuhei Ohashi
By Shuhei Ohashi, Director
Date: May 11, 2021

/s/ Patrick DeLong
By Patrick DeLong, Director
Date: May 11, 2021

/s/ Alesia Pinney
By Alesia Pinney, Director
Date: May 11, 2021

Exhibit 2.1

NINTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WINC, INC.

(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)

WINC, INC., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),

DOES HEREBY CERTIFY:

A. That the name of the corporation is Winc, Inc. The corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on August 11, 2011 under the name “Club W, Inc.” An Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on March 20, 2012. A Second Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on January 30, 2013 and a Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on July 10, 2013. A Third Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on April 25, 2014. A Fourth Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on June 11, 2015 and a Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on September 7, 2016. A Fifth Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on July 14, 2017. A Sixth Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on April 23, 2019. A Seventh Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on December 5, 2019. An Eighth Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on December 8, 2020.

B. All amendments to the corporation’s Certificate of Incorporation reflected herein have been duly authorized and adopted by the corporation’s board of directors and stockholders in accordance with the provisions of Sections 242 and 245 of the General Corporation Law.

C. The corporation’s Certificate of Incorporation, as amended to date, is hereby amended and restated in its entirety to read as follows:

Article I

The name of the corporation is Winc, Inc. (the “Corporation”).

-1-

Article II

The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801, New Castle County, and the name of its registered agent at such address National Registered Agents, Inc.

Article III

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law.

Article IV

The Corporation is authorized to issue two classes of stock designated “Common Stock” and “Preferred Stock.” The Corporation shall have authority to issue 115,490,000 shares of Common Stock, par value $0.0001 per share, and 80,083,971 shares of Preferred Stock, par value $0.0001 per share. 13,296,372 shares of the Preferred Stock are designated as “Series Seed Preferred Stock”; 8,276,928 shares of the Preferred Stock are designated as “Series A Preferred Stock”; 13,381,711 shares of the Preferred Stock are designated as “Series B Preferred Stock”; 7,736,552 shares of the Preferred Stock are designated as “Series B-1 Preferred Stock”; 8,209,586 shares of the Preferred Stock are designated as “Series C Preferred Stock”; 10,611,205 shares of the Preferred Stock are designated as “Series D Preferred Stock”; 10,000,000 shares of the Preferred Stock are designated as “Series E Preferred Stock”; and 8,571,428 shares of the Preferred Stock are designated as “Series F Preferred Stock.”

The rights, preferences and privileges of the Common Stock and Preferred Stock are as set forth in Article V and Article VI, respectively. The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.

Article V

1. General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.

2. Voting. The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings); 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 the Certificate of Incorporation 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 the Certificate of Incorporation 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 the Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.

-2-

Article VI

Unless otherwise indicated, references to “sections” or “subsections” in this Article VI refer to sections and subsections of this Article VI.

1. Dividends. The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in the Certificate of Incorporation) the holders of the Preferred Stock then outstanding shall simultaneously receive a dividend on each outstanding share of Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the applicable Original Issue Price (as defined below) of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the applicable Original Issue Price (as defined below); provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Preferred Stock pursuant to this Section 1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Preferred Stock dividend. The “Series F Original Issue Price” shall mean $1.75 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series F Preferred Stock. The “Series E Original Issue Price” shall mean $1.75 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series E Preferred Stock. The “Series D Original Issue Price” shall mean $1.4136 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series D Preferred Stock. The “Series C Original Issue Price” shall mean $1.218088 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock. The “Series B-1 Original Issue Price” shall mean $1.31 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B-1 Preferred Stock. The “Series B Original Issue Price” shall mean $1.309997 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B Preferred Stock. “Series A Original Issue Price” shall mean $1.2089 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock. “Series Seed Original Issue Price” shall mean $0.2740 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series Seed Preferred Stock. “Original Issue Price” means, as applicable, the Series F Original Issue Price, the Series E Original Issue Price, the Series D Original Issue Price, the Series C Original Issue Price, the Series B-1 Original Issue Price, the Series B Original Issue Price, the Series A Original Issue Price, or the Series Seed Original Issue Price.

-3-

2. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

2.1 Preferential Payments to Holders of Preferred Stock.

2.1.1 In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the holders of shares of Series F Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, Series B-1 Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Series Seed Preferred Stock or Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Series F Original Issue Price, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series F Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this sentence to the Series F Preferred Stock is hereinafter referred to as the “Series F Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series F Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1.1, the holders of Series F Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

2.1.2 In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment of the amounts required under Subsection 2.1.1, the holders of shares of Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, and Series B-1 Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Series B Preferred Stock, Series A Preferred Stock, Series Seed Preferred Stock or Common Stock by reason of their ownership thereof, and on pari passu basis, an amount per share equal to: (A) with respect to the Series E Preferred Stock and Series D Preferred Stock, the greater of (i) the applicable Original Issue Price for the corresponding series of such Preferred Stock, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, and Series B-1 Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event; and (B) with respect to the Series C Preferred Stock and the Series B-1 Preferred Stock, the greater of (i) one and one-half (1.5) times the applicable Original Issue Price for the corresponding series of such Preferred Stock, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series E Preferred Stock Series D Preferred Stock, Series C Preferred Stock and Series B-1 Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this sentence to the applicable series of Preferred Stock is hereinafter referred to as the “Senior Preferred Series Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, and Series B-1 Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1.3, the holders of shares of such series of Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

-4-

2.1.3 In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment of the amounts required under Subsection 2.1.1 and Subsection 2.1.3, the holders of shares of Series B Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, and on pari passu basis, an amount per share equal to the greater of (i) one times the applicable Original Issue Price for the corresponding series of such Preferred Stock, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series Seed Preferred Stock, Series A Preferred Stock and Series B Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this sentence to the applicable series of Preferred Stock is hereinafter referred to as the “Junior Preferred Series Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series Seed Preferred Stock, Series A Preferred Stock, and Series B Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1.3, the holders of shares of such series of Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

2.2 Payments to Holders of Common Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders of shares of Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

-5-

2.3 Deemed Liquidation Events.

2.3.1 Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of at least a majority of the outstanding shares of Preferred Stock, voting on an as-converted to Common Stock basis, elect otherwise by written notice sent to the Corporation at least ten (10) days prior to the effective date of any such event:

(a) a merger or consolidation in which

(i)

the Corporation is a constituent party, or

(ii)

a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,

except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation 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 fifty (50%) percent, by voting power, 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; or

(b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation 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 Corporation.

2.3.2 Effecting a Deemed Liquidation Event.

(a) The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(i) unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2.

-6-

(b) In the event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii) or 2.3.1(b), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the ninetieth (90^th) 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; (ii) to require the redemption of such shares of Preferred Stock, and (iii) if the holders of at least a majority of the then outstanding shares of Preferred Stock so request in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation 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 of Directors of the Corporation), together with any other assets of the Corporation 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 fiftieth (150^th) day after such Deemed Liquidation Event, to redeem all outstanding shares of Preferred Stock at a price per share equal to the applicable Junior Preferred Series Liquidation Amount with respect to shares of Series Seed Preferred Stock, Series A Preferred Stock, and Series B Preferred Stock, at a price per share equal to the applicable Senior Preferred Series Liquidation Amount with respect to shares of Series B-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock, and at a price per share equal to the Series F Liquidation Amount with respect to shares of Series F Preferred Stock, in accordance with the schedule of payments described in Subsection 2.1. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, the Corporation shall ratably redeem each holder’s shares of Preferred Stock to the fullest extent of such Available Proceeds, and shall redeem the remaining shares as soon as it may lawfully do so under Delaware law governing distributions to stockholders. Prior to the distribution or redemption provided for in this Subsection 2.3.2(b), the Corporation 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.

2.3.3 Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or other entity. The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation.

2.3.4 Allocation of Escrow and Contingent Consideration. In the event of a Deemed Liquidation Event pursuant to Subsection 2.3.1(a)(i), if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction of contingencies (the “Additional Consideration”), the Merger Agreement shall provide that (a) the portion of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 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 Corporation upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Subsection 2.3.4, consideration placed into escrow or retained as holdback to be available for satisfaction of indemnification or similar obligations in connection with such Deemed Liquidation Event shall be deemed to be Additional Consideration.

-7-

3. Voting.

3.1 General. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Certificate of Incorporation, holders of Preferred Stock shall vote together with the holders of Common Stock as a single class.

3.2 Election of Directors. The holders of record of the shares of Series C Preferred Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Series C Director”). The holders of record of the shares of Series B Preferred Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Series B Director”). The holders of record of the shares of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Series A Director”). The holders of record of the shares of Series Seed Preferred Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the “Series Seed Director” and, together with the Series C Director, the Series B Director, and the Series A Director, the “Preferred Directors”). The holders of record of the shares of Common Stock, exclusively and as a separate class, shall be entitled to elect two (2) directors of the Corporation. Any director elected as provided in the preceding sentence may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock 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. If the holders of shares of the applicable series of Preferred Stock or Common Stock, as the case may be, fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class, pursuant to the first sentence of this Subsection 3.2, then any directorship not so filled shall remain vacant until such time as the holders of the applicable series of Preferred Stock or Common Stock, as the case may be, elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are entitled to elect a person to fill such directorship, voting exclusively and as a separate class. The holders of record of the shares of Common Stock and of any other class or series of voting stock (including the Preferred Stock), exclusively and voting together as a single class, shall be entitled to elect the balance of the total number of directors of the Corporation. 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 shall constitute a quorum for the purpose of electing such director. Except as otherwise provided in this Subsection 3.2, a vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or written consent in lieu of a meeting of the holders of such class or series or by any remaining director or directors elected by the holders of such class or series pursuant to this Subsection 3.2.

3.3 Protective Provisions – Preferred Stock. At any time when shares of Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, 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:

-8-

3.3.1 liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger or consolidation or any other Deemed Liquidation Event, or consent to any of the foregoing;

3.3.2 amend, alter or repeal any provision of the Certificate of Incorporation or the bylaws of the Corporation;

3.3.3 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 Corporation other than (i) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (ii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation 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 terms otherwise approved by the Corporation’s board of directors, including the affirmative vote or consent of at least two Preferred Directors;

3.3.4 create, or authorize the creation of, or issue, or authorize the issuance of any debt security or other indebtedness, or permit any subsidiary to take any such action with respect to any debt security or other indebtedness, if the aggregate indebtedness of the Corporation and its subsidiaries for borrowed money following such action would exceed $250,000 other than trade incurred in the ordinary course of business, unless expressly approved by the board of directors, including the affirmative vote or consent of at least two Preferred Directors;

3.3.5 increase or decrease (other than for decreases resulting from conversion of the Preferred Stock) the authorized number of shares of Preferred Stock or any other class or series of capital stock;

3.3.6 authorize or create (by reclassification, merger or otherwise) any new class or series of equity security (including any security convertible into or exercisable for any equity security) having rights, preferences or privileges with respect to dividends, or payments upon liquidation senior to or on a parity with the Series F Preferred Stock or having voting rights other than those granted to the Preferred Stock generally;

3.3.7 increase the number of shares authorized for issuance under any existing stock, option, or equity incentive plan or create any new stock, option, or equity incentive plan;

3.3.8 increase or decrease the authorized number of directors constituting the Board of Directors;

-9-

3.3.9 issue any equity interest in any direct or indirect subsidiary of the Corporation (other than to the Corporation or one of its wholly-owned direct or indirect subsidiaries); or

3.3.10 take any action with respect to any direct or indirect subsidiary of the Corporation, that if taken by the Corporation, would require approval pursuant to this Section 3.3.

4. Optional Conversion.

The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

4.1 Right to Convert.

4.1.1 Conversion Ratio. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the applicable Original Issue Price by the applicable Conversion Price (as defined below) in effect at the time of conversion. The “Series F Conversion Price” shall initially be equal to $1.75. The “Series E Conversion Price” shall initially be equal to $1.75. The “Series D Conversion Price” shall initially be equal to $1.4136. The “Series C Conversion Price” shall initially be equal to $1.218088. The “Series B-1 Conversion Price” shall initially be equal to $1.31. The “Series B Conversion Price” shall initially be equal to $1.309997. The “Series A Conversion Price” shall initially be equal to $1.2089. The “Series Seed Conversion Price” shall initially be equal to $0.2740. The applicable “Conversion Price” shall be the Series A Conversion Price with respect to the Series A Preferred Stock, the Series B Conversion Price with respect to the Series B Preferred Stock, the Series B-1 Conversion Price with respect to the Series B-1 Preferred Stock, the Series C Conversion Price with respect to the Series C Preferred Stock, the Series D Conversion Price with respect to the Series D Preferred Stock, the Series E Conversion Price with respect to the Series E Preferred Stock, the Series F Conversion Price with respect to the Series F Preferred Stock, and the Series Seed Conversion Price with respect to the Series Seed Preferred Stock. Such initial Conversion Price, and the rate at which shares of Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

4.1.2 Termination of Conversion Rights. In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock.

4.2 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Corporation. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

-10-

4.3 Mechanics of Conversion.

4.3.1 Notice of Conversion. In order for a holder of Preferred Stock to voluntarily convert shares of Preferred Stock into shares of Common Stock, such holder shall (a) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent) that such holder elects to convert all or any number of such holder’s shares of Preferred Stock and, if applicable, any event on which such conversion is contingent and (b), if such holder’s shares are certificated, surrender the certificate or certificates for such shares of Preferred Stock (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 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), at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent). Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such notice and, if applicable, certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time (i) issue and deliver to such holder of Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the shares of Preferred Stock converted.

4.3.2 Reservation of Shares. The Corporation shall at all times when the Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation. Before taking any action which would cause an adjustment reducing the applicable Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the applicable series of Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted applicable Conversion Price.

-11-

4.3.3 Effect of Conversion. All shares of Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Subsection 4.2 and to receive payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted 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 Preferred Stock accordingly.

4.3.4 No Further Adjustment. Upon any such conversion, no adjustment to the applicable Conversion Price shall be made for any declared but unpaid dividends on the Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

4.3.5 Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

4.4 Adjustments to Applicable Conversion Price for Diluting Issues.

4.4.1 Special Definitions. For purposes of this Article VI, the following definitions shall apply:

(a) “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

(b) “Series F Original Issue Date” shall mean the date on which the first share of Series F Preferred Stock was issued.

(c) “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

-12-

(d) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Subsection 4.4.3 below, deemed to be issued) by the Corporation after the Series F Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):

(i)

shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Preferred Stock;

(ii)

shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Subsection 4.5, 4.6, 4.7 or 4.8;

(iii)

shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Corporation;

(iv)

shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security;

(v)

shares of Common Stock, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors of the Corporation;

(vi)

shares of Common Stock, Options or Convertible Securities issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors of the Corporation, including the affirmative vote or consent of at least two Preferred Directors;

-13-

(vii)

shares of Common Stock, Options or Convertible Securities issued pursuant to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided, that such issuances are approved by the Board of Directors of the Corporation, including the affirmative vote or consent of at least two Preferred Directors; or

(viii)

shares of Common Stock, Options or Convertible Securities issued in connection with collaboration, development, marketing or other similar agreements or strategic partnerships approved by the Board of Directors of the Corporation, including the affirmative vote or consent of at least two Preferred Directors.

4.4.2 No Adjustment of Conversion Price. No adjustment in the Conversion Price of (a) the Series Seed Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series Seed Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock; (b) the Series A Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series A Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock; (c) the Series B Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series B Preferred Stock (including the affirmative consent of each of the Lead Investors, as defined in the Series B Preferred Stock Purchase Agreement dated June 11, 2015, by and among the Corporation and the other parties thereto) agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock; (d) the Series B-1 Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series B-1 Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock; (e) the Series C Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series C Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock; (f) the Series D Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series D Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock; (g) the Series E Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series E Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock; and (h) the Series F Preferred Stock shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series F Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

-14-

4.4.3 Deemed Issue of Additional Shares of Common Stock.

(a) If the Corporation at any time or from time to time after the Series F Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the applicable Conversion Price pursuant to the terms of Subsection 4.4.4, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the applicable Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such applicable Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the applicable Conversion Price to an amount which exceeds the lower of (i) the applicable Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the applicable Conversion Price that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

-15-

(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the applicable Conversion Price pursuant to the terms of Subsection 4.4.4 (either because the consideration per share (determined pursuant to Subsection 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the applicable Conversion Price then in effect, or because such Option or Convertible Security was issued before the Series F Original Issue Date), are revised after the Series F Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Subsection 4.4.3(a)) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

(d) Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the applicable Conversion Price pursuant to the terms of Subsection 4.4.4, the applicable Conversion Price shall be readjusted to such applicable Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.

(e) If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the applicable Conversion Price provided for in this Subsection 4.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Subsection 4.4.3). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the applicable Conversion Price that would result under the terms of this Subsection 4.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the applicable Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

-16-

4.4.4 Adjustment of Applicable Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall at any time after the Series F Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3), without consideration or for a consideration per share less than the applicable Conversion Price in effect immediately prior to such issue, then the applicable Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

CP₂ = CP₁* (A + B) ÷ (A + C).

For purposes of the foregoing formula, the following definitions shall apply:

(a) “CP₂” shall mean the applicable Conversion Price in effect immediately after such issue of Additional Shares of Common Stock;

(b) “CP₁” shall mean the applicable Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock;

(c) “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

(d) “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at a price per share equal to CP₁ (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP₁); and

(e) “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.

4.4.5 Determination of Consideration. For purposes of this Subsection 4.4, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

(a) Cash and Property: Such consideration shall:

(i)

insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

(ii)

insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors of the Corporation; and

-17-

(iii)

in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Corporation.

(b) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing:

(i)

The total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

(ii)

the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

-18-

4.4.6 Multiple Closing Dates. In the event the Corporation 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 Subsection 4.4.4, and such issuance dates occur within a period of no more than ninety (90) days from the first such issuance to the final such issuance, 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).

4.5 Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Series F Original Issue Date effect a subdivision of the outstanding Common Stock, the applicable Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Series F Original Issue Date combine the outstanding shares of Common Stock, the applicable Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

4.6 Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Series F Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the applicable Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the applicable Conversion Price then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

Notwithstanding the foregoing (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the applicable Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the applicable Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of the applicable series of Preferred Stock had been converted into Common Stock on the date of such event.

-19-

4.7 Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Series F Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.

4.8 Adjustment for Merger or Reorganization, etc. Subject to the provisions of Subsection 2.3, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 4.4, 4.6 or 4.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the applicable Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Preferred Stock.

4.9 Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the applicable Conversion Price pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the applicable Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Preferred Stock.

-20-

4.10 Notice of Record Date. In the event:

(a) the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(b) of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

5. Mandatory Conversion.

5.1 Trigger Events. Upon either (a) the closing of the sale of shares of Common Stock to the public at a price of at least $2.00 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $20,000,000 of gross proceeds to the Corporation or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least a majority of the then outstanding shares of Preferred Stock (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), then (i) all outstanding shares of Preferred Stock (including, without limitation, Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series Seed Preferred Stock) shall automatically be converted into shares of Common Stock, at the then effective conversion rate as calculated pursuant to Subsection 4.1.1 and (ii) such shares may not be reissued by the Corporation.

-21-

5.2 Procedural Requirements. All holders of record of shares of Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 5. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Preferred Stock in certificated form shall surrender his, her or its 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 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 Preferred Stock converted pursuant to Subsection 5.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Subsection 5.2. As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (b) pay cash as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Preferred Stock converted. Such converted Preferred Stock 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 Preferred Stock accordingly.

6. Redeemed or Otherwise Acquired Shares. Any shares of Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption. Shares of Series Seed Preferred Stock shall not be redeemable at the option of the holder.

-22-

7. Waiver. (a) Any of the rights, powers, preferences, notice rights and other terms of the Preferred Stock as a class 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 at least a majority of the shares of Preferred Stock then outstanding, voting together as a single class, (b) any of the rights, powers, preferences, notice rights and other terms of the Series A Preferred Stock as a separate series set forth herein may be waived on behalf of all holders of Series A Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series A Preferred Stock then outstanding, voting together as a separate series, (c) any of the rights, powers, preferences, notice rights and other terms of the Series B Preferred Stock as a separate series set forth herein may be waived on behalf of all holders of Series B Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series B Preferred Stock then outstanding (including the affirmative vote or consent of each of the Lead Investors), voting together as a separate series, (d) any of the rights, powers, preferences, notice rights and other terms of the Series B-1 Preferred Stock as a separate series set forth herein may be waived on behalf of all holders of Series B-1 Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series B-1 Preferred Stock then outstanding, voting together as a separate series, (e) any of the rights, powers, preferences, notice rights and other terms of the Series C Preferred Stock as a separate series set forth herein may be waived on behalf of all holders of Series C Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series C Preferred Stock then outstanding, voting together as a separate series, (f) any of the rights, powers, preferences, notice rights and other terms of the Series D Preferred Stock as a separate series set forth herein may be waived on behalf of all holders of Series D Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series D Preferred Stock then outstanding, voting together as a separate series, (g) any of the rights, powers, preferences, notice rights and other terms of the Series E Preferred Stock as a separate series set forth herein may be waived on behalf of all holders of Series E Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series E Preferred Stock then outstanding, voting together as a separate series, (h) any of the rights, powers, preferences, notice rights and other terms of the Series F Preferred Stock as a separate series set forth herein may be waived on behalf of all holders of Series F Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series F Preferred Stock then outstanding, voting together as a separate series, and (i) any of the rights, powers, preferences, notice rights and other terms of the Series Seed Preferred Stock as a separate series set forth herein may be waived on behalf of all holders of Series Seed Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series Seed Preferred Stock then outstanding, voting together as a separate series.

8. Notices. Any notice required or permitted by the provisions of this Article VI to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.

Article VII

Subject to any additional vote required by the Certificate of Incorporation or the bylaws of the Corporation, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the bylaws of the Corporation.

Article VIII

Subject to any additional vote required by the Certificate of Incorporation, the number of directors of the Corporation shall be determined in the manner set forth in the bylaws of the Corporation.

-23-

Article IX

Elections of directors need not be by written ballot unless the bylaws of the Corporation shall so provide.

Article X

Meetings of stockholders may be held within or without the State of Delaware, as the bylaws of the Corporation may provide. The books of the Corporation may be kept 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 of the Corporation.

Article XI

To the fullest extent permitted by law, 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. If the General Corporation Law or any other law of the State of Delaware is amended after approval by the stockholders of this Article XI to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended. Any repeal or modification of the foregoing provisions of this Article XI by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

Article XII

To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which the General Corporation Law permits the Corporation to provide indemnification) through bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law. Any amendment, repeal or modification of the foregoing provisions of this Article XII shall not adversely affect any right or protection of any director, officer or other agent of the Corporation existing at the time of such amendment, repeal or modification.

Article XIII

The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation 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 (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is an employee of the Corporation 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 Corporation.

-24-

Article XIV

For purposes of Section 500 of the California Corporations Code (to the extent applicable), in connection with any repurchase of shares of Common Stock permitted under this Ninth Amended and Restated Certificate of Incorporation from employees, officers, directors or consultants of the Corporation in connection with a termination of employment or services pursuant to agreements or arrangements approved by the Board of Directors (in addition to any other consent required under this Ninth Amended and Restated Certificate of Incorporation), such repurchase may be made without regard to any “preferential dividends arrears amount” or “preferential rights amount” (as those terms are defined in Section 500 of the California Corporations Code). Accordingly, for purposes of making any calculation under California Corporations Code Section 500 in connection with such repurchase, the amount of any “preferential dividends arrears amount” or “preferential rights amount” (as those terms are defined therein) shall be deemed to be zero (0).

* * *

-25-

D. That the foregoing amendment and restatement was approved by the holders of the requisite number of shares of the Corporation in accordance with Section 228 of the General Corporation Law.

E. That this Ninth Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of the Corporation’s Eighth Amended and Restated Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.

IN WITNESS WHEREOF, this Ninth Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of the Corporation on April 1, 2021.

	By:	/s/ Geoffrey McFarlane
		Geoffrey McFarlane,
		Chief Executive Officer

Signature Page to Ninth Amended and Restated Certificate of Incorporation

Exhibit 3.1

Winc, Inc.

SEVENTH amended and restated

VOTING AGREEMENT

Effective Date: February [●], 2021

TABLE OF CONTENTS

Page

TABLE OF CONTENTS		i
1.	Voting Provisions Regarding Board of Directors	2
	1.1 Size of the Board	2
	1.2 Board Composition	2
	1.3 Failure to Designate a Board Member	3
	1.4 Removal of Board Members	4
	1.5 No Liability for Election of Recommended Directors	4
	1.6 No “Bad Actor” Designees	4
2.	Vote to Increase Authorized Common Stock; Founder Voting	5
3.	Drag-Along Right	5
	3.1 Definitions	5
	3.2 Actions to be Taken	5
	3.3 Exceptions	6
	3.4 Restrictions on Sales of Control of the Company	8
4.	Remedies	9
	4.1 Covenants of the Company	9
	4.2 Irrevocable Proxy and Power of Attorney	9
	4.3 Specific Enforcement	9
	4.4 Remedies Cumulative	10
5.	“Bad Actor” Matters	10
	5.1 Definitions	10
	5.2 Representations	10
	5.3 Covenants	10
6.	Term	11
7.	Miscellaneous	11
	7.1 Additional Parties	11
	7.2 Transfers	12
	7.3 Successors and Assigns	12
	7.4 Governing Law	12
	7.5 Counterparts	12
	7.6 Titles and Subtitles	12
	7.7 Notices	12
	7.8 Consent Required to Amend, Terminate or Waive	13
	7.9 Delays or Omissions	14
	7.10 Severability	14
	7.11 Entire Agreement	14
	7.12 Share Certificate Legend	14
	7.13 Stock Splits, Stock Dividends, etc.	15

-i-

	7.14 Manner of Voting	15
	7.15 Further Assurances	15
	7.16 Dispute Resolution	15
	7.17 Waiver of Jury Trial.	15
	7.18 Costs of Enforcement	16
	7.19 Aggregation of Stock	16
	7.20 Spousal Consent	16

Schedules and Exhibits

Schedule A	Investors

Schedule B	Key Holders

Exhibit A	Adoption Agreement

Exhibit B	Consent of Spouse

-ii-

SEVENTH AMENDED AND RESTATED
VOTING AGREEMENT

THIS SEVENTH AMENDED AND RESTATED VOTING AGREEMENT (this “Agreement”), is made and entered into as of February [●], 2021, by and among Winc, Inc., a Delaware corporation (the “Company”), each holder of the Company’s Series F Preferred Stock, $0.0001 par value per share (“Series F Preferred Stock”), Series E Preferred Stock, $0.0001 par value per share (“Series E Preferred Stock”), Series D Preferred Stock, $0.0001 par value per share (“Series D Preferred Stock”), Series C Preferred Stock, $0.0001 par value per share (“Series C Preferred Stock”), Series B-1 Preferred Stock, $0.0001 par value per share (“Series B-1 Preferred Stock”), Series B Preferred Stock, $0.0001 par value per share (“Series B Preferred Stock”), Series A Preferred Stock, $0.0001 par value per share (“Series A Preferred Stock”) and Series Seed Preferred Stock, $0.0001 par value per share (“Series Seed Preferred Stock” and, collectively with the Series F Preferred Stock, Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, Series B-1 Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock, the “Preferred Stock”) listed on Schedule A (together with any subsequent investors, or transferees, who become parties hereto as “Investors” pursuant to Subsections 7.1(a) or 7.2 below, the “Investors”), and those certain stockholders of the Company and holders of options to acquire shares of the capital stock of the Company listed on Schedule B (together with any subsequent stockholders or option holders, or any transferees, who become parties hereto as “Key Holders” pursuant to Subsections 7.1(b) or 7.2 below, the “Key Holders,” and together collectively with the Investors, the “Stockholders”).

WHEREAS, Certain of the Investors (the “Existing Investors”) and certain of the Key Holders are already parties to the Sixth Amended and Restated Voting Agreement dated as of December 8, 2020, by and among the Company and the parties thereto (the “Prior Agreement”);

WHEREAS, the Key Holders, the Existing Investors and the Company desire to induce certain of the Investors to purchase shares of Series F Preferred Stock of the Company and warrants to purchase shares of Series F Preferred Stock, pursuant to a Series F Preferred Stock and Warrant Purchase Agreement (the “Purchase Agreement”) by amending and restating the Prior Agreement to provide the Investors with the rights and privileges as set forth herein;

WHEREAS, the Ninth Amended and Restated Certificate of Incorporation of the Company (the “Restated Certificate”) provides that (a) the holders of record of the shares of the Series C Preferred Stock, exclusively and as a separate class, shall be entitled to elect one director of the Company (the “Series C Director”); (b) the holders of record of the shares of the Series B Preferred Stock, exclusively and as a separate class, shall be entitled to elect one director of the Company (the “Series B Director”); (c) the holders of record of the shares of the Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect one director of the Company (the “Series A Director”); (d) the holders of record of the shares of Series Seed Preferred Stock shall be entitled to elect one director of the Company (the “Series Seed Director”); (e) the holders of record of the shares of common stock of the Company, $0.0001 par value (“Common Stock”), exclusively and as a separate class, shall be entitled to elect two directors of the Company (the “Common Directors”); and (f) the holders of record of the shares of Common Stock and of any other class or series of voting stock (including Preferred Stock), exclusively and voting together as a single class, shall be entitled to elect the balance of the total number of directors of the Company; and

-1-

WHEREAS, the parties also desire to enter into this Agreement to set forth their agreements and understandings with respect to how shares of the Company’s capital stock held by them will be voted on, or tendered in connection with, an acquisition of the Company and an increase in the number of shares of Common Stock required to provide for the conversion of the Company’s Preferred Stock.

NOW, THEREFORE, the parties agree as follows:

1. Voting Provisions Regarding Board of Directors.

1.1 Size of the Board. Each Stockholder agrees to vote, or cause to be voted, all Shares (as defined below) owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that the size of the Board shall be set and remain at nine (9) directors and may be increased only with the written consent of Investors holding at least a majority of the shares of Common Stock issuable upon conversion of the then outstanding shares Preferred Stock. For purposes of this Agreement, the term “Shares” shall mean and include any securities of the Company the holders of which are entitled to vote for members of the Board, including without limitation, all shares of Common Stock and Preferred Stock, by whatever name called, now owned or subsequently acquired by a Stockholder, however acquired, whether through stock splits, stock dividends, reclassifications, recapitalizations, similar events or otherwise. For purposes of this Agreement, the term “Bessemer” means Bessemer Venture Partners VIII Institutional L.P.

1.2 Board Composition. Each Stockholder agrees to vote, or cause to be voted, all Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that at each annual or special meeting of stockholders at which an election of directors is held or pursuant to any written consent of the stockholders, subject to Section 5, the following persons shall be elected to the Board:

(a) One person designated by Sake Ventures, LLC and Rice Wine Ventures, LLC (collectively, “CJF”) as the Series C Director, which individual shall initially be Shuhei Ohashi, for so long as such Stockholder and its Affiliates continue to own beneficially at least 4,046,315 shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon conversion of Series C Preferred Stock), which number is subject to appropriate adjustment for all stock splits, dividends, combinations, recapitalizations and the like.

(b) One person designated by Shining as the Series B Director, which individual shall initially be Xiangwei Weng, for so long as such Stockholder and its Affiliates continue to own beneficially at least 3,435,122 shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon conversion of Series B Preferred Stock), which number is subject to appropriate adjustment for all stock splits, dividends, combinations, recapitalizations and the like. For purposes of this Agreement, “Shining” shall collectively refer to Shiningwine Limited (BVI), Dreamer Pathway Limited (BVI) and Dream Catcher Investments Limited (BVI).

-2-

(c) One person designated by Bessemer as the Series A Director, which individual shall initially be Kent Bennett, for so long as Bessemer and its Affiliates continue to own beneficially at least 2,978,934 shares of Common Stock of the Company (including shares of Common Stock issued or issuable upon conversion of Series A Preferred Stock), which number is subject to appropriate adjustment for all stock splits, dividends, combinations, recapitalizations and the like.

(d) For so long as the Key Holders who are then, or any Key Holder entity that is owned, controlled or established for estate planning purposes and/or for the benefit of any Founder who is then, providing services to the Company as officers, employees or consultants collectively hold at least 1,000,000 shares of Common Stock (as adjusted for any stock splits, stock dividends, recapitalizations or the like), two individuals designated by the holders of a majority of the Shares of Common Stock held by the Key Holders who are then, or held by any Key Holder entity that is owned, controlled or established for estate planning purposes and/or for the benefit of any Founder who is then, providing services to the Company as full-time officers, employees or consultants as the Common Directors, which individuals shall initially be Brian Smith and Geoff McFarlane; and

(e) Four individuals who are not otherwise an Affiliate (as defined below) of the Company or of any Investor, each of whom is unanimously approved by the other members of the Board, which individuals shall initially be Patrick DeLong, Laura Joukovski, Alesia Pinney, with the remaining seat to be initially vacant until filled in accordance with this Agreement.

To the extent that any of clauses (a) through (f) above shall not be applicable, any member of the Board who would otherwise have been designated in accordance with the terms thereof shall instead be voted upon by all the Stockholders of the Company entitled to vote thereon in accordance with, and pursuant to, the Company’s Restated Certificate.

For purposes of this Agreement, an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity (collectively, a “Person”) shall be deemed an “Affiliate” of another Person who, directly or indirectly, controls, is controlled by or is under common control with such Person, including, without limitation, any general partner, managing member, officer, director or trustee of such Person or any venture capital fund or registered investment company now or hereafter existing that is controlled by one or more general partners, managing members or investment advisers of, or shares the same management company or investment adviser with, such Person.

1.3 Failure to Designate a Board Member. In the absence of any designation from the Persons or groups with the right to designate a director as specified above, the director previously designated by them and then serving shall be reelected if still eligible and willing to serve unless such individual has been removed as provided herein, and otherwise such Board seat shall remain vacant until otherwise filled as provided above.

-3-

1.4 Removal of Board Members. Each Stockholder also agrees to vote, or cause to be voted, all Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that:

(a) no director elected pursuant to Section 1.2 of this Agreement may be removed from office unless (i) such removal is directed or approved by the persons or entities entitled to designate such director; or (ii) the person or entity originally entitled to designate such director is no longer so entitled pursuant to the terms of this Agreement to designate or approve such director;

(b) any vacancies created by the resignation, removal or death of a director elected pursuant to Subsections 1.3 or 1.4 shall be filled pursuant to the provisions of this Section 1; and

(c) upon the request of any party or parties entitled to designate a director as provided in Subsection 1.2(a), 1.2(b), 1.2(c), 1.2(d), or 1.2(e) to remove such director, such director shall be removed.

All Stockholders agree to execute any written consents required to perform the obligations of this Agreement, and the Company agrees at the request of any party entitled to designate directors to call a special meeting of stockholders for the purpose of electing directors.

1.5 No Liability for Election of Recommended Directors. No Stockholder, nor any Affiliate of any Stockholder, shall have any liability as a result of designating a person for election as a director for any act or omission by such designated person in his or her capacity as a director of the Company, nor shall any Stockholder have any liability as a result of voting for any such designee in accordance with the provisions of this Agreement.

1.6 No “Bad Actor” Designees. Each Person with the right to designate or participate in the designation of a director as specified above hereby represents and warrants to the Company that, to such Person’s knowledge, none of the “bad actor” disqualifying events described in Rule 506(d)(1)(i)-(viii) under the Securities Act of 1933, as amended (the “Securities Act”) (each, a “Disqualification Event”), is applicable to such Person’s initial designee named above except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. Any director designee to whom any Disqualification Event is applicable, except for a Disqualification Event to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable, is hereinafter referred to as a “Disqualified Designee.” Each Person with the right to designate or participate in the designation of a director as specified above hereby covenants and agrees (A) not to designate or participate in the designation of any director designee who, to such Person’s knowledge, is a Disqualified Designee and (B) that in the event such Person becomes aware that any individual previously designated by any such Person is or has become a Disqualified Designee, such Person shall as promptly as practicable take such actions as are necessary to remove such Disqualified Designee from the Board and designate a replacement designee who is not a Disqualified Designee.

-4-

2. Vote to Increase Authorized Common Stock; Founder Voting.

Each Stockholder agrees to vote or cause to be voted all Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to increase the number of authorized shares of Common Stock from time to time to ensure that there will be sufficient shares of Common Stock available for conversion of all of the shares of Preferred Stock outstanding at any given time.

At such time as either Alexander Oxman or Geoff McFarlane (each, a “Founder”) is no longer a full-time officer or employee of the Company, such Founder will (or shall cause any Key Holder entity owned or controlled by such Founder to) vote his shares of voting capital stock of the Company on any matter brought to the Stockholders of the Company in the same proportion as all other shares of Company voting capital stock are voted.

3. Drag-Along Right.

3.1 Definitions. A “Sale of the Company” shall mean either: (a) a transaction or series of related transactions in which a Person, or a group of related Persons, acquires from stockholders of the Company shares representing more than fifty percent (50.0%) of the outstanding voting power of the Company (a “Stock Sale”); or (b) a transaction that qualifies as a “Liquidation Transaction” as defined in the Restated Certificate.

3.2 Actions to be Taken. In the event that (i) Investors holding at least a majority of the shares of Common Stock issuable upon conversion of the then outstanding shares Preferred Stock (the “Selling Investors”); and (ii) the holders of a majority of the then outstanding shares of Common Stock, approve a Sale of the Company in writing, specifying that this Section 3 shall apply to such transaction, then each Stockholder and the Company hereby agree:

(a) if such transaction requires stockholder approval, with respect to all Shares that such Stockholder owns or over which such Stockholder otherwise exercises voting power, to vote (in person, by proxy or by action by written consent, as applicable) all Shares in favor of, and adopt, such Sale of the Company (together with any related amendment to the Restated Certificate required in order to implement such Sale of the Company) and to vote in opposition to any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such Sale of the Company;

(b) if such transaction is a Stock Sale, to sell the same proportion of shares of capital stock of the Company beneficially held by such Stockholder as is being sold by the Selling Investors to the Person to whom the Selling Investors propose to sell their Shares, and, except as permitted in Subsection 3.3 below, on the same terms and conditions as the Selling Investors;

(c) to execute and deliver all related documentation and take such other action in support of the Sale of the Company as shall reasonably be requested by the Company or the Selling Investors in order to carry out the terms and provision of this Section 3, including, without limitation, executing and delivering instruments of conveyance and transfer, and any purchase agreement, merger agreement, indemnity agreement, escrow agreement, consent, waiver, governmental filing, share certificates duly endorsed for transfer (free and clear of impermissible liens, claims and encumbrances), and any similar or related documents;

-5-

(d) not to deposit, and to cause their Affiliates not to deposit, except as provided in this Agreement, any Shares of the Company owned by such party or Affiliate in a voting trust or subject any Shares to any arrangement or agreement with respect to the voting of such Shares, unless specifically requested to do so by the acquirer in connection with the Sale of the Company;

(e) to refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company;

(f) if the consideration to be paid in exchange for the Shares pursuant to this Section 3 includes any securities and due receipt thereof by any Stockholder would require under applicable law (x) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities; or (y) the provision to any Stockholder of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the Securities Act, the Company may cause to be paid to any such Stockholder in lieu thereof, against surrender of the Shares which would have otherwise been sold by such Stockholder, an amount in cash equal to the fair value (as determined in good faith by the Board) of the securities which such Stockholder would otherwise receive as of the date of the issuance of such securities in exchange for the Shares; and

(g) in the event that the Selling Investors, in connection with such Sale of the Company, appoint a stockholder representative (the “Stockholder Representative”) with respect to matters affecting the Stockholders under the applicable definitive transaction agreements following consummation of such Sale of the Company, (x) to consent to (i) the appointment of such Stockholder Representative, (ii) the establishment of any applicable escrow, expense or similar fund in connection with any indemnification or similar obligations, and (iii) the payment of such Stockholder’s pro rata portion (from the applicable escrow or expense fund or otherwise) of any and all reasonable fees and expenses to such Stockholder Representative in connection with such Stockholder Representative’s services and duties in connection with such Sale of the Company and its related service as the representative of the Stockholders, and (y) not to assert any claim or commence any suit against the Stockholder Representative or any other Stockholder with respect to any action or inaction taken or failed to be taken by the Stockholder Representative in connection with its service as the Stockholder Representative, absent fraud, bad faith, gross negligence or willful misconduct.

3.3 Exceptions. Notwithstanding the foregoing, a Stockholder will not be required to comply with Subsection 3.2 above in connection with any proposed Sale of the Company (the “Proposed Sale”), unless:

(a) any representations and warranties to be made by such Stockholder in connection with the Proposed Sale are limited to representations and warranties related to authority, ownership and the ability to convey title to such Shares, including, but not limited to, representations and warranties that (i) the Stockholder holds all right, title and interest in and to the Shares such Stockholder purports to hold, free and clear of all liens and encumbrances, (ii) the obligations of the Stockholder in connection with the transaction have been duly authorized, if applicable, (iii) the documents to be entered into by the Stockholder have been duly executed by the Stockholder and delivered to the acquirer and are enforceable (subject to customary limitations) against the Stockholder in accordance with their respective terms; and (iv) neither the execution and delivery of documents to be entered into by the Stockholder in connection with the transaction, nor the performance of the Stockholder’s obligations thereunder, will cause a breach or violation of the terms of any agreement to which the Stockholder is a party, or any law or judgment, order or decree of any court or governmental agency that applies to the Stockholder;

-6-

(b) such Stockholder is not required to agree (unless such Stockholder is a Company officer or employee) to any restrictive covenant in connection with the Proposed Sale (including, without limitation, any covenant not to compete or covenant not to solicit customers, employees or suppliers of any party to the Proposed Sale) or any release of claims other than a release in customary form of claims arising solely in such Stockholder’s capacity as a stockholder of the Company;

(c) such Stockholder and its Affiliates are not required to amend, extend or terminate any contractual or other relationship with the Company, the acquirer or their respective Affiliates, except that the Stockholder may be required to agree to terminate the investment-related documents between or among such Stockholder, the Company and/or other stockholders of the Company;

(d) the Stockholder shall not be liable for the inaccuracy of any representation, warranty or covenant made by any other Person in connection with the Proposed Sale, other than the Company (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any stockholder of any of identical representations, warranties and covenants provided by all stockholders);

(e) the liability for indemnification, if any, of such Stockholder in the Proposed Sale and for the inaccuracy of any representations and warranties made by the Company or its Stockholders in connection with such Proposed Sale, is several and not joint with any other Person (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any stockholder of any of identical representations, warranties and covenants provided by all stockholders), and subject to the provisions of the Restated Certificate related to the allocation of the escrow, is pro rata in proportion to, and does not exceed, the amount of consideration paid to such Stockholder in connection with such Proposed Sale;

(f) liability shall be limited to such Stockholder’s applicable share (determined based on the respective net proceeds payable to each Stockholder in connection with such Proposed Sale in accordance with the provisions of the Restated Certificate) of a negotiated aggregate indemnification amount that applies equally to all Stockholders but that in no event exceeds the amount of net consideration otherwise payable to such Stockholder in connection with such Proposed Sale, except with respect to claims related to fraud by such Stockholder, the liability for which need not be limited as to such Stockholder;

-7-

(g) upon the consummation of the Proposed Sale (i) each holder of each class or series of the Company’s stock will receive the same form of consideration for their shares of such class or series as is received by other holders in respect of their shares of such same class or series of stock, (ii) each holder of a series of Preferred Stock will receive the same amount of consideration per share of such series of Preferred Stock as is received by other holders in respect of their shares of such same series, (iii) each holder of Common Stock will receive the same amount of consideration per share of Common Stock as is received by other holders in respect of their shares of Common Stock, and (iv) unless the holders of a majority of the then outstanding shares of Preferred Stock elect to receive a lesser amount by written notice given to the Company at least ten days prior to the effective date of any such Proposed Sale, the aggregate consideration receivable by all holders of the Preferred Stock and Common Stock shall be allocated among the holders of Preferred Stock and Common Stock on the basis of the relative liquidation preferences to which the holders of each respective series of Preferred Stock and the holders of Common Stock are entitled in a Deemed Liquidation Event (assuming for this purpose that the Proposed Sale is a Deemed Liquidation Event) in accordance with the Company’s ccertificate of incorporation in effect immediately prior to the Proposed Sale; provided, however, that, notwithstanding the foregoing, if the consideration to be paid in exchange for the Key Holder Shares or Investor Shares, as applicable, pursuant to this Subsection 3.3(g) includes any securities and due receipt thereof by any Key Holder or Investor would require under applicable law (x) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities; or (y) the provision to any Key Holder or Investor of any information other than such information as a prudent issuer would generally furnish in an offering made solely to accredited investors, the Company may cause to be paid to any such Key Holder or Investor in lieu thereof, against surrender of the Key Holder Shares or Investor Shares, as applicable, which would have otherwise been sold by such Key Holder or Investor, an amount in cash equal to the fair value (as determined in good faith by the Company) of the securities which such Key Holder or Investor would otherwise receive as of the date of the issuance of such securities in exchange for the Key Holder Shares or Investor Shares, as applicable; and

(h) subject to clause (e) above, requiring the same form of consideration to be available to the holders of any single class or series of capital stock, if any holders of any capital stock of the Company are given an option as to the form and amount of consideration to be received as a result of the Proposed Sale, all holders of such capital stock will be given the same option; provided, however, that nothing in this Subsection 3.3(h) shall entitle any holder to receive any form of consideration that such holder would be ineligible to receive as a result of such holder’s failure to satisfy any condition, requirement or limitation that is generally applicable to the Company’s stockholders.

3.4 Restrictions on Sales of Control of the Company. No Stockholder shall be a party to any Stock Sale unless all holders of Preferred Stock are allowed to participate in such transaction and the consideration received pursuant to such transaction is allocated among the parties thereto in the manner specified in the Company’s certificate of incorporation in effect immediately prior to the Stock Sale (as if such transaction were a Liquidation Transaction), unless the Investors holding at least a majority of the shares of Common Stock issuable upon conversion of the then outstanding shares Preferred Stock elect otherwise by written notice given to the Company at least ten days prior to the effective date of any such transaction or series of related transactions.

-8-

4. Remedies.

4.1 Covenants of the Company. The Company agrees to use its best efforts, within the requirements of applicable law, to ensure that the rights granted under this Agreement are effective and that the parties enjoy the benefits of this Agreement. Such actions include, without limitation, the use of the Company’s best efforts to cause the nomination and election of the directors as provided in this Agreement.

4.2 Irrevocable Proxy and Power of Attorney. Each party to this Agreement hereby constitutes and appoints as the proxies of the party and hereby grants a power of attorney to the Chief Executive Officer of the Company, and a designee of the Selling Investors, and each of them, with full power of substitution, with respect to the matters set forth herein, including, without limitation, election of persons as members of the Board in accordance with Section 1 hereto, votes to increase authorized shares pursuant to Section 2.1 hereof and votes regarding any Sale of the Company pursuant to Section 3 hereof, and hereby authorizes each of them to represent and vote, if and only if the party (i) fails to vote, or (ii) attempts to vote (whether by proxy, in person or by written consent), in a manner which is inconsistent with the terms of this Agreement, all of such party’s Shares in favor of the election of persons as members of the Board determined pursuant to and in accordance with the terms and provisions of this Agreement or the increase of authorized shares or approval of any Sale of the Company pursuant to and in accordance with the terms and provisions of Sections 2 and 3, respectively, of this Agreement or to take any action necessary to effect Sections 2 and 3, respectively, of this Agreement. Each proxy for the Founders shall have the right to vote such Founder’s shares of capital stock of the Company, on any matter brought to the Stockholders of the Company, in the event such Founder is no longer a full-time officer or employee of the Company and such Founder fails to vote in a manner which is consistent with the terms of Section 2.2 of this Agreement. Each of the proxy and power of attorney granted pursuant to the preceding sentences is given in consideration of the agreements and covenants of the Company and the parties in connection with the transactions contemplated by this Agreement and, as such, each is coupled with an interest and shall be irrevocable unless and until this Agreement terminates or expires pursuant to Section 6 hereof. Each party hereto hereby revokes any and all previous proxies or powers of attorney with respect to the Shares and shall not hereafter, unless and until this Agreement terminates or expires pursuant to Section 6 hereof, purport to grant any other proxy or power of attorney with respect to any of the Shares, deposit any of the Shares into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of any of the Shares, in each case, with respect to any of the matters set forth herein.

4.3 Specific Enforcement. Each party acknowledges and agrees that each party hereto will be irreparably damaged in the event any of the provisions of this Agreement are not performed by the parties in accordance with their specific terms or are otherwise breached. Accordingly, it is agreed that each of the Company and the Stockholders shall be entitled to an injunction to prevent breaches of this Agreement, and to specific enforcement of this Agreement and its terms and provisions in any action instituted in any court of the United States or any state having subject matter jurisdiction.

-9-

4.4 Remedies Cumulative. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

5. “Bad Actor” Matters.

5.1 Definitions. For purposes of this Agreement:

(a) “Company Covered Person” means, with respect to the Company as an “issuer” for purposes of Rule 506 promulgated under the Securities Act, any Person listed in the first paragraph of Rule 506(d)(1).

(b) “Disqualified Designee” means any director designee to whom any Disqualification Event is applicable, except for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable.

(c) “Disqualification Event” means a “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) promulgated under the Securities Act.

(d) “Rule 506(d) Related Party” means, with respect to any Person, any other Person that is a beneficial owner of such first Person’s securities for purposes of Rule 506(d) under the Securities Act.

5.2 Representations.

(a) Each Person with the right to designate or participate in the designation of a director pursuant to this Agreement hereby represents that (i) such Person has exercised reasonable care to determine whether any Disqualification Event is applicable to such Person, any director designee designated by such Person pursuant to this Agreement or any of such Person’s Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable and (ii) no Disqualification Event is applicable to such Person, any Board member designated by such Person pursuant to this Agreement or any of such Person’s Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. Notwithstanding anything to the contrary in this Agreement, each Investor makes no representation regarding any Person that may be deemed to be a beneficial owner of the Company’s voting equity securities held by such Investor solely by virtue of that Person being or becoming a party to (x) this Agreement, as may be subsequently amended, or (y) any other contract or written agreement to which the Company and such Investor are parties regarding (1) the voting power, which includes the power to vote or to direct the voting of, such security; and/or (2) the investment power, which includes the power to dispose, or to direct the disposition of, such security.

(b) The Company hereby represents and warrants to the Investors that no Disqualification Event is applicable to the Company or, to the Company’s knowledge, any Company Covered Person, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3) is applicable.

5.3 Covenants. Each Person with the right to designate or participate in the designation of a director pursuant to this Agreement covenants and agrees (i) not to designate or participate in the designation of any director designee who, to such Person’s knowledge, is a Disqualified Designee, (ii) to exercise reasonable care to determine whether any director designee designated by such person is a Disqualified Designee, (iii) that in the event such Person becomes aware that any individual previously designated by any such Person is or has become a Disqualified Designee, such Person shall as promptly as practicable take such actions as are necessary to remove such Disqualified Designee from the Board and designate a replacement designee who is not a Disqualified Designee, and (iv) to notify the Company promptly in writing in the event a Disqualification Event becomes applicable to such Person or any of its Rule 506(d) Related Parties, or, to such Person’s knowledge, to such Person’s initial designee named in Section 1, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable.

-10-

6. Term. This Agreement shall be effective as of the date hereof and shall continue in effect until and shall terminate upon the earliest to occur of (a) the consummation of the Company’s first underwritten public offering of its Common Stock in which all of the Preferred Stock converts into Common Stock pursuant to Section 5.1(a) of the Restated Certificate (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to its stock option, stock purchase or similar plan or an SEC Rule 145 transaction); (b) the consummation of a Sale of the Company and distribution of proceeds to or escrow for the benefit of the Stockholders in accordance with the Restated Certificate, provided that the provisions of Section 3 hereof will continue after the closing of any Sale of the Company to the extent necessary to enforce the provisions of Section 3 with respect to such Sale of the Company; and (c) termination of this Agreement in accordance with Subsection 7.8 below.

7. Miscellaneous.

7.1 Additional Parties.

(a) Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of Preferred Stock after the date hereof, as a condition to the issuance of such shares the Company shall require that any purchaser of shares of Preferred Stock become a party to this Agreement by executing and delivering (i) the Adoption Agreement attached to this Agreement as Exhibit A, or (ii) a counterpart signature page hereto agreeing to be bound by and subject to the terms of this Agreement as an Investor and Stockholder hereunder. In either event, each such person shall thereafter shall be deemed an Investor and Stockholder for all purposes under this Agreement.

(b) In the event that after the date of this Agreement, the Company enters into an agreement with any Person to issue shares of capital stock to such Person (other than to a purchaser of Preferred Stock described in Subsection 7.1(a) above), and, following such issuance, such Person would hold at least 1.0% of the then outstanding capital stock of the Company (determined on a fully-diluted basis, after giving effect to the exercise and/or conversion of all Preferred Stock and other convertible securities of the Company), then, the Company shall cause such Person, as a condition precedent to entering into such agreement, to become a party to this Agreement by executing an Adoption Agreement in the form attached hereto as Exhibit A, agreeing to be bound by and subject to the terms of this Agreement as a Stockholder and thereafter such person shall be deemed a Stockholder for all purposes under this Agreement.

-11-

7.2 Transfers. Each transferee or assignee of any Shares subject to this Agreement shall continue to be subject to the terms hereof, and, as a condition precedent to the Company’s recognizing such transfer, each transferee or assignee shall agree in writing to be subject to each of the terms of this Agreement by executing and delivering an Adoption Agreement substantially in the form attached hereto as Exhibit A. Upon the execution and delivery of an Adoption Agreement by any transferee, such transferee shall be deemed to be a party hereto as if such transferee were the transferor and such transferee’s signature appeared on the signature pages of this Agreement and shall be deemed to be an Investor and Stockholder, or Key Holder and Stockholder, as applicable. The Company shall not permit the transfer of the Shares subject to this Agreement on its books or issue a new certificate representing any such Shares unless and until such transferee shall have complied with the terms of this Subsection 7.2. Each certificate instrument, or book entry representing the Shares subject to this Agreement if issued on or after the date of this Agreement shall be notated by the Company with the legend set forth in Subsection 7.12.

7.3 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.

7.4 Governing Law. This Agreement and any controversy arising directly or indirectly out of or relating to this Agreement shall be governed by and construed in accordance with the internal laws of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.

7.5 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, 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 and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

7.6 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.

7.7 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on Schedule A or Schedule B hereto, or to such email address, facsimile number or address as subsequently modified by written notice given in accordance with this Subsection 7.7.

-12-

7.8 Consent Required to Amend, Terminate or Waive. This Agreement may be amended or terminated and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by (a) the Company; (b) the Key Holders holding a majority of the Shares then held by the Key Holders who are then, or then held by any Key Holder entity that is owned, controlled or established for estate planning purposes and/or for the benefit of any Founder who is then, providing services to the Company as full-time officers, employees or consultants; and (c) the Investors holding at least a majority of the shares of Common Stock issuable upon conversion of the then outstanding shares Preferred Stock. Notwithstanding the foregoing:

(a) this Agreement may not be amended or terminated and the observance of any term of this Agreement may not be waived with respect to any Investor or Key Holder without the written consent of such Investor or Key Holder unless such amendment, termination or waiver applies to all Investors or Key Holders, as the case may be, in the same fashion;

(b) the consent of the Key Holders shall not be required for any amendment or waiver if such amendment or waiver either (A) is not directly applicable to the rights of the Key Holders hereunder; or (B) does not adversely affect the rights of the Key Holders in a manner that is different than the effect on the rights of the other parties hereto. For avoidance of doubt, any proposed amendment of Section 3.2(ii) (which Section requires the approval of a Sale of the Company by a majority of the outstanding shares of Common Stock) shall require the written consent of the Key Holders holding a majority of the Shares held by all Key Holders;

(c) Schedule A hereto may be amended by the Company from time to time to add information regarding additional purchasers of Series F Preferred Stock pursuant to the Purchase Agreement without the consent of the other parties hereto;

(d) any provision hereof may be waived by the waiving party on such party’s own behalf, without the consent of any other party;

(e) Subsections 1.2(a), 1.2(b), and 1.2(c) of this Agreement shall not be amended or waived without the written consent of CJF, Shining, Bessemer, respectively; and

(f) Subsection 1.2(e) of this Agreement shall not be amended or waived without the written consent of the Key Holders holding a majority of the Shares held by Key Holders who are then, or held by any Key Holder entity that is owned, controlled or established for estate planning purposes and/or for the benefit of any Founder who is then, providing services to the Company as full-time officers, employees or consultants.

The Company shall give prompt written notice of any amendment, termination, or waiver hereunder to any party who had a right to consent to such amendment, terminate or waiver hereunder and that did not consent in writing thereto. Any amendment, termination, or waiver effected in accordance with this Subsection 7.8 shall be binding on each party and all of such party’s successors and permitted assigns, whether or not any such party, successor or assignee entered into or approved such amendment, termination or waiver. For purposes of this Subsection 7.8, the requirement of a written instrument may be satisfied in the form of an action by written consent of the Stockholders circulated by the Company and executed by the Stockholder parties specified, whether or not such action by written consent makes explicit reference to the terms of this Agreement.

-13-

7.9 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting 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 previously 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. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

7.10 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

7.11 Entire Agreement. Upon the effectiveness of this Agreement, the Prior Agreement shall be deemed amended and restated to read in its entirety as set forth in this Agreement. This Agreement, together with the Purchase Agreement and the other agreements referenced therein, constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

7.12 Share Certificate Legend. Each certificate, instrument, or book entry representing any Shares issued after the date hereof shall be notated by the Company with a legend reading substantially as follows:

“The Shares REPRESENTED hereby are subject to a Voting Agreement, AS MAY BE AMENDED FROM TIME TO TIME, (a copy of which may be obtained upon written request from the Company), and by accepting any interest in such Shares the person accepting such interest shall be deemed to agree to and shall become bound by all the provisions of that Voting Agreement, including certain restrictions on transfer and ownership set forth therein.”

The Company, by its execution of this Agreement, agrees that it will cause the certificates instruments, or book entry notations evidencing the Shares issued after the date hereof to be notated with the legend required by this Subsection 7.12 of this Agreement, and it shall supply, free of charge, a copy of this Agreement to any holder of such Shares upon written request from such holder to the Company at its principal office. The parties to this Agreement do hereby agree that the failure to cause the certificates, instruments, or book entry notations evidencing the Shares to be notated with the legend required by this Subsection 7.12 herein and/or the failure of the Company to supply, free of charge, a copy of this Agreement as provided hereunder shall not affect the validity or enforcement of this Agreement.

-14-

7.13 Stock Splits, Stock Dividends, etc. In the event of any issuance of Shares of the Company’s voting securities hereafter to any of the Stockholders (including, without limitation, in connection with any stock split, stock dividend, recapitalization, reorganization, or the like), such Shares shall become subject to this Agreement and shall be notated with the legend set forth in Subsection 7.12.

7.14 Manner of Voting. The voting of Shares pursuant to this Agreement may be effected in person, by proxy, by written consent or in any other manner permitted by applicable law. For the avoidance of doubt, voting of the Shares pursuant to the Agreement need not make explicit reference to the terms of this Agreement.

7.15 Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, 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.

7.16 Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the sole and exclusive jurisdiction of the state courts of the State of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

7.17 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

-15-

7.18 Costs of Enforcement. If any party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings, the non-prevailing party shall pay all costs and expenses incurred by the prevailing party, including, without limitation, all reasonable attorneys’ fees.

7.19 Aggregation of Stock. All Shares held or acquired by a Stockholder and/or its Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement, and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

7.20 Spousal Consent. If any individual Stockholder is married on the date of this Agreement, such Stockholder’s spouse shall execute and deliver to the Company a consent of spouse in the form of Exhibit B hereto (“Consent of Spouse”), effective on the date hereof. Notwithstanding the execution and delivery thereof, such consent shall not be deemed to confer or convey to the spouse any rights in such Stockholder’s Shares that do not otherwise exist by operation of law or the agreement of the parties. If any individual Stockholder should marry or remarry subsequent to the date of this Agreement, such Stockholder shall within thirty (30) days thereafter obtain his/her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by causing such spouse to execute and deliver a Consent of Spouse acknowledging the restrictions and obligations contained in this Agreement and agreeing and consenting to the same.

(Remainder of page intentionally left blank.)

-16-

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Voting Agreement as of the date first written above.

	Company:

	Winc, Inc.,
	a Delaware corporation

	By:
		Name: Geoffrey McFarlane
		Title: Chief Executive Officer

Signature Page to Seventh Amended and Restated

Voting Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Voting Agreement as of the date first written above.

	Investor:

	[________]

	By:
		Name:
		Title:

	[________]

	Address:

Signature Page to Seventh Amended and Restated

Voting Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Voting Agreement as of the date first written above.

	Key Holder:

	McFarlane Family Trust

	By:
		Name:
		Title:

	Address:

Signature Page to Seventh Amended and Restated

Voting Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Voting Agreement as of the date first written above.

	Key Holder:

	Siemer Ventures II, LP

	By:
		Name:
		Title:

	Address:

Signature Page to Seventh Amended and Restated

Voting Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Voting Agreement as of the date first written above.

	Key Holder:

	Alexander Oxman

	Address:

Signature Page to Seventh Amended and Restated

Voting Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Voting Agreement as of the date first written above.

	Key Holder:

	Geoffrey McFarlane

	Address:

Signature Page to Seventh Amended and Restated

Voting Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Voting Agreement as of the date first written above.

	Key Holder:

	Michael Greenlee

	Address:

Signature Page to Seventh Amended and Restated

Voting Agreement of Winc, Inc.

Schedule A

Investors

A-1

Schedule B

Key Holders

Alexander Oxman

Geoffrey McFarlane

McFarlane Family Trust

Michael Greenlee

Siemer Ventures II, LP

B-1

Exhibit A

ADOPTION AGREEMENT

This Adoption Agreement (this “Adoption Agreement”) is executed on __________ __, 20__, by the undersigned (the “Holder”) pursuant to the terms of that certain Seventh Amended and Restated Voting Agreement dated as of February [●], 2021 (the “Agreement”), by and among the Company and certain of its Stockholders, as such Agreement may be amended or amended and restated hereafter. Capitalized terms used but not defined in this Adoption Agreement shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the Holder agrees as follows.

1.1 Acknowledgement. Holder acknowledges that Holder is acquiring certain shares of the capital stock of the Company (the “Stock”) or options, warrants, or other rights to purchase such Stock (the “Options”), for one of the following reasons (Check the correct box):

As a transferee of Shares from a party in such party’s capacity as an “Investor” bound by the Agreement, and after such transfer, Holder shall be considered an “Investor” and a “Stockholder” for all purposes of the Agreement.

As a transferee of Shares from a party in such party’s capacity as a “Key Holder” bound by the Agreement, and after such transfer, Holder shall be considered a “Key Holder” and a “Stockholder” for all purposes of the Agreement.

As a new Investor in accordance with Subsection 7.1(a) of the Agreement, in which case Holder will be an “Investor” and a “Stockholder” for all purposes of the Agreement.

In accordance with Subsection 7.1(b) of the Agreement, as a new party who is not a new Investor, in which case Holder will be a “Stockholder” for all purposes of the Agreement.

1.2 Agreement. Holder hereby (a) agrees that the Stock or Options, as the case may be, and any other shares of capital stock or securities required by the Agreement to be bound thereby, shall be bound by and subject to the terms of the Agreement and (b) adopts the Agreement with the same force and effect as if Holder were originally a party thereto.

1.3 Notice. Any notice required or permitted by the Agreement shall be given to Holder at the contact information listed below Holder’s signature hereto.

HOLDER:		ACCEPTED AND AGREED:

		Company:

		Winc, Inc.,
		a Delaware corporation
By:
	Name:
	Title:

		By:
			Name:
			Title:

Attention:

Email:

Facsimile:

Exhibit B

CONSENT OF SPOUSE

I, _________________________, spouse of _________________________, acknowledge that I have read the Seventh Amended and Restated Voting Agreement, dated as of February [●], 2021, to which this Consent of Spouse (this “Consent of Spouse”) is attached as Exhibit B (the “Agreement”), and that I know the contents of the Agreement. I am aware that the Agreement contains provisions regarding the voting and transfer of shares of capital stock of the Company that my spouse may own, including any interest I might have therein.

I hereby agree that my interest, if any, in any shares of capital stock of the Company subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in such shares of capital stock of the Company shall be similarly bound by the Agreement.

I am aware that the legal, financial and related matters contained in the Agreement are complex and that I am free to seek independent professional guidance or counsel with respect to this Consent. I have either sought such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right.

Dated:		By:
			Name:

Exhibit 3.2

Winc, Inc.

Seventh amended and restated

Right of first Refusal and co-Sale AGREEMENT

Effective Date: February [●], 2021

TABLE OF CONTENTS

Page

1. Definitions	1
2. Rights of First Refusal and Co-Sale	4
(a) Right of First Refusal	4
(b) Right of Co-Sale	6
(c) Effect of Failure to Comply	7
3. Exempt Transfers	7
4. Legend	8
5. Miscellaneous	9
(a) Term	9
(b) Costs of Enforcement	9
(c) Notices	9
(d) Entire Agreement	9
(e) Delays or Omissions	10
(f) Amendment	10
(g) Transfers, Successors and Assigns	10
(h) Severability	11
(i) Governing Law	11
(j) Dispute Resolution; Waiver of Jury Trial	11
(k) Titles and Subtitles	11
(l) Counterparts	12
(m) Key Holders’ Ownership of Common Holder entities	12
(n) Aggregation of Stock	12
(o) Specific Performance	12
(p) Additional Affected Holders	12
(q) Consent of Spouse	12

Schedules and Exhibits

Schedule 1 Common Holders

Schedule 2 Investors

Exhibit A Consent of Spouse

-i-

SEVENTH AMENDED AND RESTATED
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT

This SEVENTH Amended and Restated Right of First Refusal and Co-Sale Agreement (this “Agreement”) is made as of February [●], 2021, by and among Winc, Inc., a Delaware corporation (the “Company”), the holders of Common Stock listed on Schedule 1 hereto (the “Common Holders”), the holders of shares of Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, and Series F Preferred Stock listed on Schedule 2 hereto (the “Investors”), and each of Alexander Oxman and Geoffrey McFarlane in their individual capacities (the “Key Holders”). Investors, Common Holders and Key Holders shall collectively be referred to as “Stockholders.”

WHEREAS, the Company, certain of the Key Holders, the Common Holders and certain of the Investors (the “Prior Investors”) previously entered into the Sixth Amended and Restated Right of First Refusal and Co-Sale Agreement, dated December 8, 2020 (the “Prior Agreement”), in connection with the purchase of shares of Series E Preferred Stock of the Company, par value $0.0001 per share (“Series E Preferred Stock”); and

WHEREAS, the Key Holders, the Common Holders, the Prior Investors and the Company desire to induce certain of the Investors to purchase shares of Series F Preferred Stock of the Company, par value $0.0001 per share (“Series F Preferred Stock”) and warrants to purchase shares of Series F Preferred Stock, pursuant to a Series F Preferred Stock and Warrant Purchase Agreement (the “Purchase Agreement”) by amending and restating the Prior Agreement to provide the Investors with the rights and privileges as set forth herein.

NOW, THEREFORE, the Company, the Key Holders, the Common Holders and the Investors (including the Prior Investors) each hereby agree to amend and restate the Prior Agreement in its entirety as set forth herein, and the parties hereto further agree as follows:

1. Definitions

(a) “Affected Holder” means any Stockholder other than a Major Investor or his, her or its permitted transferees or assigns.

(b) “Affected Holder Stock” means any Capital Stock now owned or subsequently acquired by any Affected Holder.

(c) “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, manager, managing member, officer, director or trustee of such entity. For the avoidance of doubt, with respect to a venture capital fund organized as a limited liability company or a partnership, an “Affiliate” shall include any fund or entity managed by the same manager, managing member, investment adviser or general partner or management company or by an entity controlling, controlled by, or under common control with such manager, managing member, investment adviser or general partner (or member thereof) or management company (or member thereof) or any general partner, manager, managing member, investment adviser, officer or director thereof.

-1-

(d) “Bessemer” means Bessemer Venture Partners VIII Institutional L.P.

(e) “Capital Stock” means (i) shares of Common Stock, (ii) shares of Common Stock issued or issuable upon conversion of Preferred Stock and (iii) shares of Common Stock issued or issuable upon exercise or conversion, as applicable, of stock options, warrants or other convertible securities of the Company, in each case whether now owned or subsequently acquired by any Common Holder, any Investor, or their respective successors or permitted transferees or assigns.

(f) “CJF” means collectively Sake Ventures, LLC and Rice Wine Ventures, LLC.

(g) “Common Stock” means the Company’s common stock, par value $0.0001 per share.

(h) “Company Notice” means written notice from the Company notifying a selling Affected Holder that the Company intends to exercise its Right of First Refusal as to some or all of the Transfer Stock with respect to any Proposed Transfer.

(i) “Investor Notice” means written notice from a Major Investor notifying the Company and a selling Affected Holder that such Major Investor intends to exercise its Secondary Refusal Right as to a portion of the Transfer Stock with respect to any Proposed Transfer.

(j) “Investors’ Rights Agreement” means the Seventh Amended and Restated Investors’ Rights Agreement dated of even date herewith among the Company and the other stockholders of the Company parties thereto.

(k) “Major Investor” means Pacific Continental Insurance Co., Shining, Bessemer, 15 Angels II LLC, Wahoowa Ventures LLC, GoBlue Ventures LLC, CrossCut Ventures 2, L.P., Kukac Limited, CJF, Kestrel Flight Fund LLC and Thomas Wetherald, for so long as each of the foregoing Investors (together with its Affiliates) continues to hold at least fifty percent (50%) of the shares of Preferred Stock held by such Investor as of the date hereof. A Major Investor includes any general partners, managing members and Affiliates of a Major Investor.

(l) “Preferred Directors” has the meaning set forth in the Investors’ Rights Agreement.

(m) “Preferred Stock” means, collectively, shares of the Series Seed Preferred Stock, the Series A Preferred Stock, the Series B Preferred Stock, the Series B-1 Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock, and the Series F Preferred Stock.

(n) “Proposed Transfer” means any proposed assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, disposition of or any other like transfer or encumbering of any Capital Stock (or any interest therein) proposed by any of the Affected Holders.

-2-

(o) “Prospective Transferee” means any person to whom an Affected Holder proposes to make a Proposed Transfer who is not Affiliated with such Affected Holder or the Company.

(p) “Right of Co-Sale” means the right, but not an obligation, of the Major Investors to participate in a Proposed Transfer on the terms and conditions specified in the Transfer Notice.

(q) “Right of First Refusal” means the right, but not an obligation, of the Company, or its permitted transferees or assigns (subject to Section 5(g) hereof), to purchase some or all of the Transfer Stock with respect to a Proposed Transfer at the same price and on the same terms and conditions as those offered to the Prospective Transferee, as set forth in the Transfer Notice.

(r) “Secondary Notice” means written notice from the Company notifying the Major Investors and the Affected Holders that the Company does not intend to exercise its Right of First Refusal as to all shares of Transfer Stock with respect to any Proposed Transfer.

(s) “Secondary Refusal Right” means the right, but not an obligation, of each Major Investor to purchase up to its pro rata portion (based upon the total number of shares of Capital Stock then held by all Major Investors) of any Transfer Stock not purchased by the Company pursuant to the Right of First Refusal, on the terms and conditions specified in the Transfer Notice.

(t) “Series A Preferred Stock” means Series A Preferred Stock, par value $0.0001 per share, of the Company.

(u) “Series B Preferred Stock” means Series B Preferred Stock, par value $0.0001 per share, of the Company.

(v) “Series B-1 Preferred Stock” means Series B-1 Preferred Stock, par value $0.0001 per share, of the Company.

(w) “Series C Preferred Stock” means Series C Preferred Stock, par value $0.0001 per share, of the Company.

(x) “Series D Preferred Stock” means Series D Preferred Stock, par value $0.0001 per share, of the Company.

(y) “Series E Preferred Stock” means Series E Preferred Stock, par value $0.0001 per share, of the Company.

(z) “Series Seed Preferred Stock” means Series Seed Preferred Stock, par value $0.0001 per share, of the Company.

-3-

(aa) “Shining” means collectively Shiningwine Limited (BVI), Dreamer Pathway Limited (BVI) and Dream Catcher Investments Limited (BVI).

(bb) “Transfer Notice” means written notice from an Affected Holder setting forth the terms and conditions of a Proposed Transfer, including without limitation the identity of the Prospective Transferee, price and form of consideration.

(cc) “Transfer Stock” means shares of Capital Stock subject to a Proposed Transfer.

(dd) “Undersubscription Notice” means written notice from a Major Investor notifying the Company and the selling Affected Holder that such Major Investor intends to exercise its right to purchase a portion of the Transfer Stock not purchased pursuant to the Right of First Refusal or the Secondary Refusal Right.

2. Rights of First Refusal and Co-Sale

(a) Right of First Refusal

(1) Grant of First Refusal Right. Subject to the terms of Section 3 below, each Affected Holder hereby unconditionally and irrevocably grants to the Company a Right of First Refusal to purchase all or any portion of Transfer Stock that such Affected Holder may propose to transfer in a Proposed Transfer, at the same price and on the same terms and conditions as those offered to the Prospective Transferee.

(2) Right of First Refusal. Each Affected Holder proposing to make a Proposed Transfer shall deliver a Transfer Notice to the Company and each Major Investor at least 60 days prior to the proposed closing of such Proposed Transfer. The Company, or its designees or assigns (subject to Section 5(g)), may exercise its Right of First Refusal by delivering a Company Notice to the selling Affected Holder no later than 10 days after its receipt of the Transfer Notice.

(3) Conflict with Other Rights; Termination of Existing Rights of First Refusal Agreements. The Affected Holders hereby represent and warrant that this Agreement does not conflict with any other agreement to which they are party, nor shall they enter into any such agreement. This Agreement hereby terminates any existing right of first refusal or similar agreement between the Company and any Affected Holder.

(4) Grant of Secondary Refusal Right to Major Investors. If the Company does not exercise its Right of First Refusal with respect to all Transfer Stock, the Company shall deliver a Secondary Notice to each Major Investor to that effect no later than 15 business days after the Company’s receipt of the Transfer Notice. Any Major Investor may exercise its Secondary Refusal Right by delivering an Investor Notice to the selling Affected Holder and the Company within 30 days after its receipt of the Secondary Notice (the “Investor Notice Period”). A Major Investor who chooses to exercise the Secondary Refusal Right (including any undersubscription purchase rights under Section 2(a)(5) below) may designate as purchasers under such right itself or its partners or affiliates, including Affiliates (other than an Affiliate who is reasonably determined by the board of directors of the Company to be an actual and major competitor of the Company), in such proportions as it deems appropriate.

-4-

(5) Undersubscription of Transfer Stock. If the Right of First Refusal and Secondary Refusal Rights have been exercised by the Company and/or the Major Investors with respect to some but not all of the Transfer Stock by the end of the Investor Notice Period, then the Company shall, promptly after the expiration of the Investor Notice Period, send written notice to those Major Investors who fully exercised their Secondary Refusal Rights (the “Exercising Investors”), offering such Exercising Investors the additional right to purchase all or any part of such unpurchased shares of Transfer Stock on the terms and conditions set forth in the Transfer Notice. To exercise such right, the Exercising Investor shall deliver an Undersubscription Notice to the selling Affected Holder and the Company within 5 business days after the receipt of the notice referred to above in this Section 2(a)(5). In the event there are two or more Exercising Investors that choose to exercise such right for a total number of remaining shares in excess of the number available, the remaining shares available for purchase shall be allocated to such Exercising Investors pro rata based on the number of shares of Capital Stock such Exercising Investors have elected to purchase. If the right to purchase such remaining shares is exercised in full by the Exercising Investors, the Company shall immediately notify all of the Exercising Investors of that fact.

(6) Consideration; Closing. Payment of the purchase price for the Transfer Stock shall be payable, at the option of the Company or the Exercising Investors, as the case may be, in cash or by cancellation of indebtedness for borrowed money (if any) or by any combination thereof. If the consideration proposed to be paid for the Transfer Stock in the Proposed Transfer is other than cash, the fair market value of the consideration shall be determined in good faith by the Company’s board of directors with the approval of the Exercising Investors and the Affected Holder making the transfer, which approval in each case shall not be unreasonably withheld. The closing of the purchase of Transfer Stock by the Company and the Exercising Investors shall take place, and all payments from the Company and the Exercising Investors shall be delivered to the selling Affected Holder, by the later of (i) the date specified in the Transfer Notice as the intended date of the Proposed Transfer and (ii) 30 days after delivery of the Transfer Notice.

(7) Non-purchased Stock. If the Company and the Exercising Investors do not collectively elect to purchase all of the Transfer Stock, subject to compliance with Section 2(b) (and any other agreements between the Company and the Transferring Holder), the number of shares of the Transfer Stock that the Company and/or the Investors did not purchase (the “Non-Purchased Stock”) may be transferred by the Transferring Holder to the Prospective Transferee on the terms and conditions specified in the Transfer Notice. The transfer of the Non-Purchased Stock shall not be made after the 90^th day following the day on which the Transfer Notice was given, nor shall any change in the material terms and conditions of transfer be permitted without the Transferring Holder first giving to the Company a new Transfer Notice in compliance with the requirements of this Section 2(a) and the Right of First Refusal and Secondary Refusal Right, if applicable, shall apply with respect to the Proposed Transfer that is the subject of such new Transfer Notice.

-5-

(b) Right of Co-Sale

(1) If any Transfer Stock subject to a Proposed Transfer is not purchased pursuant to Section 2(a) above and thereafter is to be sold to a Prospective Transferee, each Major Investor may exercise a Right of Co-Sale by delivering to the selling Affected Holder written notice to that effect within the Investor Notice Period.

(2) Each Major Investor who timely exercises his, her or its Right of Co-Sale may include in the Proposed Transfer up to that number of shares of Capital Stock equal to the number of shares of Transfer Stock subject to the Proposed Transfer multiplied by a fraction, the numerator of which is the number of shares of Capital Stock owned by such Major Investor immediately before consummation of the Proposed Transfer and the denominator of which is the total number of shares of Capital Stock owned, in the aggregate, by all participating Major Investors immediately prior to the consummation of the Proposed Transfer plus the number of shares of Capital Stock held by the selling Affected Holder.

(3) Each participating Major Investor shall effect its participation in the Proposed Transfer by delivering to the transferring Affected Holder, no later than 15 business days after such Major Investor’s exercise of the Right of Co-Sale, one or more stock certificates, properly endorsed for transfer to the Prospective Transferee (or an instruction letter and other documentation as may be reasonably requested by the transfer agent if such Capital Stock is in book-entry form), representing no less than (i) the number of shares of Common Stock that such Major Investor elects to include in the Proposed Transfer; or (ii) the number of shares of Preferred Stock that is at such time convertible into the number of shares of Common Stock that such Major Investor elects to include in the Proposed Transfer; provided, however, that if the Prospective Transferee objects to the delivery of convertible Preferred Stock in lieu of Common Stock, such Major Investor shall first convert the Preferred Stock into Common Stock and deliver Common Stock as provided above. The Company agrees to make any such conversion concurrent with and contingent upon the actual transfer of such shares to the Prospective Transferee.

(4) The terms and conditions of any sale pursuant to this Section 2(b) will be memorialized in, and governed by, a written purchase and sale agreement with customary terms and provisions for such a transaction (including without limitation appropriate representations or warranties of the Investors (and any related indemnification obligations) and any post-closing escrow that is established that applies pro rata to the Affected Holder and Major Investors participating in such sale).

(5) Each stock certificate or book-entry notation a Major Investor delivers to the selling Affected Holder pursuant to subparagraph (3) above will be transferred to the Prospective Transferee against payment therefor in consummation of the sale of the Transfer Stock pursuant to the terms and conditions specified in the Transfer Notice and the purchase and sale agreement, and the selling Affected Holder shall concurrently therewith remit to each participating Major Investor the portion of the sale proceeds to which such Major Investor is entitled by reason of its participation in such sale. If any Prospective Transferee refuses to purchase securities subject to the Right of Co-Sale from any Major Investor exercising its Right of Co-Sale hereunder, no Affected Holder may sell any Affected Holder Stock to such Prospective Transferee or transferee unless and until, simultaneously with such sale, such Affected Holder purchases all securities subject to the Right of Co-Sale from such Major Investor.

-6-

(6) If any Proposed Transfer is not consummated within 90 days after receipt of the Transfer Notice by the Company, the Affected Holder proposing the Proposed Transfer may not sell any Affected Holder’s Stock unless he, she or it first again complies in full with each provision of this Section 2. The exercise or election not to exercise any right by any Major Investor hereunder shall not adversely affect its right to participate in any other sales of Transfer Stock subject to this Section 2.

(1) Any Proposed Transfer not made in compliance with the requirements of this Agreement shall be null and void ab initio, shall not be recorded on the books of the Company or its transfer agent and shall not be recognized by the Company. Each party hereto acknowledges and agrees that any breach of this Agreement would result in substantial harm to the other parties hereto for which monetary damages alone could not adequately compensate. Therefore, the parties hereto unconditionally and irrevocably agree that any non-breaching party hereto shall be entitled to protective orders, injunctive relief and other remedies available at law or in equity (including, without limitation, seeking specific performance or the rescission of purchases, sales and other transfers of Capital Stock not made in strict compliance with this Agreement).

(2) If any Affected Holder becomes obligated to sell any Capital Stock to the Company under this Agreement and fails to deliver such Capital Stock in accordance with the terms of this Agreement, the Company may, at its option, in addition to all other remedies it may have, send to such Affected Holder the purchase price for such Capital Stock as is herein specified and cancel on its books the certificate or certificates representing the Capital Stock to be sold.

(3) If any Affected Holder purports to sell any Capital Stock in contravention of the Right of Co-Sale (a “Prohibited Transfer”), each Major Investor, in addition to such remedies as may be available by law, in equity or hereunder, has the right to require such Affected Holder to purchase shares of Capital Stock from such Major Investor, as provided below, and such Affected Holder will be bound by the terms of such right. If an Affected Holder makes a Prohibited Transfer, each Major Investor may require such Affected Holder to purchase from such Major Investor the type and number of shares of Capital Stock that such Major Investor would have been entitled to sell to the Prospective Transferee under Section 2(b) had the Prohibited Transfer been effected pursuant to and in compliance with the terms of Section 2(b).

3. Exempt Transfers

(a) Notwithstanding the foregoing or anything to the contrary herein, the restrictions on transfer set forth in Section 2 shall not apply:

(1) to a repurchase of Transfer Stock from an Affected Holder by the Company at a price no greater than that originally paid by such Affected Holder for such Transfer Stock and pursuant to an agreement containing vesting and/or repurchase provisions approved by the board of directors;

-7-

(2) to any other repurchase of Transfer Stock from an Affected Holder by the Company approved by the board of directors, including the affirmative vote or consent of at least two Preferred Directors;

(3) to a pledge of Transfer Stock that creates a mere security interest in the pledged Transfer Stock, provided that the pledgee thereof agrees in writing in advance to be bound by and comply with all applicable provisions of this Agreement to the same extent as if it were the Affected Holder making such pledge;

(4) in the case of an Affected Holder that is a natural person, upon a transfer of Transfer Stock by such Affected Holder made for bona fide estate planning purposes and without consideration, either during his or her lifetime or on death by will or intestacy to his or her spouse, child (natural or adopted), or any other direct lineal descendant of such Affected Holder (or his or her spouse) (all of the foregoing collectively referred to as “family members”), or any other person approved by the board of directors, or any custodian or trustee of any trust, or partnership or limited liability company for the benefit of, or the ownership interests of which are owned wholly by, such Affected Holder or any such family members;

(5) in the case of an Affected Holder that is an investment fund, venture capital fund, private equity fund, institutional investor, or Affiliate of any of the foregoing, the distribution by such Affected Holder to its partners (limited or general), members, stockholders or beneficial owners provided, that except in the case of a repurchase of Transfer Stock by the Company, the Affected Holder shall provide prior written notice to the Company and such shares of Transfer Stock shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such transaction, deliver a counterpart signature page to this Agreement or other documentation reasonably satisfactory to the Company as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as an Affected Holder (but only with respect to the securities so transferred to the transferee), including the obligations of an Affected Holder with respect to Proposed Transfers of such Transfer Stock pursuant to Section 2; and

(6) notwithstanding the foregoing or anything to the contrary herein, the provisions of Section 2 shall not apply to the sale of any Transfer Stock (a) to the public in an offering pursuant to an effective registration statement under the Securities Act of 1933, as amended; or (b) pursuant to a Deemed Liquidation Event (as such term is defined in the Company’s Ninth Amended and Restated Certificate of Incorporation).

4. Legend

(a) In addition to any other legend required by applicable laws or agreements, each certificate representing shares of Capital Stock held by the Affected Holders or issued to any permitted transferee in connection with a transfer permitted by Section 3(a) hereof shall be endorsed with the following legend:

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO, AND IN CERTAIN CASES PROHIBITED BY, THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT BY AND AMONG THE STOCKHOLDER, THE CORPORATION AND CERTAIN OTHER HOLDERS OF STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.

-8-

(b) Each Affected Holder agrees that the Company may instruct its transfer agent to impose transfer restrictions on the shares represented by certificates or book-entry notations bearing the legend referred to in Section 4(a) above to enforce the provisions of this Agreement, and the Company agrees to promptly do so. The legend shall be removed at the request of the holder following termination of this Agreement.

5. Miscellaneous

(a) Term. This Agreement shall automatically terminate upon the earlier of (i) an initial public offering which causes the conversion of all shares of Preferred Stock into Common Stock pursuant to Section 5.1(a) of Article VI of the Company’s Ninth Amended and Restated Certificate of Incorporation or (ii) immediately prior to a Deemed Liquidation Event, as such term is defined in the Company’s Ninth Amended and Restated Certificate of Incorporation.

(b) Costs of Enforcement. If any party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings, the non-prevailing party shall pay all costs and expenses incurred by the prevailing party, including, without limitation, all reasonable attorneys’ fees.

(c) Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon personal delivery to the party to be notified or one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the schedules or signature pages hereof, as the case may be, or to such other address as subsequently modified by written notice given in accordance with this Section.

(d) Entire Agreement. This Agreement, together with the Purchase Agreement and the other agreements referenced therein, constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled. In the event of any conflict between this Agreement and any stock purchase agreement or similar agreement containing rights of first refusal or co-sale between the Company and any Common Holder, this Agreement shall govern and control over any such other agreement, but the stock purchase agreement or similar agreement shall otherwise remain in full force and effect subject to the terms thereof.

-9-

(e) Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting 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. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

(f) Amendment. This Agreement may be amended or modified and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by (i) the Company; (ii) a majority of the shares of Common Stock then held by the Common Holders who are, or held by any Common Holder entity that is owned, controlled or established for estate planning purposes and/or for the benefit of any Key Holder who is then, performing services for the Company, and (iii) the Investors holding at least a majority of the outstanding shares of Preferred Stock then held by all the Investors who hold shares of Preferred Stock. Notwithstanding the foregoing, (i) this Agreement may not be amended or terminated and the observance of any term of this Agreement may not be waived with respect to any Investor or Common Holder without the written consent of such Investor or Common Holder, respectively, unless such amendment, termination or waiver applies to all Investors or Common Holders, respectively, as the case may be, in substantially the same fashion; and (ii) the consent of the Common Holders shall not be required for any amendment or waiver if such amendment or waiver either (A) is not directly applicable to the rights of the Common Holders hereunder or (B) does not adversely affect the rights of the Common Holders in a manner that is different than the effect of the rights of the other parties hereto. Any amendment or waiver so effected shall be binding upon the Company, the Investors, the Common Holders and the Key Holders and all of their respective successors and permitted assigns whether or not such party, assignee or other shareholder entered into or approved such amendment or waiver. Without limiting the generality of the foregoing, any waiver of, or decision not to exercise, any right hereunder, including a waiver of a Right of First Refusal or Right of Co-Sale, by the Major Investors holding at least a majority of the then outstanding Preferred Stock held by all Major Investors shall be deemed to constitute a waiver of such right that is binding on all parties. In addition, the parties acknowledge and agree that new Affected Holders may be added to this Agreement from time to time (without changing the terms of this Agreement except for the addition of such parties) without formally amending this Agreement; provided, in each such case, that each such new Affected Holder becomes a party hereto.

(g) Transfers, 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. The rights of the Company are not assignable without the consent of the Investors holding at least a majority of the then outstanding Preferred Stock. The rights of the Investors hereunder are not assignable without the Company’s written consent, except (i) by each Investor to any Affiliate of such Investor or (ii) to an assignee or transferee who acquires at least 50% of the shares of Capital Stock held by such Investor.

-10-

(h) Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. The parties agree to replace such illegal, void, invalid or unenforceable provision of this Agreement with a legal, valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such illegal, void, invalid or unenforceable provision.

(i) Governing Law. This Agreement and any controversy arising directly or indirectly out of or relating to this Agreement shall be governed by and construed in accordance with the internal laws of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.

(j) Dispute Resolution; Waiver of Jury Trial. The parties (a) hereby irrevocably and unconditionally submit to the sole and exclusive jurisdiction of the state courts of the State of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

(k) 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.

-11-

(l) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(m) Key Holders’ Ownership of Common Holder entities. With respect to any Common Holder that is an entity, such entity is beneficially controlled by the applicable Key Holder, and such Key Holder agrees not to transfer his equity interest in such entity in circumvention of the provisions of this Agreement.

(n) Aggregation of Stock. All shares of Capital Stock held or acquired by Affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

(o) Specific Performance. In addition to any and all other remedies that may be available at law in the event of any breach of this Agreement, each Investor shall be entitled to specific performance of the agreements and obligations of the Company and the Affected Holders hereunder and to such other injunction or other equitable relief as may be granted by a court of competent jurisdiction.

(p) Additional Affected Holders. In the event that after the date of this Agreement, the Company issues shares of Preferred Stock or Common Stock the Company shall, as a condition to such issuance, cause such recipient of Capital Stock to execute a counterpart signature page hereto as an Affected Holder, and such person shall thereby be bound by, and subject to, all the terms and provisions of this Agreement applicable to an Affected Holder, provided, however, that with respect to issuances of Common Stock after the date hereof, the Company shall not be required to comply with this Section 5(p) unless the recipient will hold at least 1% of the outstanding Capital Stock (determined on a fully diluted, as converted basis, assuming the exercise and/or conversion of all then outstanding convertible securities of the Company) after giving effect to such issuance.

(q) Consent of Spouse. If any Affected Holder who is a natural person is married on the date of this Agreement, such Affected Holder’s spouse shall execute and deliver to the Company a Consent of Spouse in the form of Exhibit A hereto (“Consent of Spouse”), effective on the date hereof. Notwithstanding the execution and delivery thereof, such consent shall not be deemed to confer or convey to the spouse any rights in such Affected Holder’s shares of Transfer Stock that do not otherwise exist by operation of law or the agreement of the parties. If any Affected Holder should marry or remarry subsequent to the date of this Agreement, such Affected Holder shall within thirty (30) days thereafter obtain his/her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by causing such spouse to execute and deliver a Consent of Spouse acknowledging the restrictions and obligations contained in this Agreement and agreeing and consenting to the same.

-12-

(r) Effect on Prior Agreement. Upon the execution and delivery of this Agreement, the Prior Agreement automatically shall terminate and be of no further force and effect and shall be amended and restated in its entirety as set forth in this Agreement.

(Remainder of page intentionally left blank.)

-13-

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement as of the date first written above.

	Company:

	Winc, Inc.,
	a Delaware corporation

	By:
		Name: Geoffrey McFarlane
		Title: Chief Executive Officer

Signature Page to Seventh Amended and Restated

Right of First Refusal and Co-Sale Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement as of the date first written above.

	Common Holder:

	McFarlane Family Trust

	By:
		Name:
		Title:

	Address:

Signature Page to Seventh Amended and Restated

Right of First Refusal and Co-Sale Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement as of the date first written above.

	Common Holder:

	Siemer Ventures II, LP

	By:
		Name:
		Title:

	Address:

Signature Page to Seventh Amended and Restated

Right of First Refusal and Co-Sale Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement as of the date first written above.

	Common Holder:


	Alexander Oxman

	Address:

Signature Page to Seventh Amended and Restated

Right of First Refusal and Co-Sale Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement as of the date first written above.

	Common Holder:


	Geoffrey McFarlane

	Address:

Signature Page to Seventh Amended and Restated

Right of First Refusal and Co-Sale Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement as of the date first written above.

	Investor:

	[________]

	By:
		Name:
		Title:


	[________]

	Address:

Signature Page to Seventh Amended and Restated

Right of First Refusal and Co-Sale Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement as of the date first written above.

	“KEY Holder”


	Alexander Oxman

	Address:

Signature Page to Seventh Amended and Restated

Right of First Refusal and Co-Sale Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement as of the date first written above.

	“KEY Holder”


	Geoffrey McFarlane

	Address:

Signature Page to Seventh Amended and Restated

Right of First Refusal and Co-Sale Agreement of Winc, Inc.

Schedule 1

COMMON Holders

Alexander Oxman

Geoffrey McFarlane

McFarlane Family Trust

Michael Greenlee

Siemer Ventures II, LP

1-1

Schedule 2

Investors

2-1

Exhibit A

CONSENT OF SPOUSE

I, _________________________, spouse of _________________________, acknowledge that I have read the Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement, February [●], 2021, to which this Consent of Spouse (this “Consent”) is attached as Exhibit A (the “Agreement”), and that I know the contents of the Agreement. I am aware that the Agreement contains provisions regarding certain rights to certain other holders of Capital Stock of the Company upon a Proposed Transfer of shares of Transfer Stock of the Company which my spouse may own including any interest I might have therein.

I hereby agree that my interest, if any, in any shares of Transfer Stock of the Company subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in such shares of Transfer Stock of the Company shall be similarly bound by the Agreement.

Dated:		By:
			Name:

Exhibit 3.3

Winc, Inc.

SEVENTH amended and restated

Investors’ Rights AGREEMENT

Effective Date: February [●], 2021

TABLE OF CONTENTS

Page

1.	Definitions	1
2.	Registration Rights	5
2.1 Demand Registration		5
2.2 Company Registration		7
2.3 Underwriting Requirements		7
2.4 Obligations of the Company		9
2.5 Furnish Information		10
2.6 Expenses of Registration		10
2.7 Delay of Registration		11
2.8 Indemnification		11
2.9 Reports Under Exchange Act		13
2.10 Limitations on Subsequent Registration Rights		13
2.11 “Market Stand-off” Agreement		14
2.12 Restrictions on Transfer		14
2.13 Termination of Registration Rights		16
3.	Information and Observer Rights	16
3.1 Delivery of Financial Statements		16
3.2 Inspection		17
3.3 Observer Rights		18
3.4 Termination of Rights		18
3.5 Confidentiality		18
4.	Rights to Future Stock Issuances	19
4.1 Right of First Offer		19
4.2 Termination		20
5.	Additional Covenants	20
5.1 Insurance		20
5.2 Employee Agreements		20
5.3 Employee Stock		20
5.4 Qualified Small Business Stock		21
5.5 Matters Requiring Investor Director Approval		21
5.6 Board of Directors and Committee Matters		22
5.7 Foreign Corrupt Practices Act		22
5.8 Subsidiary Board Approval – General		23
5.9 Successor Indemnification		23
5.10 Indemnification Matters		23
5.11 Right to Conduct Activities		24
5.12 Termination of Covenants		24

-i-

Miscellaneous

6.1 Successors and Assigns	24
6.2 Governing Law	25
6.3 Counterparts	25
6.4 Titles and Subtitles	25
6.5 Notices	25
6.6 Amendments and Waivers	25
6.7 Severability	26
6.8 Aggregation of Stock	26
6.9 Additional Investors	26
6.10 Entire Agreement	26
6.11 Dispute Resolution; Waiver of Jury Trial	26
6.12 Delays or Omissions	27

Schedules

Schedule 1

Investors

Schedule 2

Series D Significant Investors

-ii-

SEVENTH AMENDED AND RESTATED

INVESTORS’ RIGHTS AGREEMENT

THIS SEVENTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”), is made as of February [●], 2021, by and among Winc, Inc., a Delaware corporation (the “Company”), and each of the investors listed on Schedule 1 hereto (each, an “Investor” and collectively, the “Investors”).

RECITALS

WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of the Company’s Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, Series D Prefeerred Stock, Series E Preferred Stock, and/or shares of Common Stock issued upon conversion thereof and possess registration rights, information rights, rights of first offer, and other rights pursuant to the Sixth Amended and Restated Investors’ Rights Agreement dated as of December 8, 2020, between the Company and such Investors (the “Prior Agreement”);

WHEREAS, the Existing Investors are holders of (i) a majority of the Registrable Securities then outstanding and (ii) a majority of the Registrable Securities held by the Major Investors (as such terms are defined in the Prior Agreement), and desire to amend and restate the Prior Agreement in its entirety and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Agreement; and

WHEREAS, the Existing Investors and the Company desire to induce certain of the Investors to purchase shares of Series F Preferred Stock of the Company, par value $0.0001 per share (“Series F Preferred Stock”) and warrants to purchase shares of Series F Preferred Stock (“Series F Warrants”), pursuant to a Series F Preferred Stock and Warrant Purchase Agreement (the “Purchase Agreement”) by amending and restating the Prior Agreement to provide the Investors with the rights and privileges as set forth herein.

NOW, THEREFORE, the Existing Investors hereby agree that the Prior Agreement shall be amended and restated in its entirety as set forth in this Seventh Amended and Restated Investors’ Rights Agreement, and the parties to this Agreement further agree as follows:

1. Definitions. For purposes of this Agreement:

1.1 “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer, director or trustee of such Person or any venture capital fund or other investment fund now or hereafter existing that is controlled by one or more general partners, managing members or investment adviser of, or shares the same management company or investment adviser with, such Person.

1.2 “Bessemer Ventures” means Bessemer Venture Partners VIII Institutional L.P.

-1-

1.3 “Certificate of Incorporation” means the Ninth Amended and Restated Certificate of Incorporation of the Company, as amended or restated from time to time in accordance therewith.

1.4 “CJF” means collectively Sake Ventures, LLC and Rice Wine Ventures, LLC.

1.5 “Common Stock” means shares of the Company’s common stock, par value $0.0001 per share.

1.6 “Damages” means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an 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 indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

1.7 “Deemed Liquidation Event” means a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation.

1.8 “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.

1.9 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

1.10 “Excluded Registration” means (i) a registration relating to the sale or grant of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, equity incentive or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

1.11 “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

1.12 “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

-2-

1.13 “Founder(s)” means Geoffrey McFarlane and Brian Smith.

1.14 “GAAP” means generally accepted accounting principles in the United States.

1.15 “Holder” means any holder of Registrable Securities who is a party to this Agreement.

1.16 “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including, adoptive relationships, of a natural person referred to herein.

1.17 “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

1.18 “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

1.19 “Major Investor” means Pacific Continental Insurance Co., Shining, Bessemer Ventures, Wahoowa Ventures LLC, 15 Angels II LLC, GoBlue Ventures, LLC, CrossCut Ventures 2, L.P., Kukac Limited, CJF, Kestrel Flight Fund LLC and Thomas Wetherald, and for purposes of Sections 3.1 and 3.2 only, Guild Capital – Club W LLC, in each case, for so long as each of such Investors (together with its Affiliates) continues to hold at least fifty percent (50.0%) of the shares of Preferred Stock held by such Investor (together with its Affiliates) as of the date hereof, and, for purposes of Section 3.1 only, each Series D Significant Investor. A Major Investor includes any general partners, managing members and Affiliates of a Major Investor.

1.20 “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

1.21 “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

1.22 “Prefered Director” has the meaning set forth in the Certificate of Incorporation.

1.23 “Preferred Stock” means, collectively, shares of the Company’s Series F Preferred Stock, Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, Series B-1 Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock.

-3-

1.24 “QIPO” means an IPO which results in the conversion of all shares of Preferred Stock into Common Stock pursuant to Section 5.1(a) of Article VI of the Certificate of Incorporation.

1.25 “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock; (ii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of the Series F Warrants or any other securities of the Company, acquired by the Investors after the date hereof; and (iii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i) and (ii) above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Subsection 6.1, and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Subsection 2.13 of this Agreement.

1.26 “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.

1.27 “Restricted Securities” means the securities of the Company required to be notated with the legend set forth in Subsection 2.12(b) hereof.

1.28 “SEC” means the Securities and Exchange Commission.

1.29 “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

1.30 “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

1.31 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

1.32 “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, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Subsection 2.6.

1.33 “Series A Preferred Stock” means shares of the Company’s Series A Preferred Stock, par value $0.0001 per share.

1.34 “Series B Preferred Stock” means shares of the Company’s Series B Preferred Stock, par value $0.0001 per share.

1.35 “Series B-1 Preferred Stock” means shares of the Company’s Series B-1 Preferred Stock, par value $0.0001 per share.

-4-

1.36 “Series C Preferred Stock” means shares of the Company’s Series C Preferred Stock, par value $0.0001 per share.

1.37 “Series D Preferred Stock” means shares of the Company’s Series D Preferred Stock, par value $0.0001 per share.

1.38 “Series D Signficant Investor” means each Investor who holds at least 35,371 shares of Series D Preferred Stock (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits and the like), as listed on Schedule 2 hereto, for so long as each such Investor continues to hold at least fifty percent (50.0%) of such shares of Series D Preferred Stock.

1.39 “Series E Preferred Stock” means shares of the Company’s Series E Preferred Stock, par value $0.0001 per share.

1.40 “Series Seed Preferred Stock” means shares of the Company’s Series Seed Preferred Stock, par value $0.0001 per share.

1.41 “Shining” means collectively Shiningwine Limited (BVI), Dreamer Pathway Limited (BVI) and Dream Catcher Investments Limited (BVI).

2. Registration Rights. The Company covenants and agrees as follows:

2.1 Demand Registration.

(a) Form S-1 Demand. If at any time after the earlier of (i) five (5) years after the date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request from Holders of at least forty percent (40.0%) of the Registrable Securities (including the Holders of a majority of the Registrable Securities held by Major Investors) then outstanding that the Company file a Form S-1 registration statement with respect to at least forty percent (40.0%) of the Registrable Securities then outstanding (or a lesser percent if the anticipated aggregate offering price, net of Selling Expenses, would exceed $15.0 million), then the Company shall (x) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (y) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsections 2.1(c) and 2.3.

(b) Form S-3 Demand. If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of at least twenty (20.0%) percent of the Registrable Securities (including the Holders of a majority of the Registrable Securities held by Major Investors) then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $5.0 million, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsections 2.1(c) and 2.3.

-5-

(c) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Subsection 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than sixty (60) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such sixty (60) day period other than an Excluded Registration.

(d) The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(a): (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) after the Company has effected two (2) registrations pursuant to Subsection 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Subsection 2.1(b). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(b) (i) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Company has effected two (2) registrations pursuant to Subsection 2.1(b) within the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Subsection 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand registration statement pursuant to Subsection 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Subsection 2.1(d); provided, that if such withdrawal is during a period the Company has deferred taking action pursuant to Subsection 2.1(c), then the Initiating Holders may withdraw their request for registration and such registration will not be counted as “effected” for purposes of this Subsection 2.1(d).

-6-

2.2 Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Subsection 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Subsection 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Subsection 2.6.

2.3 Underwriting Requirements.

(a) If, pursuant to Subsection 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Subsection 2.1, and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Initiating Holders, subject only to the reasonable approval of the Company. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Subsection 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting; provided, however, that no Holder (or any of their assignees) shall be required to make any representations, warranties or indemnities except as they relate to such Holder’s ownership of shares and authority to enter into the underwriting agreement and to such Holder’s intended method of distribution, and the liability of such Holder 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 Subsection 2.3, if the managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares.

-7-

(b) In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Subsection 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30.0%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering. For purposes of the provision in this Subsection 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

(c) For purposes of Subsection 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Subsection 2.3(a), fewer than fifty percent (50.0%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

-8-

2.4 Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to an additional one hundred twenty (120) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

(b) prepare and file with the SEC 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 Securities Act in order to enable the disposition of all securities covered by such registration statement;

(c) furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

(d) use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

(f) use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

(h) promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

-9-

(i) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

(j) after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.

2.5 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

2.6 Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable and documented fees and disbursements, not to exceed $50,000, of one counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Subsection 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Subsections 2.1(a) or 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Sections 2.1(a) or 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

-10-

2.7 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

2.8 Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:

(a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they 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 any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages 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; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Subsections 2.8(b) and 2.8(d) exceed the net proceeds from the offering received by such Holder (i.e., net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

-11-

(c) Promptly after receipt by an indemnified party under this Subsection 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Subsection 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Subsection 2.8.

(d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Subsection 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Subsection 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Subsection 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect 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 allegedly untrue statement of a material fact, or the omission or alleged omission of 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; provided, however, that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Subsection 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Subsection 2.8(b), exceed the net proceeds from the offering received by such Holder (i.e., net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

(f) Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Subsection 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

-12-

2.9 Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

(a) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

(b) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

(c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).

2.10 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the shares of Preferred Stock then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that (i) would allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included; or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Subsection 6.9.

-13-

2.11 “Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company for its own behalf of shares of its Common Stock or any other equity securities under the Securities Act on a registration statement on Form S-1 or Form S-3, and ending on the date specified by the Company and the managing underwriter (such period not to exceed ninety (90) days, except in connection with the IPO, in wich case such period shall not exceed one hundred eighty (180) days), (i) lend; 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; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Subsection 2.11 shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, or the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the immediate family of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than one percent (1.0%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding Preferred Stock). The underwriters in connection with such registration are intended third-party beneficiaries of this Subsection 2.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Subsection 2.11 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements. At the election of the holders of a majority of the shares of Preferred Stock, the market stand-off period set forth in this Section 2.11 shall be extended for a period ending up to ninety (90) days following a public offering of Company securities which is consummated during the initial market stand-off period relating to the IPO.

2.12 Restrictions on Transfer.

(a) The Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

(b) Each certificate, instrument, or book entry representing (i) the Registrable Securities, and (ii) any other securities issued in respect of the securities referenced in clause (i), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Subsection 2.12(c)) be notated with a legend substantially in the following form:

-14-

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Subsection 2.12.

(c) The holder of such Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effefcted without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144, it being understood that any such opinion as may be required by the Company’s transfer agent to remove the restrictive legend identified in Section 2.12(b) for such Restricted Securities as may be sold pursuant to SEC Rule 144 shall be promptly provided by the Company’s counsel and the expense of such opinion shall be borne by the Company; or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Subsection 2.12. Each certificate, instrument, or book entry representing the Restricted Securities transferred as above provided shall be notated with, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Subsection 2.12(b), except that such certificate instrument, or book entry shall not be notated with such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

-15-

2.13 Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Subsections 2.1 or 2.2 shall terminate upon the earliest to occur of:

(a) the closing of a Deemed Liquidation Event; and

(b) the fifth (5^th) anniversary of the QIPO.

3. Information and Observer Rights.

3.1 Delivery of Financial Statements. The Company shall deliver to each Major Investor; provided that the Board of Directors has not reasonably determined that such Major Investor is a competitor of the Company (it being understood that a venture capital fund that is a Major Investor will not be determined to be a competitor of the Company):

(a) as soon as practicable, but in any event within ninety (90) days after the end of each fiscal year of the Company (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows 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 in Subsection 3.1(e)) 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 audited and certified by independent public accountants of recognized standing selected by the Company and approved by the Company’s Board of Directors;

(b) as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments; and (ii) not contain all notes thereto that may be required in accordance with GAAP);

(c) as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters 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 the Major Investors to calculate their respective percentage equity ownership in the Company, and certified by the chief financial officer or chief executive officer of the Company as being true, complete, and correct;

-16-

(d) as soon as practicable, but in any event within thirty (30) days of the end of each month, an unaudited income statement and statement of cash flows for such month, and an unaudited balance sheet and statement of stockholders’ equity as of the end of such month, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

(e) as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), approved by the Board of Directors and prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company;

(f) with respect to the financial statements called for in Subsection 3.1(a), Subsection 3.1(b) and Subsection 3.1(d), an instrument executed by the chief financial officer and chief executive officer of the Company certifying that such financial statements were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (except as otherwise set forth in Subsection 3.1(b) and Subsection 3.1(d)) and fairly present the financial condition of the Company and its results of operation for the periods specified therein; and

(g) such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Major Investor may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Subsection 3.1 to provide 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); or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

Notwithstanding anything else in this Subsection 3.1 to the contrary, the Company may cease providing the information set forth in this Subsection 3.1 during the period starting with the date thirty (30) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Subsection 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

3.2 Inspection. The Company shall permit each Major Investor (provided that the Board of Directors has not reasonably determined that such Major Investor is a competitor of the Company (it being understood that a venture capital fund that is a Major Investor will not be determined to be a competitor of the Company)), at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Subsection 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

-17-

3.3 Observer Rights. As long as Thomas Wetherald owns not less than seventy five percent (75.0%) of the shares of the Series F Preferred Stock he is purchasing under the Purchase Agreement (or an equivalent amount of Common Stock issued upon conversion thereof), the Company shall Mr. Wetherald to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give Mr. Wetherald copies of all notices, minutes, consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that Mr. Wetherald shall agree to hold in confidence all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude Mr. Wetherald from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest.

3.4 Termination of Rights. The covenants set forth in Subsection 3.1, Subsection 3.2 and Section 3.3 shall terminate and be of no further force or effect (i) immediately before the consummation of the QIPO, or (ii) upon a Deemed Liquidation Event, whichever event occurs first.

3.5 Confidentiality. Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor or make decisions with respect to its investment in the Company) 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), 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 Subsection 3.5 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor 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; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Subsection 3.5 (iii) to any existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

-18-

4. Rights to Future Stock Issuances.

4.1 Right of First Offer. Subject to the terms and conditions of this Subsection 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor. A Major Investor shall be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate, among (i) itself, (ii) its Affiliates and (iii) its beneficial interest holders, such as limited partners, members or any other Person having “beneficial ownership,” as such term is defined in Rule 13d-3 promulgated under the Exchange Act, of such Major Investor (“Investor Beneficial Owners”); provided that each such Affiliate or Investor Beneficial Owner agrees to enter into this Agreement and each of the Voting Agreement and Right of First Refusal and Co-Sale Agreement of even date herewith among the Company, the Investors and the other parties named therein, as an “Investor” under each such agreement.

(a) The Company shall give notice (the “Offer Notice”) to each Major Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

(b) By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock then held by such Major Investor (including all shares of Common Stock then issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held by such Major Investor) bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock and other Derivative Securities). At the expiration of such twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Major Investor’s failure to do likewise. During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares. The closing of any sale pursuant to this Subsection 4.1(b) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Subsection 4.1(c).

(c) If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Subsection 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Subsection 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Major Investors in accordance with this Subsection 4.1.

-19-

(d) The right of first offer in this Subsection 4.1 shall not be applicable to (i) Exempted Securities (as defined in the Certificate of Incorporation); (ii) shares of Common Stock issued in the QIPO; (iii) the issuance of shares of Series F Preferred Stock pursuant to the Purchase Agreement; or (iv) shares or securities which the Major Investors holding at least a majority of the Registrable Securities held by all Major Investors agree, retroactively or prospectively, shall not be deemed to be New Securities.

4.2 Termination. The covenants set forth in Subsection 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the QIPO, or (ii) upon a Deemed Liquidation Event, whichever event occurs first.

5. Additional Covenants.

5.1 Insurance. The Company shall maintain, from financially sound and reputable insurers Directors and Officers liability insurance in an amount and from a carrier on terms and conditions satisfactory to Bessemer Ventures, Shining and CJF. The Company will certify to Bessemer Ventures, Shining and CJF, at least annually, that it is complying with this Subsection 5.1 and shall deliver a current copy of such policy to Bessemer Ventures, Shining and CJF along with such certification.

5.2 Employee Agreements. The Company will cause (i) each person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) to enter into a nondisclosure and proprietary rights assignment agreement; and (ii) each person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a one (1) year nonsolicitation agreement, substantially in the form approved by the Board of Directors, including the affirmative consent of at least two Preferred Directors (except in the case of an executive officer, in which case the affirmative consent of all Preferred Directors shall be required). In addition, the Company shall not 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, without the consent of the Company’s Board of Directors, including the affirmative consent of at least two Preferred Directors (except in the case of an executive officer, in which case the affirmative consent of all Preferred Directors shall be required).

5.3 Employee Stock. Unless otherwise approved by the Board of Directors, including the affirmative consent of at least two Preferred Directors, all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25.0%) of such shares vesting following twelve (12) months of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Subsection 2.11. In addition, unless otherwise approved by the Board of Directors, including the affirmative consent of at least two Preferred Directors, with respect to equity grants following the Initial Closing (as defined in the Purchase Agreement), the Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock.

-20-

5.4 Qualified Small Business Stock. The Company shall use commercially reasonable efforts to cause the shares of Preferred Stock, as well as any shares into which such shares are converted, within the meaning of Section 1202(f) of the Internal Revenue Code (the “Code”), to constitute “qualified small business stock” as defined in Section 1202(c) of the Code; provided, however, that such requirement shall not be applicable if the Board of Directors of the Company determines, in its good-faith business judgment, that such qualification is inconsistent with the best interests of the Company. The Company shall submit to its stockholders (including the Investors) and to the Internal Revenue Service any reports that may be required under Section 1202(d)(1)(C) of the Code and the regulations promulgated thereunder. In addition, within twenty (20) business days after any Investor’s written request therefor, the Company shall, at its option, either (i) deliver to such Investor a written statement indicating whether (and what portion of) such Investor’s interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code or (ii) deliver to such Investor such factual information in the Company’s possession as is reasonably necessary to enable such Investor to determine whether (and what portion of) such Investor’s interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code.

5.5 Matters Requiring Investor Director Approval.

(a) So long as the holders of Preferred Stock are entitled to elect three Preferred Directors, the Company hereby covenants and agrees with each of the Investors that it shall not, without approval of the Board of Directors, which approval must include the affirmative vote or consent of at least two Preferred Directors:

(i) make, or permit any subsidiary to make, any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company;

(ii) make, or permit any subsidiary to make, any loan or advance to any Person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board of Directors, including the affirmative vote or consent of at least two Preferred Directors;

(iii) guarantee, directly or indirectly, or permit any subsidiary to guarantee, directly or indirectly, any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;

-21-

(iv) implement or change (or make any investment inconsistent with) the Company’s cash investment policy;

(v) incur any aggregate indebtedness in excess of five hundred thousand dollars ($500,000) that is not already included in the Budget (as defined in Subsection 3.1(e)), other than trade credit incurred in the ordinary course of business;

(vi) hire, terminate, or change the compensation of the executive officers, including approving any option grants or stock awards to executive officers;

(vii) change the principal business of the Company, enter new lines of business, or exit the current line of business;

(viii) sell, assign, license, pledge, or encumber material technology or intellectual property, other than licenses granted in the ordinary course of business; or

(ix) enter into any corporate strategic relationship involving the payment, contribution or assignment by the Company or to the Company of money or assets greater than five hundred thousand dollars ($500,000).

(b) In addition, so long as the holders of Preferred Stock are entitled to elect three Preferred Directors, the Company hereby covenants and agrees with each of the Investors that it shall not, without approval of the Board of Directors, which approval must include the affirmative vote or consent of at least two Preferred Directors:

(i) enter into or be a party to any transaction with any director, officer, or Founder of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person, including without limitation any “management bonus” or similar plan providing payments to employees in connection with a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation; or

(ii) approve any stock incentive or stock option plan or program, increase the number of shares of Common Stock reserved for issuance under any such plan or program, or accelerate vesting of any stock option, restricted stock, or other equity-based incentive.

5.6 Board of Directors and Committee Matters. Unless otherwise determined by the vote of a majority of the directors then in office, the Board of Directors shall meet at least quarterly in accordance with an agreed-upon schedule. The Company shall reimburse the nonemployee directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board of Directors. The Company shall cause to be established, as soon as practicable after such request, and will maintain, an audit and compensation committee, each of which shall consist solely of non-management directors. Each non-employee director shall be entitled in such person’s discretion to be a member of any committee of the Board of Directors.

5.7 Foreign Corrupt Practices Act. As soon as practicable, but in any event within 90 days of the date hereof, the Company shall institute and maintain, and shall cause each of its subsidiaries and affiliates to institute and maintain, systems or internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with the Foreign Corrupt Practices Act of 1977, as amended or any other applicable anti-bribery or anti-corruption law (including without limitation Part 12 of the United States Anti-Terrorism, Crime and Security Act of 2001; the United States Money Laundering Control Act of 1986; the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001; the United States Foreign Corrupt Practices Act, as amended; and laws applicable in the United Kingdom that prohibit bribery, corrupt practices or money laundering, including, for the avoidance of doubt, the Bribery Act 2010).

-22-

5.8 Subsidiary Board Approval – General. No subsidiary of the Company shall take any action without the approval of the Board of Directors of the Company to the extent approval of the Board of Directors of the Company would be required in the event such action was to be taken by the Company itself, including the affirmative consent of at least two Preferred Directors.

5.9 Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into any other Person 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 of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, its Certificate of Incorporation, or elsewhere, as the case may be.

5.10 Indemnification Matters. The Company hereby acknowledges that one (1) or more of the directors nominated to serve on the Board of Directors by the Investors (each a “Fund Director”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Fund Director are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Fund Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Fund 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 Fund Director to the extent legally permitted and as required by the Company’s Certificate of Incorporation or Bylaws of the Company (or any agreement between the Company and such Fund Director), without regard to any rights such Fund Director may have against the Fund Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund 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 Fund Indemnitors on behalf of any such Fund Director with respect to any claim for which such Fund Director has sought indemnification from the Company shall affect the foregoing and the Fund 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 Fund Director against the Company.

-23-

5.11 Right to Conduct Activities. The Company hereby agrees and acknowledges that certain of the Holders (together with their respective Affiliates) are professional investment organizations, and as such review the business plans and related proprietary information of many enterprises, some of which 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 Holders 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; and the Company hereby agrees that, to the extent permitted under applicable law, the Holders (and their respective Affiliates) shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by any Holder (or their respective Affiliates) in any entity competitive with the Company, or (ii) actions taken by any partner, officer, employee or other representative of an Holder (or their respective Affiliates) 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, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x) any of the Holders from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.

5.12 Termination of Covenants. The covenants set forth in this Section 5, except for Subsections 5.10 and 5.11, shall terminate and be of no further force or effect (i) immediately before the consummation of the QIPO; or (iii) upon a Deemed Liquidation Event, whichever event occurs first.

6. Miscellaneous.

6.1 Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least 250,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Subsection 2.11. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees 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 permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

-24-

6.2 Governing Law. This Agreement and any controversy arising directly or indirectly out of or relating to this Agreement shall be governed by and construed in accordance with the internal laws of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.

6.3 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, 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 and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

6.4 Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

6.5 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Subsection 6.5.

6.6 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of (i) the Company, (ii) the holders of a majority of the Registrable Securities then outstanding, and (iii) the holders a majority of the Registrable Securities then held by the Major Investors; provided that the Company may in its sole discretion waive compliance with Subsection 2.12(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Subsection 2.12(c) shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction). The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Subsection 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

-25-

6.7 Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

6.8 Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

6.9 Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Series F Preferred Stock after the date hereof, any purchaser of such shares of Series F 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. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.

6.10 Entire Agreement. This Agreement (including any Schedules and Exhibits hereto), together with the Purchase Agreement and the other agreements referenced therein, constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled. Upon the effectiveness of this Agreement, the Prior Agreement shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect.

6.11 Dispute Resolution; Waiver of Jury Trial. The parties (a) hereby irrevocably and unconditionally submit to the sole and exclusive jurisdiction of the state courts of the State of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

-26-

6.12 Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to 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. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

(Remainder of page intentionally left blank.)

-27-

The parties hereto have executed this Seventh Amended and Restated Investors’ Rights Agreement as of the date first written above.

	Company:

	Winc, Inc.,
	a Delaware corporation

	By:
		Name: Geoffrey McFarlane
		Title: Chief Executive Officer

	Address:

Signature Page to Seventh Amended and Restated

Investors’ Rights Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties hereto have executed this Seventh Amended and Restated Investors’ Rights Agreement as of the date first written above.

	Investor:

	[________]


	By:
		Name:
		Title:



	[________]

	Address:

Signature Page to Seventh Amended and Restated Investors’ Rights Agreement of Winc, Inc.

Schedule 1

Investors

1-1

Schedule 2

Series D Significant Investors

2-1

Exhibit 3.4

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. This warrant must be surrendered to the coMPANY or its transfer agent as a condition precedent to the sale, transfer, pledge or hypothecation of any interest in any of the securities represented hereby.

Warrant to Purchase SECURITIES of

Winc, Inc.

Dated as of February ●, 2021 (the “Issuance Date”)

Void after the date specified in Section 10

THIS CERTIFIES THAT, for value received, [●], or its registered assigns (the “Holder”), is entitled, subject to the provisions and upon the terms and conditions set forth herein, to purchase from Winc, Inc., a Delaware corporation (the “Company”), either (i) shares of the Company’s Series F Preferred Stock (the “Series F Preferred Stock”) prior to an initial public offering or other event that results in the conversion of all shares of the Company’s Preferred Stock into shares of its common stock, par value $0.0001 per share (the “Common Stock”), pursuant to Section 5.1(a) of Article VI of the Company’s Ninth Amended and Restated Certificate of Incorporation (a “QIPO”) or (ii) shares of Common Stock following a QIPO by the Company, in each case in the amounts, at such times and at the price per share set forth in Section 1. The term “Warrant” as used herein shall include this Warrant and any warrants delivered in substitution or exchange therefor as provided herein. The term “Securities” as used herein shall include the Series F Preferred Stock or the Common Stock, as applicable, to be delivered by the Company in connection with the exercise of this Warrant, it being understood that whether the Securities delivered consist of Series F Preferred Stock, Common Stock or other securities of the Company shall be determined in accordance with this Warrant. This Warrant is issued in connection with the transactions described in the Series F Preferred Stock and Warrant Purchase Agreement, dated as of even date herewith, by and among the Company and the purchasers described therein (the “Purchase Agreement”). All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Purchase Agreement.

The following is a statement of the rights of Holder and the conditions to which this Warrant is subject, and to which Holder, by acceptance of this Warrant, agrees:

1. Number and Price of Securities; Exercise Period.

(a) Number of Securities. Subject to the terms and conditions of this Warrant:

(i) Holder shall have the right to purchase up to [●]shares of Series F Preferred Stock, as may be adjusted pursuant hereto, at any point during the Exercise Period prior to a QIPO; or

(ii) Holder shall have the right to purchase up to [●]shares of Common Stock, as may be adjusted pursuant hereto, at any point during the Exercise Period following a QIPO.

For the sake of clarity, subject to the terms of this Warrant, Holder shall have the right upon the exercise of this Warrant to receive either the shares of Series F Preferred Stock pursuant to Section 1(a)(i) or the shares of Common Stock pursuant to Section 1(a)(ii), it being understood that if Holder exercises its rights in full pursuant to Section 1(a)(i) then Holder will have no remaining rights pursuant to Section 1(a)(ii); provided further, however, if Holder only exercises a portion of the rights under this Warrant pursuant to Section 1(a)(i), then Holder will have the right to exercise the remaining portion of the rights available under this Warrant either pursuant to Section 1(a)(i) or Section 1(a)(ii), as applicable.

-1 -

(b) Exercise Price. The exercise price per Security shall be equal to $1.75, subject to adjustment pursuant hereto (the “Exercise Price Per Security”).

(c) Exercise Period. This Warrant shall be exercisable, in whole or in part, prior to or in connection with the expiration of this Warrant as set forth in Section 10 (the “Exercise Period”).

2. Definitions. For purposes of this Warrant:

(a) “Affiliate” means as to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, such Person.

(b) “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in the State of California are authorized or required to close.

(c) “Control” and its derivatives means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities (or other ownership interest), as trustee or executor, by contract or otherwise.

(d) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(e) “Person” means any individual, partnership, joint venture, limited liability company, corporation, trust or other entity, any national or state government or any agency or political subdivision thereof, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so requires.

-2 -

(f) “Securities Act” means the Securities Act of 1933, as amended.

3. Exercise of the Warrant.

(a) Exercise. The purchase rights represented by this Warrant may be exercised at the election of the Holder, in whole or in part, by:

(i) the tender to the Company at its principal office (or such other office or agency as the Company may designate) of a notice of exercise in the form of Exhibit A (the “Notice of Exercise”), duly completed and executed by or on behalf of Holder, together with the surrender of this Warrant; and

(ii) the payment to the Company of an amount equal to the product of (x) the Exercise Price Per Security multiplied by (y) the number of Securities being purchased, by wire transfer or certified, cashier’s or other check acceptable to the Company and payable to the order of the Company.

(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to Section 3(a), if the fair market value of one Security is greater than the Exercise Price Per Security (at the date of calculation as set forth below), the Holder may elect to receive a number of Securities equal to the value of this Warrant (or of any portion of this Warrant being canceled) by surrender of this Warrant at the principal office of the Company (or such other office or agency as the Company may designate) together with a properly completed and executed Notice of Exercise reflecting such election, in which event the Company shall issue to the Holder that number of Securities computed using the following formula:

X	=	Y (A – B)
		A

Where:

X	=	The number of Securities to be issued to the Holder
Y	=	The number of Securities purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)
A	=	The fair market value of one Security (at the date of such calculation)
B	=	The Exercise Price Per Security (as adjusted to the date of such calculation)

For purposes of the calculation above, the fair market value of one Security shall be determined by the Company’s Board of Directors, acting in good faith; provided, however, that: (i) where a public market exists for the Common Stock at the time of such exercise (e.g., if such exercise takes place after a QIPO by the Company), the fair market value per share of Common Stock shall be the average of the closing bid and asked prices of the Common Stock or the closing price quoted on the national securities exchange on which the Common Stock is listed as published in The Wall Street Journal, as applicable, for the ten (10) trading day period ending five (5) trading days prior to the date of determination of fair market value; and (ii) if the Warrant is exercised in connection with the Company’s initial public offering of Common Stock, the fair market value per share of Common Stock shall be the per share offering price to the public of the Company’s initial public offering.

-3 -

(c) Security Certificates. The rights under this Warrant shall be deemed to have been exercised and the Securities issuable upon such exercise shall be deemed to have been issued immediately prior to the close of business on the date this Warrant is exercised in accordance with its terms, and the Person entitled to receive the Securities issuable upon such exercise shall be treated for all purposes as the holder of record of such Securities as of the close of business on such date. As promptly as reasonably practicable on or after such date, the Company shall issue and deliver to the Person or Persons entitled to receive the same a certificate or certificates for that number of Securities issuable upon such exercise. In the event that the rights under this Warrant are exercised in part and have not expired, the Company shall execute and deliver a new Warrant reflecting the number of Securities that remain subject to this Warrant.

(d) No Fractional Securities or Scrip. No fractional securities or scrip representing fractional securities shall be issued upon the exercise of the rights under this Warrant. In lieu of such fractional securities to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price Per Security multiplied by such fraction.

(e) Automatic Exercise. If the Holder of this Warrant has not elected to exercise this Warrant prior to expiration of this Warrant pursuant to Section 10, then this Warrant shall automatically (without any act on the part of the Holder) be exercised pursuant to Section 3(b) effective immediately prior to the expiration of the Warrant to the extent such net issue exercise would result in the issuance of Securities, unless Holder shall earlier provide written notice to the Company that the Holder desires that this Warrant expire unexercised. If this Warrant is automatically exercised, the Company shall notify the Holder of the automatic exercise as soon as reasonably practicable, and the Holder shall surrender the Warrant to the Company in accordance with the terms hereof.

(f) Reservation of Securities. The Company agrees during the Exercise Period to take all reasonable action to reserve and keep available from its authorized and unissued shares of Series F Preferred Stock and shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, such number of shares of Series F Preferred Stock (and shares of Common Stock for issuance on conversion of such shares) and shares of Common Stock as shall from time to time be sufficient to effect the exercise of the rights under this Warrant; and if at any time the number of authorized but unissued shares of Series F Preferred Stock (and shares of Common Stock for issuance on conversion of such shares) and shares of Common Stock shall not be sufficient for purposes of the exercise of this Warrant in accordance with its terms and the conversion of the Series F Preferred Stock, if applicable, without limitation of such other remedies as may be available to Holder, the Company will take such corporate action as may be necessary to increase its authorized and unissued shares of Series F Preferred Stock (and shares of Common Stock for issuance on conversion of such shares) and Shares of Common Stock to a number of shares as shall be sufficient for such purposes. The Company represents and warrants that all Securities that may be issued upon the exercise of this Warrant will, when issued in accordance with the terms hereof, be validly issued, fully paid and nonassessable.

-4 -

4. Replacement of the Warrant. Subject to the 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 and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at the expense of Holder shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

5. Investors’ Rights Agreement. This Warrant and all Securities issuable upon exercise of this Warrant are and shall become subject to, and have the benefit of, the Investors’ Rights Agreement (as defined in the Purchase Agreement), and Holder shall be required, for so long as Holder holds this Warrant or any Securities, to become and remain a party to the Investors’ Rights Agreement.

6. Transfer of the Warrant.

(a) Transferability of the Warrant. Subject to the provisions hereof, this Warrant with respect to compliance with the Securities Act and limitations on assignments and transfers, including without limitation compliance with the restrictions on transfer set forth in Section 7, title to this Warrant may be transferred by endorsement (by the transferor and the transferee executing the assignment form attached as Exhibit B (the “Assignment Form”)) and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery.

(b) Exchange of the Warrant upon a Transfer. On surrender of this Warrant (and a properly endorsed Assignment Form) for exchange, subject to the provisions of this Warrant with respect to compliance with the Securities Act and limitations on assignments and transfers, the Company shall issue to or on the order of Holder a new warrant or warrants of like tenor, in the name of Holder or as Holder (on payment by Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof, and the Company shall register any such transfer upon the warrant register. This Warrant (and the Securities issuable upon exercise of the rights under this Warrant) must be surrendered to the Company or its warrant or transfer agent, as applicable, as a condition precedent to the sale, pledge, hypothecation or other transfer of any interest in any of the securities represented hereby.

(c) Taxes. In no event shall the Company be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of any certificate in a name other than that of Holder, and the Company shall not be required to issue or deliver any such certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid or is not payable.

7. Restrictions on Transfer of the Warrant and Securities; Compliance with Securities Laws. By acceptance of this Warrant, Holder agrees to comply with the following:

(a) Restrictions on Transfers. Subject to Section 7(c), this Warrant may not be transferred or assigned in whole or in part without the Company’s prior written consent (which shall not be unreasonably withheld) other than to an Affiliate of Holder and any attempt by Holder to transfer or assign any rights, duties or obligations that arise under this Warrant without such permission shall be void. Holder agrees not to make any sale, assignment, transfer, pledge or other disposition (each, a “Disposition”) of all or any portion of this Warrant, or any beneficial interest herein, unless and until the transferee has executed and delivered an Assignment Form.

-5 -

(b) Compliance with Securities Laws. Any transfer of this Warrant or the other Securities must be in compliance with all applicable federal and state securities laws. Holder agrees not to make any Disposition of all or any portion of the Securities, or any beneficial interest therein, unless and until:

(i) the transferee thereof has agreed in writing for the benefit of the Company to take and hold such Securities subject to, and to be bound by, the terms and conditions set forth in this Warrant to the same extent as if the transferee were the original Holder hereunder, and there is then in effect a registration statement under the Securities Act covering such proposed Disposition and such Disposition is made in accordance with such registration statement, or

(ii) (A) such Holder shall have given prior written notice to the Company of such Holder’s intention to make such Disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed Disposition, (B) the transferee shall have confirmed to the satisfaction of the Company in writing, substantially in the form of the representations set forth in Section 12, that the Securities are being acquired (1) solely for the transferee’s own account and not as a nominee for any other party, (2) for investment and (3) not with a view toward distribution or resale, and shall have confirmed such other matters related thereto as may be reasonably requested by the Company, and (C) if requested by the Company, such Holder shall have furnished the Company, at Holder’s expense, with (1) evidence reasonably satisfactory to the Company that such Disposition will not require registration of such Securities under the Securities Act or (2) a “no action” letter from the Securities and Exchange Commission (the “Commission”) to the effect that the transfer of such Securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon such Holder shall be entitled to transfer such Securities in accordance with the terms of the notice delivered by Holder to the Company.

(c) Permitted Transfers. Permitted transfers include (i) a transfer not involving a change in beneficial ownership, (ii) transactions by an individual to any immediate family member, which, for purposes of this Warrant, shall mean any relationship by blood, marriage or adoption, not more remote than first cousin or (iii) transactions involving the distribution without consideration of Securities by any Holder to (A) a parent, subsidiary or other Affiliate of a Holder that is a corporation, (B) any of Holder’s partners, members or other equity owners, or retired partners or members, or to the estate of any of its partners, members or other equity owners or retired partners or members, or (C) a venture capital fund that is Controlled by or under common Control with one or more general partners or managing members of, or shares the same management company with, Holder; provided, in each case, that Holder shall give written notice to the Company of Holder’s intention to effect such Disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed Disposition.

(d) Investment Representation Statement. Unless the rights under this Warrant are exercised pursuant to an effective registration statement under the Securities Act that includes the Securities with respect to which this Warrant was exercised, it shall be a condition to any exercise of the rights under this Warrant that Holder shall have confirmed to the satisfaction of the Company in writing that the Securities so purchased are being acquired solely for Holder’s own account and not as a nominee for any other Person, for investment and not with a view toward distribution or resale and that Holder shall have confirmed such other matters related thereto as may be reasonably requested by the Company.

-6 -

(e) Securities Law Legend. The Securities shall (unless otherwise permitted by the provisions of this Warrant) be stamped or imprinted with a legend substantially similar to the following (in addition to any legend required by state securities laws):

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

(f) Investors’ Rights Agreement Legend. The Securities shall also be stamped or imprinted with a legend in substantially the following form:

THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD IN THE EVENT OF A PUBLIC OFFERING, AS SET FORTH IN AN INVESTORS’ RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

(g) Instructions Regarding Transfer Restrictions. Holder consents to the Company making a notation on its records and giving instructions to any transfer agent in order to implement the restrictions on transfer established in this Section 7.

(h) Removal of Legend. The legend referring to federal and state securities laws identified in Section 7(e) stamped on a certificate or book-entry notation evidencing the Securities and any Common Stock issued upon conversion thereof, if applicable, and the stock transfer instructions and record notations with respect to such securities shall be removed and the Company shall issue a certificate without such legend to Holder of such securities if (i) such securities are registered under the Securities Act, or (ii) such holder provides the Company with an opinion of counsel or other evidence reasonably satisfactory to counsel to the Company to the effect that a sale or transfer of such securities may be made without registration or qualification.

-7 -

8. Adjustments. Subject to the expiration of this Warrant pursuant to Section 10, the number and kind of Securities purchasable hereunder and the Exercise Price Per Security therefor are subject to adjustment from time to time, as follows:

(a) Merger or Reorganization. If at any time there shall be any reorganization, recapitalization, merger or consolidation (a “Reorganization”) involving the Company (other than as otherwise provided for herein or as would cause the expiration of this Warrant under Section 10) in which shares of the Company’s capital stock are converted into or exchanged for securities, cash or other property, then, as a part of such Reorganization, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, the kind and amount of securities, cash or other property of the successor corporation resulting from such Reorganization, equivalent in value to that which a holder of the Securities deliverable upon exercise of this Warrant would have been entitled in such Reorganization if the right to purchase the Securities hereunder had been exercised immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the board of directors of the successor corporation) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after such Reorganization to the end that the provisions of this Warrant shall be applicable after the event, as near as reasonably may be, in relation to any shares or other securities deliverable after that event upon the exercise of this Warrant.

(b) Reclassification of Securities. If the Securities issuable upon exercise of this Warrant are changed into the same or a different number of securities of any other class or classes by reclassification, capital reorganization, conversion of all outstanding shares of the relevant class or series (other than as would cause the expiration of this Warrant pursuant to Section 10) or otherwise (other than as otherwise provided for herein) (a “Reclassification”), then, in any such event, in lieu of the type of Securities which Holder would otherwise have been entitled to receive, Holder shall have the right thereafter to exercise this Warrant for a number of shares of such other class or classes of stock that a holder of the number of securities deliverable upon exercise of this Warrant immediately before that change would have been entitled to receive in such Reclassification, all subject to further adjustment as provided herein with respect to such other shares.

(c) Subdivisions and Combinations. In the event that the outstanding shares of Series F Preferred Stock or Common Stock are subdivided (by stock split, by payment of a stock dividend or otherwise) into a greater number of shares of such securities, the number of Securities issuable upon exercise of the rights under this Warrant immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately increased, and the Exercise Price Per Security shall be proportionately decreased, and in the event that the outstanding shares of Series F Preferred Stock or Common Stock are combined (by reclassification or otherwise) into a lesser number of shares of such securities, the number of Securities issuable upon exercise of the rights under this Warrant immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately decreased, and the Exercise Price Per Security shall be proportionately increased.

-8 -

(d) Notice of Adjustments. Upon any adjustment in accordance with this Section 8, the Company shall give notice thereof to Holder, which notice shall state the event giving rise to the adjustment, the Exercise Price Per Security as adjusted and the number and type of securities or other property purchasable upon the exercise of the rights under this Warrant, setting forth in reasonable detail the method of calculation of each. The Company shall, upon the written request of any Holder, furnish or cause to be furnished to such Holder a certificate setting forth (i) such adjustments, and (ii) the Exercise Price Per Security at the time in effect and the number and type of securities and the amount, if any, of other property that at the time would be received upon exercise of this Warrant.

9. Notification of Certain Events. Prior to the expiration of this Warrant pursuant to Section 10, in the event that the Company shall authorize: (a) the issuance of any dividend or other distribution on the capital stock of the Company (other than (i) dividends or distributions otherwise provided for in Section 8, (ii) repurchases of Common Stock issued to or held by employees, officers, directors or consultants of the Company or its subsidiaries upon termination of their employment or services pursuant to agreements providing for the right of said repurchase; (iii) repurchases of Common Stock issued to or held by employees, officers, directors or consultants of the Company or its subsidiaries pursuant to rights of first refusal or first offer contained in agreements providing for such rights; or (iv) repurchases of capital stock of the Company in connection with the settlement of disputes with any stockholder), whether in cash, property, stock or other securities; or (b) the voluntary liquidation, dissolution or winding up of the Company, then the Company shall send to Holder of this Warrant at least ten (10) days prior written notice of the date on which a record shall be taken for any such dividend or distribution specified in Section 9(a) or the expected effective date of any such other event specified in Section 10(b), as applicable. The notice provisions set forth in this section may be shortened or waived prospectively or retrospectively by the consent of the holders of Warrants representing a majority of the Securities then issuable upon exercise of the rights under the Warrants.

10. Expiration of the Warrant. This Warrant shall expire and shall no longer be exercisable as of the earlier of:

(a) 5:00 p.m., Pacific time, on February ●, 2026; or

(b) any Deemed Liquidation Event (as defined in the Company’s certificate of incorporation).

11. No Rights as a Stockholder. Nothing contained herein shall entitle Holder to any rights as a stockholder of the Company or to be deemed the holder of any Securities that may at any time be issuable on the exercise of the rights hereunder for any purpose nor shall anything contained herein be construed to confer upon Holder, as such, any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or any other rights of a stockholder of the Company until the rights under this Warrant shall have been exercised and the Securities purchasable upon exercise of the rights hereunder shall have become deliverable as provided herein.

-9 -

12. Representations and Warranties of the Holder. By acceptance of this Warrant, Holder represents and warrants to the Company as follows:

(a) No Registration. The Holder understands that the Securities have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Holder’s representations as expressed herein or otherwise made pursuant hereto.

(b) Investment Intent. The Holder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof. The Holder has no present intention of selling, granting any participation in, or otherwise distributing the Securities, nor does it have any contract, undertaking, agreement or arrangement for the same.

(c) Investment Experience. The Holder has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, and has such knowledge and experience in financial or business matters so that it is capable of evaluating the merits and risks of its investment in the Company and protecting its own interests.

(d) Speculative Nature of Investment. The Holder understands and acknowledges that the Company has a limited financial and operating history and that its investment in the Company is highly speculative and involves substantial risks. The Holder can bear the economic risk of its investment and is able, without impairing its financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of its investment.

(e) Access to Data. The Holder has had an opportunity to ask questions of officers of the Company, which questions were answered to its satisfaction. The Holder understands that any such discussions, as well as any information issued by the Company, were intended to describe certain aspects of the Company’s business and prospects, but were not necessarily a thorough or exhaustive description. Holder acknowledges that any business plans prepared by the Company have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results.

(f) Accredited Investor. The Holder is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Commission and agrees to submit to the Company such further assurances of such status as may be reasonably requested by the Company. The Holder has furnished or made available any and all information requested by the Company or otherwise necessary to satisfy any applicable verification requirements as to “accredited investor” status. Any such information is true, correct, timely and complete.

(g) Residency. The residency of the Holder (or, in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth on the signature page hereto.

-10 -

(h) Restrictions on Resales. The Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. The Holder is aware of the provisions of Rule 144 promulgated under the Securities Act, which permit resale of shares purchased in a private placement subject to the satisfaction of certain conditions, which may include, among other things, the availability of certain current public information about the Company; the resale occurring not less than a specified period after a party has purchased and paid for the security to be sold; the number of shares being sold during any three-month period not exceeding specified limitations; the sale being effected through a “broker’s transaction,” a transaction directly with a “market maker” or a “riskless principal transaction” (as those terms are defined in the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder); and the filing of a Form 144 notice, if applicable. The Holder acknowledges and understands that the Company may not be satisfying the current public information requirement of Rule 144 at the time the Holder wishes to sell the Securities and that, in such event, the Holder may be precluded from selling the Securities under Rule 144 even if the other applicable requirements of Rule 144 have been satisfied. The Holder acknowledges that, in the event the applicable requirements of Rule 144 are not met, registration under the Securities Act or an exemption from registration will be required for any Disposition of the Securities. The Holder understands that, although Rule 144 is not exclusive, the Commission has expressed its opinion that Persons proposing to sell restricted securities received in a private offering other than in a registered offering or pursuant to Rule 144 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 the brokers who participate in the transactions do so at their own risk.

(i) No Public Market. The Holder understands and acknowledges that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company’s securities.

(j) Brokers and Finders. The Holder has not engaged any brokers, finders or agents in connection with the Securities, and the Company has not incurred nor will incur, directly or indirectly, as a result of any action taken by Holder, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Securities.

(k) Tax Advisors. The Holder has reviewed with its own tax advisors the U.S. federal, state and local and non-U.S. tax consequences of this investment and the transactions contemplated by this Warrant. With respect to such matters, the Holder relies solely on any such advisors and not on any statements or representations of the Company or any of its agents, written or oral. The Holder understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment and the transactions contemplated by this Warrant.

13. Miscellaneous.

(a) Amendments. Except as expressly provided herein, neither this Warrant nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Warrant and signed by: (i) the Company and the holders of Warrants representing a majority of the Securities then issuable upon exercise of the rights under the Warrants (as such terms are defined in the Purchase Agreement), which majority does not need to include the consent of Holder; and (ii) the party against whom the waiver is to be effective, in the case of a waiver. Any amendment, waiver, discharge or termination effected in accordance with this Section 13(a) shall be binding upon each holder of the Warrants, each future holder of such Warrants, and the Company; provided, however, that no special consideration or inducement may be given to any such holder in connection with such consent that is not given ratably to all such holders, and that such amendment must apply to all such holders equally and ratably in accordance with the number of Securities issuable upon exercise of the Warrants. The Company shall promptly give Notice to all holders of Warrants of any amendment effected in accordance with this Section 13(a).

-11 -

(b) Waivers. No waiver of any single breach or default shall be deemed a waiver of any other breach or default theretofore or thereafter occurring.

(i) All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed: (A) if to the Holder, to the Holder at the Holder’s address, facsimile number or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof, or until the Holder so furnishes an address, facsimile number or electronic mail address to the Company, then to and at the address, facsimile number or electronic mail address of the last holder of this Warrant for which the Company has contact information in its records; or (B) if to the Company, to the attention of the Chief Executive Officer of the Company at the Company’s address, facsimile number or electronic mail address as shown on the signature page hereto, as may be updated in accordance with the provisions hereof.

(ii) Each such notice or other communication shall for all purposes of this Warrant be treated as effective or having been given: (A) 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); (B) 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 (C) if sent via electronic mail, when sent (unless the sender receives a failure to deliver or other similar error message) if received prior to 5:00 p.m. Pacific time on a Business Day, or otherwise on the next Business Day.

(d) Governing Law. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions of the State of Delaware, or of any other state.

(e) Titles and Subtitles. The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant. All references in this Warrant to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.

-12 -

(f) Severability. If any provision of this Warrant becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Warrant, and such illegal, unenforceable or void provision shall be replaced with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, unenforceable or void provision. The balance of this Warrant shall be enforceable in accordance with its terms.

(g) California Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS WARRANT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS WARRANT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

(h) Saturdays, Sundays and Holidays. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a day other than a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

(i) Entire Agreement. Except as expressly set forth herein, this Warrant, the Purchase Agreement, and the Investors’ Rights Agreement (including the exhibits attached hereto and thereto) constitutes the entire agreement and understanding of the Company and the Holder with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof.

[Remainder of page intentionally left blank.]

-13 -

IN WITNESS WHEREOF, the Company and Holder have executed and delivered this Warrant as of the Issuance Date.

Company:

Winc, INc.,

a Delaware corporation

By:

Name:

Title:

Address:

Attention:

HOlder:

[●]

By:

Name:

Title:

Address:

Attention:

[Warrant to Purchase Securities of Winc, Inc.]

Exhibit A

Notice of Exercise

To:

Winc, Inc.(the “Company”)

Attention:

Chief Executive Officer

Warrant:

Warrant to Purchase SECURITIES of the Company issued on February [●], 2021 (the “Warrant”)

(1)

Exercise. The undersigned elects to purchase the following number of Securities pursuant to the terms of the Warrant:

(2)

Method of Exercise. The undersigned elects to exercise the Warrant pursuant to:

a cash payment in accordance with Section 3(a) of the Warrant, and tenders herewith payment of the aggregate Exercise Price Per Security for the Securities being purchased in full, together with all applicable transfer taxes, if any; or

the net issue exercise provision of Section 3(b) of the Warrant.

(3)

Stock Certificate. Please issue a certificate or certificates representing the Securities in the name of:

The undersigned

Other—Name:

Address:

(4)

Unexercised Portion of the Warrant. Please issue a new Warrant for the unexercised portion of the Warrant in the name of:

The undersigned

Other—Name:

Address:

Not applicable

(5)

Investment Intent. The undersigned represents and warrants that the aforesaid Securities are being acquired for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and that the undersigned has no present intention of selling, granting any participation in, or otherwise distributing the Securities, nor does it have any contract, undertaking, agreement or arrangement for the same.

A-1

(6)

Investment Representation. The undersigned represents and warrants that all representations and warranties of Holder set forth in Section 12 of the attached Warrant are true and correct as of the date hereof.

	[●]

	By:

Name:

Title:

Address:

Attention:

A-2

Exhibit B

Assignment Form

Assignor:

(“Assignor”)

Company:

Winc, INC. (the “Company”)

Warrant:

Warrant to Purchase SECURITIESof the Company issued on FEBRUARY [●], 2021 (the “Warrant”)

(1)

Assignment. The undersigned Assignor is the registered holder of the Warrant and hereby assigns and transfers to the assignee named below (“Assignee”) all of the rights of Assignor under the Warrant, with respect to the number of Securities set forth below:

Name:

Address:

No. of Shares:

and does irrevocably constitute and appoint ______________________ as attorney to make such transfer on the books of the Company, maintained for the purpose, with full power of substitution in the premises.

(2)

Obligations of Assignee. Assignee agrees to take and hold the Warrant and any shares of capital stock to be issued upon exercise of the rights thereunder and any shares issuable upon conversion thereof (the “Securities”) subject to, and to be bound by, the terms and conditions set forth in the Warrant, to the same extent as if Assignee were the original holder thereof.

(3)

Investment Intent. Assignee represents and warrants that the Securities are being acquired for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and that Assignee has no present intention of selling, granting any participation in, or otherwise distributing the Securities, nor does it have any contract, undertaking, agreement or arrangement for the same.

(4)

Investment Representation. Assignee represents and warrants that all representations and warranties of Holder set forth in Section 12 of the attached Warrant are true and correct as of the date hereof.

[Remainder of page intentionally left blank.]

B-1

IN WITNESS WHEREOF, Assignor and Assignee are signing this Assignment Form on the date first set forth above.

“ASSIGNOR”

Print name of Assignor

Signature of Assignor

Print name of signatory, if applicable

Print title of signatory, if applicable

Address:

Attention:

Email:

“ASSIGNEE”

Print name of Assignor

Signature of Assignor

Print name of signatory, if applicable

Print title of signatory, if applicable

Address:

Attention:

Email:

B-2

Exhibit 3.5

Winc, Inc.

Series F Preferred

Stock AND WARRANT Purchase AGREEMENT

Initial Closing Date: February [●], 2021

TABLE OF CONTENTS

Page

1. Purchase and Sale of Preferred Stock AND WARRANTS	1
1.1 Sale and Issuance of Shares and Warrants	1
1.2 Closing; Delivery	2
1.3 Certain Defined Terms Used in this Agreement	2
2. Representations and Warranties of the Company	4
2.1 Organization, Good Standing and Qualification of the Company	4
2.2 Capitalization	4
2.3 Subsidiaries	6
2.4 Authorization	7
2.5 Valid Issuance of Securities	7
2.6 Governmental Consents and Filings	8
2.7 Litigation	8
2.8 Intellectual Property	8
2.9 Compliance with Other Instruments	9
2.10 Agreements; Actions	10
2.11 Related-Party Transactions	10
2.12 Rights of Registration and Voting Rights	11
2.13 Title to Property and Assets	11
2.14 Financial Statements; Liabilities	11
2.15 Changes	11
2.16 Employee Matters	12
2.17 Tax Matters	14
2.18 Insurance	14
2.19 Corporate Documents	14
2.20 Environmental and Safety Laws	14
2.21 Permits	15
2.22 Real Property Holding Company	15
2.23 Qualified Small Business Stock	15
2.24 83(b) Elections	15
2.25 Anti-Bribery; Export	15
2.26 Absence of Disqualification Events	16
2.27 Data Privacy	16
2.28 Export Control Laws	16
2.29 FDA Regulation	16
2.30 Alcohol Regulation	17
2.31 Disclosure	17
3. Representations and Warranties of the Purchasers	17
3.1 Authorization	17
3.2 Purchase Entirely for Own Account	17
3.3 Disclosure of Information	18
3.4 Restricted Securities	18

-i-

3.5 No Public Market	18
3.6 Legends	18
3.7 Accredited Investor	19
3.8 Foreign Investors	19
3.9 No General Solicitation	19
3.10 Exculpation Among Purchasers	19
3.11 Residence	19
4. Conditions of the Purchasers’ Obligations	19
4.1 Representations and Warranties	20
4.2 Performance	20
4.3 Qualifications	20
4.4 Investors’ Rights Agreement	20
4.5 Right of First Refusal and Co-Sale Agreement	20
4.6 Voting Agreement	20
4.7 Certificate	20
4.8 Officer’s Certificates	20
4.9 Good Standing Certificate	20
4.10 Proceedings and Documents	20
5. Conditions of the Company’s Obligations	21
5.1 Representations and Warranties	21
5.2 Performance	21
5.3 Qualifications	21
5.4 Ancillary Documents	21
5.5 Proceedings and Documents	21
6. Miscellaneous	21
6.1 Survival of Warranties	21
6.2 Successors and Assigns	21
6.3 Governing Law	21
6.4 Dispute Resolution; Waiver of Jury Trial	22
6.5 Counterparts	22
6.6 Titles and Subtitles	22
6.7 Notices	22
6.8 Finder’s Fee	23
6.9 Fees and Expenses	23
6.10 Attorney’s Fees	23
6.11 Amendments and Waivers	23
6.12 Severability	23
6.13 Delays or Omissions	23
6.15 Entire Agreement	24
6.16 No Commitment for Additional Financing	24

-ii-

Exhibits

	Exhibit A	Schedule of Purchasers
	Exhibit B	Ninth Amended and Restated Certificate of Incorporation\
	Exhibit C	Form of Warrant
	Exhibit D	Seventh Amended and Restated Investors’ Rights Agreement
	Exhibit E	Seventh Amended and Restated Voting Agreement
	Exhibit F	Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement
	Exhibit G	Schedule of Exceptions

-iii-

SERIES F PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

This Series F Preferred Stock AND WARRANT Purchase Agreement (this “Agreement”) is made as of February [●], 2021, by and among Winc, Inc., a Delaware corporation (the “Company”), and the purchasers listed on the signature pages hereto (each a “Purchaser” and together, the “Purchasers”).

The parties hereby agree as follows:

1. Purchase and Sale of Preferred Stock AND WARRANTS.

1.1 Sale and Issuance of Shares and Warrants.

(a) Authorization of Stock. The Company has adopted and filed with the Secretary of State of the State of Delaware the Ninth Amended and Restated Certificate of Incorporation attached hereto as Exhibit B (the “Certificate”). On or prior to the Initial Closing, the Company will authorize: (i) the sale and issuance of up to 5,714,285 shares of the Company’s Series F Preferred Stock, par value $0.0001 per share (the “Series F Preferred Stock”); and (ii) the issuance of warrants, in substantially the form attached hereto as Exhibit C (the “Warrants”), for the purchase of up to 2,285,714 shares of Series F Preferred Stock prior to an initial public offering or other event that results in the conversion of all shares of Preferred Stock into Common Stock pursuant to Section 5.1(a) of Article VI of the Certificate (a “QIPO”) or up to 2,285,714 shares of Common Stock following a QIPO by the Company, in each case, subject to adjustment in accordance with, and the other terms and conditions of, the Warrants (together, the “Warrant Shares”).

(b) Purchase and Sale of the Shares of Series F Preferred Stock. Subject to the terms and conditions of this Agreement, each Purchaser whose name is set forth on Exhibit A severally, and not jointly, agrees to purchase at the applicable Closing (as defined below) and the Company agrees to sell and issue to each Purchaser at such Closing that number of shares of Series F Preferred Stock set forth opposite each such Purchaser’s name on Exhibit A hereto at a purchase price per share of $1.75, with the aggregate purchase price payable with respect to such shares of Series F Preferred Stock set forth opposite such Purchaser’s name on Exhibit A.

(c) Issuance of the Warrants. Subject to the terms and conditions of this Agreement, the Company shall issue to each Purchaser whose name is set forth on Exhibit A a Warrant to purchase up to that number of Warrant Shares equal to forty percent (40.0%) of the number of shares of Series F Preferred Stock purchased by such Purchaser pursuant to Section 1.1(b). The Company’s agreement with each Purchaser is a separate agreement, and the issuance of a Warrant to each Purchaser is a separate issuance.

(d) Use of Proceeds. The Company will use the proceeds from the sale of the shares of Series F Preferred Stock and the Warrant Shares, if applicable, for general corporate purposes.

-1-

1.2 Closing; Delivery.

(a) The purchase, sale and issuance of the shares of Series F Preferred Stock and the Warrants to the Purchasers shall take place at one or more closings (each, a “Closing”), remotely via the electronic exchange of documents and signatures. The initial Closing (the “Initial Closing”) shall take place on the date hereof. At each Closing, the Company shall deliver to each Purchaser a certificate or book-entry notation representing the shares of Series F Preferred Stock being purchased thereby and the related Warrant(s) issued by the Company in connection therewith, against payment of the purchase price therefor by check or wire transfer, or by any combination of the foregoing methods.

(b) After the Initial Closing, the Company may sell and issue, on the same terms and conditions as those contained in this Agreement, additional shares of Series F Preferred Stock and additional Warrants in an aggregate amount up to the maximum number of shares of Series F Preferred Stock authorized under the Certificate (the “Additional Shares” and “Additional Warrants,” respectively), to one or more purchasers (the “Additional Purchasers”) provided that (i) such subsequent Closing is consummated on or before the date that is forty-five (45) days after the Initial Closing, and (ii) each Additional Purchaser shall become a party to the Transaction Agreements (as defined below), by executing and delivering a counterpart signature page to each of such Transaction Agreements. Exhibit A to this Agreement shall be updated to reflect the number of Additional Shares and Additional Warrants purchased at each such Closing, and the parties purchasing such Additional Shares and Additional Warrants.

1.3 Certain Defined Terms Used in this Agreement. In addition to the terms defined above, the following terms used in this Agreement shall be construed to have the meanings set forth or referenced below.

“Affiliate” means, with respect to any specified Person, any other Person which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any general partner, venture partner, officer, director or member of such Person and any venture capital fund now or hereafter existing which is controlled by or under common control with one or more general partners of, or shares the same management company with, such Person.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means the Company’s Common Stock, $0.0001 par value per share.

“Founder” means each of Geoffrey McFarlane and Brian Smith.

“GAAP” shall have the meaning set forth in Section 2.14 of this Agreement.

“IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

-2-

“Investors’ Rights Agreement” means the Seventh Amended and Restated Investors’ Rights Agreement among the Company, the Purchasers, and the other parties thereto, dated as of the date of the Initial Closing, in the form of Exhibit D attached hereto.

“Key Employee” means (i) each Founder and (ii) any executive-level employee of the Company.

“Knowledge,” including the phrase “to the Company’s knowledge” shall mean the actual knowledge, after reasonable investigation, of Geoffrey McFarlane, Matthew Thelen and Brian Smith.

“Material Adverse Effect” means a material adverse effect on the business, assets (including intangible assets), liabilities, financial condition, property, or results of operations of the Company, taken as a whole; provided, however, that Material Adverse Effect shall exclude any adverse changes or conditions as and to the extent such changes or conditions result from any adverse change arising from general economic conditions or other conditions generally affecting the industry in which the Company competes.

“Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

“Preferred Stock” means the Company’s Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, and Series F Preferred Stock.

“Right of First Refusal and Co-Sale Agreement” means the Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement among the Company, the Purchasers and the other parties thereto, dated as of the date of the Initial Closing, in the form of Exhibit F attached hereto.

“Securities Act” means the Securities Act of 1933, as amended.

“Series A Preferred Stock” means the Company’s Series A Preferred Stock, $0.0001 par value per share.

“Series B Preferred Stock” means the Company’s Series B Preferred Stock, $0.0001 par value per share.

“Series B-1 Preferred Stock” means the Company’s Series B-1 Preferred Stock, $0.0001 par value per share.

“Series C Preferred Stock” means the Company’s Series C Preferred Stock, $0.0001 par value per share.

“Series D Preferred Stock” means the Company’s Series D Preferred Stock, $0.0001 par value per share.

-3-

“Series E Preferred Stock” means the Company’s Series E Preferred Stock, $0.0001 par value per share.

“Series Seed Preferred Stock” means the Company’s Series Seed Preferred Stock, $0.0001 par value per share.

“Subsidiary” means BWSC, LLC, a California limited liability company.

“Transaction Agreements” means this Agreement, the Investors’ Rights Agreement, the Right of First Refusal and Co-Sale Agreement, and the Voting Agreement.

“Voting Agreement” means the Seventh Amended and Restated Voting Agreement among the Company, the Purchasers, and the other parties thereto, dated as of the date of the Initial Closing, in the form of Exhibit E attached hereto.

2. Representations and Warranties of the Company. For purposes of the representations and warranties in this Section 2, the “Company” shall be deemed to mean the Company and its Subsidiary, except with respect to Subsection 2.1 through 2.5. Except as set forth on the Schedule of Exceptions delivered to the Purchasers at the applicable Closing and attached as Exhibit G hereto (the “Schedule of Exceptions”), which exceptions shall be deemed to be part of the representations and warranties made hereunder, the Company represents and warrants to each Purchaser that:

2.1 Organization, Good Standing and Qualification of the Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted and as currently proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect.

2.2 Capitalization.

(a) Upon the filing of the Certificate, but immediately prior to the Initial Closing, the authorized and outstanding capital stock of the Company will consist of:

(i) 80,083,971 shares of Preferred Stock, 13,296,372 of which have been designated Series Seed Preferred Stock, 13,241,627 of which are issued and outstanding; 8,276,928 of which have been designated Series A Preferred Stock, all of which are issued and outstanding; 13,381,711 of which have been designated Series B Preferred Stock, all of which are issued and outstanding; 7,736,552 of which have been designated Series B-1 Preferred Stock, 6,870,228 of which are issued and outstanding; 8,209,586 of which have been designated Series C Preferred Stock, all of which are issued and outstanding; 10,611,205 of which have been designated Series D Preferred Stock, 6,583,273 of which are issued and outstanding; 10,000,000 of which have been designated Series E Preferred Stock, 4,266,224 of which are issued and outstanding; and 8,571,428 of which have been designated Series F Preferred Stock, none of which are issued or outstanding; and

-4-

(ii) 115,490,000 shares of Common Stock, 14,566,954 of which are issued and outstanding (inclusive of the shares issued under the Company’s 2012 Incentive Stock Plan (the “2012 Stock Plan”) and the Company’s 2013 Stock Plan (the “2013 Stock Plan”), as described in Section 2.2(b) below).

(b) As of immediately prior to the Initial Closing, the Company has reserved: (i) 438,220 shares of Common Stock for issuance to officers, directors, employees and consultants of the Company pursuant to the 2012 Stock Plan, 343,220 of which were issued pursuant to the exercise of stock options granted under the 2012 Stock Plan, 95,000 of which were issued pursuant to restricted stock awards granted under the 2012 Stock Plan, and none of which are available for future issuance under the 2012 Stock Plan; and (ii) 24,255,249 shares of Common Stock for issuance to officers, directors, employees and consultants of the Company pursuant to its 2013 Stock Plan, 11,863,544 of which are subject to outstanding stock options granted under the 2013 Stock Plan, 10,053,403 of which were issued pursuant to the exercise of stock options granted under the 2013 Stock Plan, 100,000 of which were issued pursuant to the exercise of stock options granted under the 2013 Stock Plan later repurchased by the Company for return the pool, and 2,365,302 of which are available for future issuance under the 2013 Stock Plan (the “Reserved Pool”). The Company has furnished to the Purchasers complete and accurate copies of the 2013 Stock Plan and forms of agreements used thereunder and a copy of the 2012 Stock Plan and forms of agreement used thereunder.

(c) Section 2.2(c) of the Schedule of Exceptions sets forth the capitalization of the Company immediately following the Initial Closing (assuming the sale of all authorized shares of Series F Preferred Stock and the Warrants), including all issued and outstanding shares of capital stock and all outstanding stock options, warrants and other stock purchase rights, if any. To the extent that any outstanding shares of capital stock, outstanding stock options, warrants or other stock purchase rights are subject to vesting as of the date hereof, Section 2.2(c) of the Schedule of Exceptions sets forth the vesting schedule, vesting terms, number of shares vested, and number of shares remaining to be vested as of immediately following the Initial Closing.

(d) Except for: (i) the conversion privileges of the Preferred Stock; (ii) the shares of Series F Preferred Stock and the Warrants to be issued pursuant to this Agreement; (iii) the rights provided in the Investors’ Rights Agreement; (iv) the Reserved Pool for issuance pursuant to future awards under the 2013 Stock Plan; and (v) as set forth in Section 2.2(d) of the Schedule of Exceptions, as of the date of the Initial Closing, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, for the purchase or acquisition from the Company of any shares of its capital stock, nor are there any rights that are tied or related to the Company’s capital stock (e.g., “phantom stock”). Except as set forth in the Certificate, the Company has no obligation (contingent or otherwise) to purchase or redeem any of its capital stock, nor does any Person have any price-based anti-dilution protection with respect to the Company’s capital stock.

(e) Except as set forth on Section 2.2(e) of the Schedule of Exceptions, (i) all outstanding shares of Common Stock and Preferred Stock and all shares of Common Stock underlying outstanding options are subject to a right of first refusal in favor of the Company upon any proposed transfer (other than transfers for estate planning purposes and the like), and (ii) all outstanding shares of the Common Stock and Preferred Stock, and all shares of the Common Stock and Preferred Stock underlying options, warrants or other convertible securities are subject to a lock-up or market standoff agreement of not less than 180 days following the Company’s initial public offering.

-5-

(f) The rights, privileges and preferences of the Preferred Stock and Common Stock are as stated in the Certificate. All outstanding shares of the Company’s capital stock have been duly authorized, are fully paid and nonassessable and were issued in material compliance with the Securities Act and all applicable state securities laws.

(g) Except as set forth in Section 2.2(g) of the Schedule of Exceptions, no stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or terms of such agreements or understandings, or the lapse of a Company repurchase right, upon the occurrence of any event or combination of events.

(h) Except as set forth on Section 2.2(h) of the Schedule of Exceptions, the Company has never adjusted or amended the exercise price of any stock options previously awarded, whether through amendment, cancellation, replacement grant, repricing, or any other means.

(i) The Company believes in good faith that any “nonqualified deferred compensation plan” (as such term is defined under Section 409A(d)(1) of the Code and the guidance thereunder) under which the Company makes, is obligated to make or promises to make, payments (each, a “409A Plan”) complies in all material respects, in both form and operation, with the requirements of Section 409A of the Code and the guidance thereunder. To the Company’s knowledge, no payment to be made under any 409A Plan is, or will be, subject to the penalties of Section 409A(a)(1) of the Code.

2.3 Subsidiaries.

(a) The Company owns 100% of the membership interests in the Subsidiary free and clear of all encumbrances. The Subsidiary is a duly organized limited liability company, validly existing and in good standing under the laws of the State of California and has all requisite limited liability company power and authority to carry on its business as presently conducted and as currently proposed to be conducted. The Subsidiary is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a Material Adverse Effect.

(b) Other than the Subsidiary, the Company does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association or other business entity. The Company is not a participant in any joint venture, partnership or similar arrangement.

-6-

2.4 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the other Transaction Agreements, the performance of all obligations of the Company hereunder and thereunder and the authorization, issuance and delivery of the shares of Series F Preferred Stock, the Warrants, and the Common Stock issuable upon conversion of the shares of Series F Preferred Stock and the shares of Series F Preferred Stock issuable upon conversion of the Warrants prior to a QIPO or otherwise in accordance with the Warrants (the “Pre-QIPO Series F Preferred Stock”), the Common Stock issuable upon conversion of the Pre-QIPO Series F Preferred Stock and the shares of Common Stock issuable upon conversion of the Warrants following a QIPO or otherwise in accordance with the Warrants (together, the “Securities”) has been taken or will be taken prior to the Closing, and the Transaction Agreements, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (iii) to the extent the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable federal or state securities laws.

2.5 Valid Issuance of Securities. The shares of Series F Preferred Stock, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, and the Warrant Shares, when issued and delivered and paid for in compliance with the provisions of this Agreement and the Warrants, will be duly and validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Agreements, applicable state and federal securities laws and liens or encumbrances created by or imposed by a Purchaser. Based in part upon the representations of the Purchasers in Section 3 of this Agreement and subject to the provisions of Section 2.6 below, the shares of Series F Preferred Stock and the Warrants will be issued in compliance with the Securities Act and all applicable securities laws. The Common Stock issuable upon conversion of the shares of Series F Preferred Stock and the shares of Pre-QIPO Series F Preferred Stock, the Common Stock issuable upon conversion of the Pre-QIPO Series F Preferred Stock and the shares of Common Stock issuable upon conversion of the Warrants following a QIPO or otherwise in accordance with the Warrants have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Certificate, will be duly and validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Agreements, applicable federal and state securities laws and liens or encumbrances created by or imposed by a Purchaser. Based in part upon the representations of the Purchasers in Section 3 of this Agreement, and subject to Section 2.6 below, the Common Stock issuable upon conversion of the shares of Series F Preferred Stock and the shares of Pre-QIPO Series F Preferred Stock, the Common Stock issuable upon conversion of the Pre-QIPO Series F Preferred Stock and the shares of Common Stock issuable upon conversion of the Warrants following a QIPO or otherwise in accordance with the Warrants will be issued in compliance with the Securities Act and all applicable securities laws. The sale of the shares of Series F Preferred Stock and the Warrants is not, the subsequent exercise of the Warrants, and the subsequent conversion of the shares of Series F Preferred Stock or the Warrant Shares will not be, subject to any preemptive rights, rights of first refusal or similar rights which have not been properly waived or complied with.

-7-

2.6 Governmental Consents and Filings. Assuming the accuracy of the representations made by the Purchasers in Section 3 of this Agreement, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of the Company in connection with the consummation of the transactions contemplated by this Agreement, except for filings pursuant to applicable state securities laws and Regulation D of the Securities Act, which have been made or will be made in a timely manner.

2.7 Litigation. There is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation (any of the foregoing, an “Action”) pending or, to the Company’s knowledge, currently threatened against the Company. There is no Action pending or, to the Company’s knowledge, threatened against any officer, director or Key Employee of the Company that relates to the Company (including without limitation by way of such person’s prior employment, their use in connection with the Company’s business of any information, technology or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers). The Company is not a party to nor named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality, nor to its knowledge is any of its officers, directors or Key Employees named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that relates to the Company. There is no Action or investigation by the Company pending or which the Company intends to initiate.

2.8 Intellectual Property.

(a) As used herein, “Intellectual Property” means (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade dress, trade names, logos and corporate names and registrations and applications for registration thereof together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, databases and documentation thereof, (vi) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or not and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and information), (vii) domain names, (viii) rights of publicity and privacy, (ix) other intellectual property rights and (x) copies and tangible embodiments thereof (in whatever form or medium).

(b) The Company owns or possesses sufficient legal rights to all Intellectual Property as are necessary to the conduct of the Company’s business as now conducted and as presently proposed to be conducted, without (i) with respect to any filed patents, to the Company’s knowledge, any conflict with, or infringement of, the rights of others, and (ii) with respect to all other Intellectual Property rights, any conflict with, or infringement of, the rights of others. No product or service marketed or sold by the Company violates any license relating to the Intellectual Property of the Company or infringes any Intellectual Property rights of any other party. Other than (i) with respect to commercially available software products under standard end-user object code license agreements, or (ii) the Company’s standard terms of use for end-users of the Company’s products or services, there are no outstanding options, licenses, agreements, claims, encumbrances or shared ownership interests of any kind relating to the Intellectual Property of the Company, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the Intellectual Property of any other Person.

-8-

(d) The Company has not received any written notices or other written communications alleging that the Company (or any of its employees or consultants) has violated or, by conducting its business as now conducted, would violate any of the Intellectual Property rights of any Person. The Company has obtained and possesses valid licenses to use all of the software programs present on the computers and other software-enabled electronic devices that it owns or leases or that it has otherwise provided to its employees for their use in connection with the Company’s business except where the failure to do so would not have a Material Adverse Effect.

(e) To the Company’s knowledge, (i) it will not be necessary to use any inventions of any of its employees made prior to or outside the scope of their employment by the Company; and (ii) no employee owns any Intellectual Property rights that relate to the Company’s business as now conducted or currently proposed to be conducted except for Intellectual Property rights that have been assigned to the Company.

(f) The Company has not embedded any open source, copy left or community source code in any of its products or in development, including but not limited to any general public license, lesser general public license or similar license arrangement that would require the Company to (i) make any public disclosure or to make available any source code or other Intellectual Property either used, developed, or modified by Company or (ii) grant licensees rights under the Company’s patents, or that contains other provisions that relinquish or compromise the Intellectual Property of the Company.

2.9 Compliance with Other Instruments. The Company is not in violation or default (a) of any provisions of the Certificate or the bylaws of the Company; (b) of any instrument, judgment, order, writ, or decree; (c) under any contract to which it is a party or by which it is bound that is required to be listed on the Schedule of Exceptions; or (d) to the Company’s knowledge, of any provision of federal or state statute, rule or regulation applicable to the Company, the violation of which could reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of the Transaction Agreements and the consummation of the transactions contemplated hereby or thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

-9-

2.10 Agreements; Actions.

(a) Except for the Transaction Agreements, there are no agreements, understandings, instruments, or contracts to which the Company is a party or by which it is bound that involve (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of, $100,000; (ii) the license of any Intellectual Property by the Company from any other party (other than the license to the Company of generally commercially available “off-the-shelf’ third-party products); (iii) the license of any Intellectual Property by the Company to any other party; (iv) the grant of rights to manufacture, produce, assemble, license, market, or sell its products or services to any other Person or that limit the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products or services; (v) leases of real property; (vi) indemnification by the Company with respect to infringement of Intellectual Property rights, or (vii) that are otherwise material to the Company’s current business.

(b) The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or incurred any other liabilities individually in excess of $100,000 or in excess of $250,000 in the aggregate, (iii) made any loans or advances to any Person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business.

(c) For the purposes of subsections (a) and (b) above, all indebtedness, liabilities, agreements, understandings, instruments, and contracts involving the same Person shall be aggregated for the purposes of meeting the individual minimum dollar amounts of each such subsection.

(d) The Company is not a guarantor or indemnitor of any indebtedness of any other Person.

2.11 Related-Party Transactions.

(a) Other than (i) standard employee benefits generally made available to all employees, (ii) standard director and officer indemnification agreements approved by the Board of Directors, (iii) agreements relating to the purchase or grant of shares of the Company’s capital stock and the issuance of options to purchase shares of Common Stock, in each instance, approved by the Board of Directors, and (iv) the transactions contemplated by the Transaction Agreements, there are no agreements, understandings or proposed transactions between the Company and any of its officers or directors, or any Affiliate of the Company’s officers or directors.

(b) No employee, officer or director of the Company (a “Related Party”) or member of such Related Party’s immediate family, or any corporation, partnership or other entity in which such Related Party is an officer, director or partner, or in which such Related Party has an ownership interest or otherwise controls, is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. To the Company’s knowledge, no Related Person has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation that competes with the Company, except that Related Parties and members of their immediate families may own stock in (but not exceeding 2% of the outstanding capital stock of) publicly traded companies that may compete with the Company. To the Company’s knowledge, no Related Party or member of their immediate families is directly or indirectly interested in any material contract with the Company. To the Company’s knowledge, none of the Related Parties, or any member of such Related Party’s immediate family, has any material commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship with any of the Company’s major business relationship partners, service providers, joint venture partners, licensees or competitors.

-10-

2.12 Rights of Registration and Voting Rights. Except as provided in the Investors’ Rights Agreement, the Company is not under any obligation to register under the Securities Act any of its currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities. To the Company’s knowledge, except as contemplated in the Voting Agreement, no stockholder of the Company has entered into any agreements with respect to the voting of capital stock of the Company.

2.13 Title to Property and Assets. The Company owns its property and assets free and clear of all mortgages, deeds of trust, liens, loans and encumbrances, except for statutory liens for the payment of current taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets. With respect to the property and assets it leases, the Company is in compliance with such leases and, to its knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances other than to the lessors of such property or assets.

2.14 Financial Statements; Liabilities. The Company has delivered to the Purchasers its unaudited consolidated financial statements as of January 31, 2021 (the “Financial Statements”). The Financial Statements fairly present in all material respects the financial condition and operating results of the Company as of the dates and for the periods indicated therein, are accurate and complete in all material respects. Except as set forth in the Financial Statements, the Company has no liabilities or obligations, contingent or otherwise, other than (a) liabilities incurred in the ordinary course of business subsequent to the date of the Financial Statements which are not individually or in the aggregate material to the financial condition or operating results of the Company and (b) liabilities and obligations of a type or nature not required under United States generally accepted accounting principles (“GAAP”) to be reflected in the Financial Statements which are not individually or in the aggregate material to the financial condition or operating results of the Company.

2.15 Changes. Since the date of the Financial Statements there has not been:

(a) any change in the assets, liabilities, financial condition or operating results of the Company from that reflected in the Financial Statements, except changes in the ordinary course of business that have not caused, in the aggregate, a Material Adverse Effect;

(b) any damage, destruction or loss, whether or not covered by insurance, that would have a Material Adverse Effect;

-11-

(d) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and the satisfaction or discharge of which would not have a Material Adverse Effect;

(e) any material change to a material contract or agreement by which the Company or any of its assets is bound or subject;

(f) any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder;

(g) any resignation or termination of employment of any officer or Key Employee of the Company;

(h) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets;

(i) any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(j) any declaration, setting aside or payment or other distribution in respect of any of the Company’s capital stock, or any direct or indirect redemption, purchase, or other acquisition of any of such stock by the Company;

(k) any sale, assignment or transfer of any Intellectual Property of the Company that could reasonably be expected to result in a Material Adverse Effect;

(l) receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

(m) to the Company’s knowledge, any other event or condition of any character, other than events affecting the economy or the Company’s industry generally, that could reasonably be expected to result in a Material Adverse Effect; or

(n) any arrangement or commitment by the Company to do any of the things described in this Section 2.15.

2.16 Employee Matters.

(a) To the Company’s knowledge, none of its employees (including any Founder) is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with such employee’s ability to promote the interest of the Company or that would conflict with the Company’s business. Neither the execution or delivery of the Transaction Agreements, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the Company’s business as now conducted and as presently proposed to be conducted will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which any such employee is now obligated.

-12-

(b) The Company is not delinquent in payments to any of its employees, consultants, or independent contractors for any wages, salaries, commissions, bonuses, or other direct compensation for any service performed for it to the date hereof or amounts required to be reimbursed to such employees, consultants, or independent contractors. The Company has complied with all applicable state and federal equal employment opportunity laws and with other laws related to employment, including those related to wages, hours, worker classification, collective bargaining, and the payment and withholding of taxes and other sums as required by law except where noncompliance with any applicable law would not result in a Material Adverse Effect. The Company has withheld and paid to the appropriate governmental entity or is holding for payment not yet due to such governmental entity all amounts required to be withheld from employees of the Company and is not liable for any arrears of wages, taxes, penalties, or other sums for failure to comply with any of the foregoing.

(c) To the Company’s knowledge, no Key Employee intends to terminate employment with the Company or is otherwise likely to become unavailable to continue as a Key Employee, nor does the Company have a present intention to terminate the employment of any Key Employee. The employment of each employee is terminable at the will of the Company, without any obligation of severance pay or similar pay (except for payment of such amounts as are required by law).

(d) Each current and former employee has executed an agreement with the Company regarding confidentiality, proprietary information, and invention assignments substantially in the form or forms delivered to the Purchasers and to the Company’s knowledge, no such Person is in violation thereof nor has any such Person excluded works or inventions from any such assignment.

(e) The Company has not made any representations regarding equity incentives to any officer, employee, director or consultant that are inconsistent with the share amounts set forth in Section 2.2(c) of the Schedule of Exceptions.

(f) Each former Key Employee (if any) whose employment was terminated by the Company has entered into an agreement with the Company providing for the full release of any claims against the Company or any related party arising out of such employment.

(g) The Company does not have any material liability under any employee benefit plan (including without limitation any employee benefit plan which is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), other than liability for health plan continuation coverage described in Part 6 of Title I(B) of ERISA, and has complied with all applicable laws for any such employee benefit plan. The Company has no defined benefit or defined contribution pension plan.

-13-

(h) The Company is not bound by or subject to (and none of its assets or properties is bound by or subject to) any written or oral, express or implied, contract, commitment or arrangement with any labor union, and no labor union has requested or, to the knowledge of the Company, has sought to represent any of the employees, representatives or agents of the Company. There is no strike or other labor dispute involving the Company pending or, to the Company’s knowledge, threatened, nor is the Company aware of any labor organization activity involving its employees.

2.17 Tax Matters. There are no federal, state, county, local or foreign taxes due and payable by the Company which have not been timely paid. There are no accrued and unpaid federal, state, county, local or foreign taxes of the Company which are due, whether or not assessed or disputed. There have been no examinations or audits of any tax returns or reports by any applicable federal, state, local or foreign governmental agency. The Company has duly and timely filed all federal, state, county, local and foreign tax returns required to have been filed by it and there are in effect no waivers of applicable statutes of limitations with respect to taxes for any year.

2.18 Insurance. The Company has in full force and effect fire and casualty insurance policies with extended coverage, sufficient in amount (subject to reasonable deductions) to allow it to replace any of its properties that might be damaged or destroyed.

2.19 Corporate Documents. The Certificate and the bylaws of the Company are in the form provided to the Purchasers. The copy of the minute books of the Company provided to Purchasers contains minutes of all meetings of, and actions by written consent of, the directors and stockholders since the date of incorporation and accurately reflects in all material respects all actions taken by the directors (and any committee thereof) and stockholders since such date.

2.20 Environmental and Safety Laws. Except as could not reasonably be expected to have a Material Adverse Effect, to the best of its knowledge, (a) the Company is and has been in compliance with all Environmental Laws (as defined below); (b) there has been no release of any pollutant, contaminant or toxic or hazardous material, substance or waste, or petroleum or any fraction thereof,(each a “Hazardous Substance”), on, upon, into or from any site currently or heretofore owned, leased or otherwise used by the Company; (c) there have been no Hazardous Substances generated by the Company that have been disposed of or come to rest at any site that has been included in any published U.S. federal, state or local “superfund” site list or any other similar list of hazardous or toxic waste sites published by any governmental authority in the United States; and (d) there are no underground storage tanks located on, no polychlorinated biphenyls (“PCBs”) or PCB-containing equipment used or stored on, and no hazardous waste as defined by the Resource Conservation and Recovery Act, as amended, stored on, any site owned or operated by the Company, except for the storage of hazardous waste in compliance with Environmental Laws. The Company has made available to the Purchasers true and complete copies of any material environmental records, reports, notifications, certificates of need, permits, pending permit applications, correspondence, engineering studies, and environmental studies or assessments. For purposes of this Section 2.20, “Environmental Laws” means any law, regulation, or other applicable requirement relating to (i) releases or threatened release of Hazardous Substance; (ii) pollution or protection of employee health or safety, public health or the environment; or (iii) the manufacture, handling, transport, use, treatment, storage, or disposal of Hazardous Substances.

-14-

2.21 Permits. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business, the lack of which could reasonably be expected to have a Material Adverse Effect. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority.

2.22 Real Property Holding Company. The Company is not a “United States real property holding corporation” as defined in Section 897(c)(2) of the Code (a “USRPHC”) and has not been a USRPHC during the five-year period ending on the date of the Initial Closing.

2.23 Qualified Small Business Stock. As of and immediately following the Closing: (a) the Company will be an eligible corporation as defined in Section 1202(e)(4) of the Code, (b) the Company will not have made purchases of its own stock described in Code Section 1202(c)(3)(B) during the one-year period preceding the Closing, except for purchases that are disregarded for such purposes under Treasury Regulation Section 1.1202-2 and (c) the Company’s aggregate gross assets, as defined by Code Section 1202(d)(2), at no time between its incorporation and through the Closing have exceeded $50.0 million, taking into account the assets of any corporations required to be aggregated with the Company in accordance with Code Section 1202(d)(3); provided, however, that in no event shall the Company be liable to the Purchasers or any other party for any damages arising from any subsequently proven or identified error in the Company’s determination with respect to the applicability or interpretation of Code Section 1202, unless such determination shall have been given by the Company in a manner either grossly negligent or fraudulent.

2.24 83(b) Elections. To the Company’s knowledge, all elections and notices under Section 83(b) of the Code have been or will be timely filed by all individuals who have acquired unvested shares of the Company’s Common Stock.

2.25 Anti-Bribery; Export. Neither the Company nor any of the Company’s directors, officers, employees or agents have, directly or indirectly, made, offered, promised or authorized any payment or gift of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)), foreign political party or official thereof or candidate for foreign political office for the purpose of (a) influencing any official act or decision of such official, party or candidate, (b) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, or (c) securing any improper advantage, in the case of (a), (b) and (c) above in order to assist the Company or any of its Affiliates in obtaining or retaining business for or with, or directing business to, any Person. Neither the Company nor any of its directors, officers, employees or agents have made or authorized any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any law, rule or regulation. Neither the Company nor any of its officers or directors, or to the Company’s knowledge, employees are the subject of any allegation, voluntary disclosure, investigation, prosecution, or other enforcement action related to the FCPA or any other anti-corruption law (collectively, “Enforcement Action”). The Company represents that it does not engage in activities prohibited to Persons subject to the jurisdiction of the United States by the United States Trading with the Enemy Act of 1917, as amended, or the United States International Emergency Economic Powers Act of 1977, as amended, or the regulations promulgated under either such Act. The Company further represents that it does not have its principal place of business in either Myanmar or Sudan, or that it does not generate more than 50% of its revenue from either of these countries.

-15-

2.26 Absence of Disqualification Events. To the knowledge of the Company, based on reasonable investigation, none of the “bad actor” disqualifications described in such Rule 506(d)(1) apply to the Company or any of its Covered Persons (as defined in Rule 506(d)(1) of Regulation D promulgated under the Securities Act).

2.27 Data Privacy. In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders) and/or use of any personally identifiable information from any individuals, including, without limitation, any customers, prospective customers, employees and/or other third parties (collectively “Personal Information”), the Company is and has been in compliance in all material respects with all applicable laws in all relevant jurisdictions, the Company’s privacy policies and the requirements of any contract or codes of conduct to which the Company is a party. The Company has commercially reasonable physical, technical, organizational and administrative security measures and policies in place to protect all Personal Information collected by it or on its behalf from and against unauthorized access, use and/or disclosure. The Company is and has been in compliance in all material respects with all laws relating to data loss, theft and breach of security notification obligations.

2.28 Export Control Laws. The Company has conducted all export transactions in accordance with applicable provisions of United States export control laws and regulations, including the Export Administration Regulations, the International Traffic in Arms Regulations, the regulations administered by the Office of Foreign Assets Control of the U.S. Treasury Department, and the export control laws and regulations of any other applicable jurisdiction. Without limiting the foregoing: (a) the Company has obtained all export licenses and other approvals, timely filed all required filings and has assigned the appropriate export classifications to all products, in each case as required for its exports of products, software and technologies from the United States and any other applicable jurisdiction; (b) the Company is in compliance with the terms of all applicable export licenses, classifications, filing requirements or other approvals; (c) there are no pending or, to the knowledge of the Company, threatened claims against the Company with respect to such exports, classifications, required filings or other approvals; (d) there are no pending investigations related to the Company’s exports; and (e) there are no actions, conditions, or circumstances pertaining to the Company’s export transactions that would reasonably be expected to give rise to any material future claims.

2.29 FDA Regulation. The Company is and has been in compliance with all applicable laws administered or issued by the U.S. Food and Drug Administration (the “FDA”) or any similar governmental entity, including the Federal Food, Drug, and Cosmetic Act and all other Laws regarding developing, testing, manufacturing, marketing, distributing or promoting the products of the Company, or complaint handling or adverse event reporting.

-16-

2.30 Alcohol Regulation. The Company is and has been in compliance in all material respects with the United States Federal Alcohol Administration Act, 27 U.S.C. Chapter 8, all applicable rules and regulations of the United States Alcohol and Tobacco Tax and Trade Bureau (the “TTB”), and the laws and regulations relating to the manufacture, distribution and/or sale of alcoholic beverages of each state, city and other jurisdiction in which the Company is licensed for the manufacture, distribution and/or sale of alcoholic beverages (collectively, “Alcohol Regulations”). As promptly as practicable after the Closing, the Company will take all actions reasonably necessary to provide any notices and obtain any approvals required under any Alcohol Regulations, including with the TTB and each state, city and other jurisdiction in which the Company is licensed for the manufacture, distribution and/or sale of alcoholic beverages. The Company manufactures, labels and distributes, and since incorporation has manufactured, labeled and distributed, its products in accordance with all Alcohol Regulations and the Company’s quality control procedures in effect at the time of manufacture. The Company has not received any notice or warning letter from the TTB, the FDA or any other governmental authority questioning its claims, manufacturing practices, labeling practices or ingredients or threatening to take any enforcement action, nor does the Company have knowledge of any intent to deliver any such notice to it. None of the products of the Company have been subject to any voluntary or involuntary recall or, to the knowledge of the Company, any governmental investigation, and all United States and international regulatory approvals or premarket notifications therefor are owned by and registered in the name of the Company and are in full force and effect.

2.31 Disclosure. The Company has made available to the Purchasers all the information reasonably available to the Company that the Purchasers have requested for deciding whether to acquire the shares of Series F Preferred Stock and the Warrants. No representation or warranty of the Company contained in this Agreement, as qualified by the Schedule of Exceptions, and no certificate furnished or to be furnished to Purchasers at the Closing contains any untrue statement of a material fact or, to the Company’s knowledge, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. The Company makes no representations or warranties to the Purchasers other than as expressly set forth in this Section 2, as qualified by the Schedule of Exceptions.

3. Representations and Warranties of the Purchasers. Each Purchaser, severally and not jointly, hereby represents and warrants to the Company that, as of the date of the applicable Closing:

3.1 Authorization. The Purchaser has full power and authority to enter into the Transaction Agreements. The Transaction Agreements, when executed and delivered by the Purchaser, will constitute valid and legally binding obligations of the Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (b) to the extent the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable federal or state securities laws.

3.2 Purchase Entirely for Own Account. The Securities to be acquired by the Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Securities. If the Purchaser is a corporation, partnership or other entity, such Purchaser has not been formed for the specific purpose of acquiring the shares of Series F Preferred Stock and the Warrants.

-17-

3.3 Disclosure of Information. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the shares of Series F Preferred Stock and the Warrants and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Purchasers to rely on such representations and warranties.

3.4 Restricted Securities. The Purchaser understands that the Securities will be characterized as “restricted securities” under the federal securities laws, inasmuch as they are being acquired from the Company in a transaction not involving a public offering, and that under such laws and applicable regulations such Securities may not be resold without registration under the Act, except in certain limited circumstances. In this connection, the Purchaser represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. The Purchaser acknowledges that the Company has no obligation to register or qualify the Securities for resale, except as set forth in the Investors’ Rights Agreement. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to the Company that are outside the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

3.5 No Public Market. The Purchaser understands that no public market now exists for any of the securities issued by the Company, and that the Company has made no assurances that a public market will ever exist for the Securities.

3.6 Legends. The Purchaser understands that the Securities, and any securities issued in respect of or exchange for the Securities, may bear one or all of the following legends:

(a) “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

(b) Any legend set forth in or required by the other Transaction Agreements.

-18-

(c) Any legend required by the securities laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended.

3.7 Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

3.8 Foreign Investors. If the Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the shares of Series F Preferred Stock and the Warrants or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the shares of Series F Preferred Stock and the Warrants, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the shares of Series F Preferred Stock, the Warrants, or the Warrant Shares. Such Purchaser’s subscription and payment for and continued beneficial ownership of the shares of Series F Preferred Stock and the Warrants, will not violate any applicable securities or other laws of the Purchaser’s jurisdiction. The funds used to purchase the shares of Series F Preferred Stock and the Warrants do not violate the anti-money laundering provisions of the Money Laundering Control Act of 1986 or the Bank Secrecy Act of 1970, as amended by the USA Patriot Act of 2001.

3.9 No General Solicitation. Neither the Purchaser, nor any of its officers, employees, agents, directors, stockholders or partners has engaged the services of a broker, investment banker or finder to contact any potential investor nor has the Purchaser or any of the Purchaser’s officers, employees, agents, directors, stockholders or partners, agreed to pay any commission, fee or other remuneration to any third party to solicit or contact any potential investor. Neither the Purchaser, nor any of its officers, directors, employees, agents, stockholders or partners has (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the shares of Series F Preferred Stock and the Warrants.

3.10 Exculpation Among Purchasers. Each Purchaser acknowledges that it is not relying upon any Person, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Purchaser agrees that no Purchaser nor the respective controlling Persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the shares of Series F Preferred Stock and the Warrants.

3.11 Residence. The Purchaser’s principal place of business is at the office identified in the address of the Purchaser set forth on Exhibit A.

4. Conditions of the Purchasers’ Obligations. The obligation of a Purchaser to purchase the shares of Series F Preferred Stock and the Warrants at a Closing is subject to the fulfillment, on or before the date of such Closing, of each of the following conditions, unless otherwise waived by such Purchaser:

-19-

4.1 Representations and Warranties. Except as set forth in or modified by the applicable Schedule of Exceptions, the representations and warranties of the Company contained in Section 2 shall be true and correct in all material respects on and as of the date of such Closing.

4.2 Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before such Closing.

4.3 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the shares of Series F Preferred Stock and the Warrants pursuant to this Agreement shall be obtained and effective as of the date of such Closing.

4.4 Investors’ Rights Agreement. The Company, each Purchaser, and the other parties named therein shall have executed and delivered the Investors’ Rights Agreement.

4.5 Right of First Refusal and Co-Sale Agreement. The Company, each Purchaser, and the other parties named therein shall have executed and delivered the Right of First Refusal and Co-Sale Agreement.

4.6 Voting Agreement. The Company, each Purchaser, and the other parties named therein shall have executed and delivered the Voting Agreement.

4.7 Certificate. The Certificate shall have been filed with the Secretary of State of the State and Delaware, and shall be in full force and effect as of such Closing.

4.8 Officer’s Certificates.

(a) Secretary’s Certificate. The Secretary of the Company shall have delivered to the Purchasers a certificate, dated as of the date of such Closing, certifying (i) the Certificate; (ii) the bylaws of the Company, (iii) the resolutions of the Board of Directors of the Company approving the Certificate, the Transaction Agreements and the transactions contemplated hereby and thereby; and (iv) the resolutions of the stockholders of Company approving the Certificate and the other transactions contemplated by the Transaction Agreements to the extent applicable.

(b) Compliance Certificate. The Chief Executive Officer of the Company shall have delivered to the Purchasers a certificate, dated as of the date of such Closing, certifying that the conditions set forth in Section 4.1 and 4.2 have been satisfied.

4.9 Good Standing Certificate. The Company shall have delivered to the Purchasers a certificate of the Secretary of State of the State of Delaware, dated as of a date within five (5) days of the date of such Closing, with respect to the good standing of the Company.

4.10 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at such Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to each Purchaser, and each Purchaser shall have received all such documents as reasonably requested.

-20-

5. Conditions of the Company’s Obligations. The obligation of the Company to sell and issue the shares of Series F Preferred Stock and the Warrants at a Closing is subject to the fulfillment, on or before the date of such Closing, of each of the following conditions, unless otherwise waived by the Company:

5.1 Representations and Warranties. The representations and warranties of each Purchaser contained in Section 3 shall be true and correct as of the date of such Closing.

5.2 Performance. The Purchasers shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them on or before such Closing.

5.3 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the shares of Series F Preferred Stock and the Warrants pursuant to this Agreement shall be obtained and effective as of such Closing.

5.4 Ancillary Documents. The Purchasers shall have executed and delivered the Investors’ Rights Agreement, the Right of First Refusal and Co-Sale Agreement and the Voting Agreement.

5.5 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Company, and the Company shall have received all such documents as reasonably requested.

6. Miscellaneous.

6.1 Survival of Warranties. Unless otherwise set forth in this Agreement, the warranties, representations and covenants of the Company and the Purchasers contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected or limited by any investigation of the subject matter thereof made by or on behalf of the Purchasers or the Company.

6.2 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.

6.3 Governing Law. This Agreement and any controversy arising directly or indirectly out of or relating to this Agreement shall be governed by and construed in accordance with the internal laws of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.

-21-

6.4 Dispute Resolution; Waiver of Jury Trial. The parties (a) hereby irrevocably and unconditionally submit to the sole and exclusive jurisdiction of the state courts of the State of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

6.5 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. This Agreement may also be executed and delivered by fax, email or other electronic delivery of signature.

6.6 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.

6.7 Notices. All notices or other communications required or permitted hereunder shall be in writing and faxed, emailed, mailed or delivered to each party as follows at the address, facsimile number or email address set forth on the signature page or exhibits hereto, or at such other address, number or email address as such party shall have furnished in writing. All notices and communications will be deemed effectively given the earlier of (a) when received, (b) when delivered personally, (c) one business day after being delivered by facsimile or email (with receipt of appropriate confirmation), (d) one business day after being deposited with an overnight courier service of recognized standing; or (e) four days after being deposited in the US mail, first class with postage prepaid.

-22-

6.8 Finder’s Fee. Each party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction. Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which each Purchaser or any of its officers, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

6.9 Fees and Expenses. Each party shall bear its own fees and expenses in connection with the transactions contemplated hereby; provided, however, that, if the Initial Closing is effected, the Company shall pay the reasonable and documented fees and expenses of Faegre Drinker Biddle & Reath LLP, counsel for Kestrel Merchant Partners, LLC, in an amount not to exceed $35,000.

6.10 Attorney’s Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of any of the Transaction Agreements, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

6.11 Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the Company and the Purchasers holding at least a majority of the shares of Series F Preferred Stock then outstanding (on an as-converted basis). Any amendment or waiver effected in accordance with this Section 6.11 shall be binding upon the Purchasers and each transferee of the shares of Series F Preferred Stock and the Warrants (or the Common Stock or other securities issuable upon conversion or exercise thereof), each future holder of all such securities, and the Company.

6.12 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. The parties agree to replace such illegal, void, invalid or unenforceable provision of this Agreement with a legal, valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such illegal, void, invalid or unenforceable provision.

6.13 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting 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. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

-23-

6.14 Termination of Closing Obligations. Each Purchaser shall have the right to terminate its obligations to complete the Initial Closing or a subsequent Closing, as the case may be, if prior to the occurrence thereof, any of the following occurs:

(a) the Company consummates a Deemed Liquidation Event (as defined in the Certificate); or

(b) the Company (i) applies for or consents to the appointment of a receiver, trustee, custodian or liquidator of itself or substantially all of its property, (ii) becomes subject to the appointment of a receiver, trustee, custodian or liquidator of itself or substantially all of its property, (iii) makes an assignment for the benefit of creditors, (iv) institutes any proceedings under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar law affecting the rights of creditors generally, or files a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any insolvency law, or files an answer admitting the material allegations of a bankruptcy, reorganization or insolvency petition filed against it, or (v) becomes subject to any involuntary proceedings under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar law affecting the rights of creditors generally, when proceeding is not dismissed within thirty (30) days of filing, or have an order for relief entered against it in any proceedings under the United States Bankruptcy Code.

6.15 Entire Agreement. This Agreement, and the exhibits attached hereto, constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled.

6.16 No Commitment for Additional Financing. The Company acknowledges and agrees that no Purchaser has made any representation, undertaking, commitment or agreement to provide or assist the Company in obtaining any financing, investment or other assistance, other than the purchase of the shares of Series F Preferred Stock and the Warrants as set forth herein and subject to the conditions set forth herein. In addition, the Company acknowledges and agrees that (a) no statements, whether written or oral, made by any Purchaser or its representatives on or after the date of this Agreement shall create an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment, (b) the Company shall not rely on any such statement by any Purchaser or its representatives and (c) an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment may only be created by a written agreement, signed by such Purchaser and the Company, setting forth the terms and conditions of such financing or investment and stating that the parties intend for such writing to be a binding obligation or agreement. Each Purchaser shall have the right, in its sole and absolute discretion, to refuse or decline to participate in any other financing of or investment in the Company, and shall have no obligation to assist or cooperate with the Company in obtaining any financing, investment or other assistance.

-24-

6.17 Right to Conduct Activities. The Company hereby agrees and acknowledges that certain of the Purchasers (together with their respective Affiliates) are professional investment organizations, and as such review the business plans and related proprietary information of many enterprises, some of which 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 Purchasers 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; and the Company hereby agrees that, to the extent permitted under applicable law, the Purchasers (and their respective Affiliates) shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by any Purchaser (or their respective Affiliates) in any entity competitive with the Company, or (ii) actions taken by any partner, officer, employee or other representative of a Purchaser (or their respective Affiliates) 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, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x) any of the Purchasers from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.

(Remainder of page intentionally left blank.)

-25-

IN WITNESS WHEREOF, the parties have executed this Series F Preferred Stock and Warrant Purchase Agreement as of the date first written above.

	Company:

	Winc, Inc.,
	a Delaware corporation

	By:
		Name: Geoffrey McFarlane
		Title: Chief Executive Officer

Signature Page to

Series F Preferred Stock and Warrant Purchase Agreement of Winc, Inc.

IN WITNESS WHEREOF, the parties have executed this Series F Preferred Stock and Warrant Purchase Agreement as of the date first written above.

Purchaser:

Signature Page to

Series F Preferred Stock and Warrant Purchase Agreement of Winc, Inc.

Exhibit A

SCHEDULE OF PURCHASERS

Initial Closing: February [●], 2021
Name and Address of Purchaser	Purchase Price ($)	Number of Shares (#)	Number of Warrant Shares (#)
[●] [●] [●] [●] Attention: [●] Email: [●]	$[●]	[●]	[●]
[●] [●] [●] [●] Attention: [●] Email: [●]	$[●]	[●]	[●]
[●] [●] [●] [●] Attention: [●] Email: [●]	$[●]	[●]	[●]
[●] [●] [●] [●] Attention: [●] Email: [●]	$[●]	[●]	[●]
Total Initial Closing:	$[●]	[●]	[●]

A-1

Exhibit B

NINTH AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

(attached)

Exhibit C

FORM OF WARRANT

(attached)

Exhibit D

SEVENTH AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT

(attached)

Exhibit E

SEVENTH AMENDED AND RESTATED

VOTING AGREEMENT

(attached)

Exhibit F

SEVENTH AMENDED AND RESTATED
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT

(attached)

Exhibit G

SCHEDULE OF EXCEPTIONS

(attached)

Exhibit 6.4

CREDIT AGREEMENT

dated as of

December 15, 2020

between

WINC, INC.
a Delaware corporation,
doing business in California as CLUB W, INC.

and

BWSC, LLC,
a California limited liability company,
as Borrowers,

and

PACIFIC MERCANTILE BANK,
a California state-chartered commercial bank,
as Bank

$7,000,000

TABLE OF CONTENTS

Page

ARTICLE I LOAN FACILITIES		1
1.1	Revolving Loans	1
1.2	Reserved	1
1.3	Reserved	1
1.4	Interest Rates; Payments of Interest	1
1.5	Notice of Borrowing Requirements	2
1.6	Reserved	3
1.7	Increased Costs	3
1.8	Reserved	4
1.9	Reserved	4
1.10	Statements of Obligations	4
1.11	Holidays	4
1.12	Time and Place of Payments	4
1.13	Reserved	4
1.14	Fees	4
1.15	Protective Advances	5
1.16	Taxes	5
1.17	Reserved	7
1.18	Termination of Commitment	7
1.19	Collections From Account Debtors	7
ARTICLE II LETTERS OF CREDIT		7
2.1	Letters of Credit	7
2.2	Procedure for Issuance of Letters of Credit	8
2.3	Fees, Commissions and Other Charges	8
2.4	Reimbursement Obligations	9
2.5	Obligations Absolute	9
2.6	Letter of Credit Payments	9
2.7	Outstanding Letters of Credit Following Event of Default or on the Revolving Loans Maturity Date	10
2.8	Letter of Credit Applications	10
ARTICLE III CONDITIONS to closing		10
3.1	Conditions to Initial Loans or Letter of Credit	10
3.2	Conditions to all Loans and Letters of Credit	10
3.3	Conditions Subsequent to all Loans and Letters of Credit	11
ARTICLE IV REPRESENTATIONS AND WARRANTIES		11
4.1	Legal Status	11
4.2	No Violation; Compliance	11
4.3	Authorization; Enforceability	11
4.4	Approvals; Consents	11
4.5	Liens	12

Table of Contents continued

Page

4.6	Debt	12
4.7	Litigation	12
4.8	No Default	12
4.9	Capitalization	12
4.10	Taxes	12
4.11	Correctness of Financial Statements; No Material Adverse Change	13
4.12	Employee Benefits	13
4.13	Full Disclosure	14
4.14	Other Obligations	14
4.15	Investment Company Act	14
4.16	Patents, Trademarks, Copyrights, and Intellectual Property, etc.	14
4.17	Environmental Condition	14
4.18	Solvency	14
4.19	Labor Matters	15
4.20	Brokers	15
4.21	Customer and Trade Relations	15
4.22	Material Contracts	15
4.23	Casualty	15
4.24	Eligible Accounts	15
4.25	Eligible Inventory	15
4.26	Compliance with Sanctions and Anti-Terrorism Laws	16
4.27	OFAC	16
4.28	Patriot Act	16
4.29	No Material Adverse Effect	16
ARTICLE V AFFIRMATIVE COVENANTS		16
5.1	Punctual Payments	16
5.2	Books and Records; Collateral Audits; Appraisals; Account Verification	17
5.3	Collateral and Financial Reporting	17
5.4	Existence; Preservation of Licenses; Compliance with Law	19
5.5	Insurance	19
5.6	Assets	19
5.7	Taxes and Other Liabilities	20
5.8	Notices to Bank	20
5.9	Compliance with ERISA and the IRC	20
5.10	Further Assurances	21
5.11	Cash Management Services	21
5.12	Environment	21
5.13	Additional Collateral	21
5.14	Subsidiaries	22
5.15	Material Contracts	22
ARTICLE VI NEGATIVE COVENANTS		22
6.1	Use of Funds; Margin Regulation	22
6.2	Debt	23
6.3	Liens	23
6.4	Merger, Consolidation, and Transfer or Acquisition of Assets	23

Table of Contents continued

Page

6.5	Reserved	23
6.6	Sales and Leasebacks	23
6.7	Dispositions	23
6.8	Investments	23
6.9	Character of Business	23
6.10	Restricted Payments	23
6.11	Guarantee	23
6.12	Reserved	23
6.13	Transactions with Affiliates	23
6.14	Stock Issuance	23
6.15	Financial Condition	24
6.16	OFAC	24
6.17	Fiscal Year	24
6.18	Reserved	24
6.19	Burdensome Agreements	24
6.20	Reserved	24
6.21	Amendments of Certain Documents	24
6.22	Employee Benefits	24
6.23	Material Contracts	24
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES		25
7.1	Events of Default	25
7.2	Remedies	27
7.3	Reserved	27
7.4	Appointment of Receiver or Trustee	27
7.5	Power of Attorney	27
7.6	Remedies Cumulative	27
ARTICLE VIII MISCELLANEOUS		28
8.1	Notices; Effectiveness; Electronic Communication	28
8.2	No Waivers	29
8.3	Expenses; Indemnification; Damage Waiver	29
8.4	Amendments and Waivers	29
8.5	Successors and Assigns; Participations; Disclosure; Register	30
8.6	Reserved	31
8.7	Counterparts; Integration	31
8.8	Severability	31
8.9	Knowledge	31
8.10	Additional Waivers	31
8.11	Destruction Of Borrowers’ Documents	32
8.12	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; CLASS ACTION WAIVER	32
8.13	Reference Provision	33
8.14	Revival and Reinstatement of Obligations	34
8.15	Updating Disclosure Schedules	34
8.16	Patriot Act Notification	34
8.17	Debtor-Creditor Relationship	34

iii

Table of Contents continued

Page

8.18	Amendment to Mezzanine Loan Documents	34
ARTICLE IX JOINT AND SEVERAL LIABILITY; SINGLE LOAN ACCOUNT		35
9.1	Joint and Several Liability	35
9.2	Primary Obligation; Waiver of Marshaling	35
9.3	Financial Condition of Borrowers	35
9.4	Continuing Liability	35
9.5	Additional Waivers	35
9.6	Settlements or Releases	37
9.7	No Election	37
9.8	Indefeasible Payment	37
9.9	Single Loan Account	37
9.10	Apportionment of Proceeds of Loans	38
9.11	Parent as Agent for Borrowers	38

Annexes, Exhibits and Schedules

Annex 1	Definitions and Construction
Annex 2	Closing Conditions
Annex 3	Post-Closing Conditions

Exhibit 5.3(c)	Form of Compliance Certificate

Schedule 1E	Locations of Eligible Inventory
Schedule 4.1	Legal Status
Schedule 4.7	Litigation
Schedule 4.9(a)	Ownership of Parent
Schedule 4.9(b)	Ownership of Subsidiaries
Schedule 4.12	Employee Benefits
Schedule 4.17	Environmental Disclosures
Schedule 4.19	Labor Matters
Schedule 4.20	Brokers
Schedule 4.22	Material Contracts

SUMMARY OF CREDIT TERMS

Section 1.1 – Revolving Credit Commitment	$7,000,000
Section 1.1 – Revolving Loans Maturity Date	March 31, 2022
Section 1.1- Inventory Sublimit	$4,500,000
Section 1.4(a)(i) – Prime Lending Rate for Revolving Loans	Prime Rate plus 1.25% (125 basis points) per annum
Section 1.14(a)(i) – Revolving Credit Commitment Fee	An amount equal to 0.25% of the Revolving Credit Commitment in effect on the date such fee is due
Section 2.1(a) – Letter of Credit Sublimit	$0
Section 6.15(a) – Minimum Liquidity	$1,500,000

CREDIT AGREEMENT

This CREDIT AGREEMENT, dated as of December 15, 2020, is entered into between WINC, INC., a Delaware corporation, doing business in California as CLUB W, INC. (“Parent”), and BWSC, LLC, a California limited liability company (“BWSC”) (Parent and BWSC are sometimes collectively referred to herein as “Borrowers” and each individually as a “Borrower”), and PACIFIC MERCANTILE BANK, a California state-chartered commercial bank (“Bank”). Initially capitalized terms used in this Agreement have the meanings ascribed to such terms in Annex 1. In addition, interpretation of UCC terms, accounting terms, and other matters of construction are set forth in Annex 1.

The parties hereto hereby agree as follows:

ARTICLE I

LOAN FACILITIES

1.1 Revolving Loans. Provided that no Event of Default or Default has occurred and is continuing, and subject to the other terms and conditions hereof, Bank agrees to make revolving loans (“Revolving Loans”) jointly and severally to Borrowers, upon notice in accordance with Section 1.5(b), from the Closing Date up to but not including the Revolving Loans Maturity Date, the proceeds of which shall be used only for the purposes allowed in Section 6.1(a), subject to the following conditions and limitations:

(a) the aggregate principal amount of Revolving Loans outstanding after giving effect to any proposed Borrowing of a Revolving Loan plus the Letter of Credit Usage on such date shall not exceed the lesser of (i) the Borrowing Base, or (ii) the Revolving Credit Commitment;

(b) Borrowers shall not be permitted to borrow, and Bank shall not be obligated to make, any Revolving Loans to Borrowers, unless and until all of the conditions for a Borrowing set forth in Section 3.2 have been met to the satisfaction of Bank; and

(c) if, at any time or for any reason, the amount of Revolving Loans outstanding plus the Letter of Credit Usage exceeds the lesser of (i) the Borrowing Base, or (ii) the Revolving Credit Commitment (an “Overadvance”), Borrowers shall promptly, but in any event within 1 Business Day pay to Bank, upon Bank’s election and demand, in cash, the amount of such Overadvance to be used by Bank to repay outstanding Revolving Loans.

Borrowers may repay and, subject to the terms and conditions hereof, reborrow Revolving Loans. All such repayments shall be without penalty or premium. On the Revolving Loans Maturity Date, Borrowers shall pay to Bank the entire unpaid principal balance of the Revolving Loans together with all accrued but unpaid interest thereon.

1.2 Reserved.

1.3 Reserved.

1.4 Interest Rates; Payments of Interest.

(a) Interest Rates.

(i) Revolving Loans. Subject to the terms and conditions hereof, all Revolving Loans shall bear interest at the greater of (x) the Prime Lending Rate for Revolving Loans, or (y) 4% per annum.

(ii) Reserved.

(iii) Reserved.

(b) Default Rate. Upon the occurrence and during the continuance of an Event of Default, in addition to and not in substitution of any of Bank’s other rights and remedies with respect to such Event of Default, at the option of Bank the entire unpaid principal balance of the Loans shall bear interest at the otherwise applicable rate(s) plus 500 basis points. In addition, if Borrowers shall fail to comply with Section 5.11, in addition to and not in substitution of Bank’s other rights and remedies with respect to such failure to comply, at the option of Bank the entire unpaid principal balance of the Loans shall bear interest at the otherwise applicable rate(s) plus an additional 100 basis points. In addition, if Borrowers shall fail to comply with Section 1.12, in addition to and not in substitution of Bank’s other rights and remedies with respect to such failure to comply, at the option of Bank the entire unpaid principal balance of the Loans shall bear interest at the otherwise applicable rate(s) plus an additional 25 basis points. In addition, interest, Expenses, the Fees, and other amounts due hereunder not paid when due shall, at the option of Bank, bear interest at the Prime Lending Rate for Revolving Loans plus 500 basis points until such overdue payment is paid in full.

(c) Computation of Interest. All computations of interest shall be calculated on the basis of a year of 360 days for the actual days elapsed. In the event that the Prime Rate announced is, from time to time, changed, adjustment in the Prime Lending Rate shall be made as of 12:01 a.m. (Pacific time) on the effective date of the change in the Prime Rate. Interest shall accrue from the Closing Date to the date of repayment of the Loans in accordance with the provisions of this Agreement; provided, however, if a Loan is repaid on the same day on which it is made, then 1 day’s interest shall be paid on that Loan. Any and all interest not paid when due shall, at the option of Bank, be added to the principal balance of the applicable Loan and shall bear interest thereafter as provided for in Section 1.4(b).

(d) Maximum Interest Rate. Under no circumstances shall the interest rate and other charges hereunder 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 a court determines that Bank has received interest and other charges hereunder in excess of the highest rate applicable hereto, such excess shall be deemed received on account of, and shall automatically be applied to reduce, FIRST, the Obligations, other than interest and Bank Product Obligations, in the inverse order of maturity, and SECOND, Bank Product Obligations, and the provisions hereof shall be deemed amended to provide for the highest permissible rate. If there are no Obligations outstanding, Bank shall refund to Borrowers such excess.

(e) Payments of Interest. All accrued but unpaid interest on the Loans, calculated in accordance with this Section 1.4, shall be due and payable, in arrears, on each and every Interest Payment Date.

1.5 Notice of Borrowing Requirements.

(a) Each Borrowing shall be made on a Business Day.

(b) Each Borrowing shall be made upon email or fax notice given by an Authorized Officer of Borrowers. Bank shall be given such notice no later than 11:00 a.m., Pacific time, 1 Business Day prior to the day on which such Borrowing is to be made.

(c) So long as all of the conditions for a Borrowing of a Loan set forth herein have been satisfied, Bank shall credit the proceeds of such Loan on the applicable Borrowing date into Borrowers’ Account, or as otherwise directed in writing by an Authorized Officer.

1.6 Reserved.

1.7 Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, Bank;

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (c) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on Bank any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by Bank or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to Bank or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by Bank or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of Bank or other Recipient, Borrowers will pay to Bank or other Recipient, as the case may be, such additional amount or amounts as will compensate Bank or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If Bank determines that any Change in Law affecting Bank or any lending office of Bank or Bank’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on Bank’s capital or on the capital of Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of Bank or the Loans made by Bank, or the Letters of Credit, to a level below that which Bank or Bank’s holding company could have achieved but for such Change in Law (taking into consideration Bank’s policies and the policies of Bank’s holding company with respect to capital adequacy), then from time to time Borrowers will pay to Bank such additional amount or amounts as will compensate Bank or Bank’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of Bank setting forth the amount or amounts necessary to compensate Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to Administrative Borrower, shall be conclusive absent manifest error. Borrowers shall pay Bank the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of Bank to demand compensation pursuant to this Section shall not constitute a waiver of Bank’s right to demand such compensation; provided that Borrowers shall not be required to compensate Bank pursuant to this Section 1.7 for any increased costs incurred or reductions suffered more than 9 months prior to the date that Bank notifies Administrative Borrower of the Change in Law giving rise to such increased costs or reductions, and of Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 9-month period referred to above shall be extended to include the period of retroactive effect thereof).

1.8 Reserved.

1.9 Reserved.

1.10 Statements of Obligations. The Loans and Borrowers’ obligation to repay the same shall be evidenced by this Agreement and the books and records of Bank. Bank shall render monthly statements of the Loans to Borrowers, including statements of all principal and interest owing on the Loans, and all Fees and Expenses owing, and such statements shall be presumed to be correct and accurate and constitute an account stated between Borrowers and Bank unless, within 30 days after receipt thereof by Borrowers, Administrative Borrower delivers to Bank, at the address specified in Section 8.1, written objection thereof specifying the error or errors, if any, contained in any such statement.

1.11 Holidays. Any principal or interest in respect of the Loans which would otherwise become due on a day other than a Business Day, shall instead become due on the next succeeding Business Day and such adjustment shall be reflected in the computation of interest; provided, however, that in the event that such due date shall, subsequent to the specification thereof by Bank, for any reason no longer constitute a Business Day, Bank may change such specified due date in accordance with this Section 1.11.

1.12 Time and Place of Payments.

(a) All payments due hereunder shall be made available to Bank in immediately available Dollars, not later than 12:00 p.m., Pacific time, on the day of payment, to the following address or such other address as Bank may from time to time specify by notice to Borrowers:

Pacific Mercantile Bank

949 South Coast Drive, Third Floor

Costa Mesa, CA 92626

(b) Borrowers hereby authorize Bank to charge Borrowers’ Account, or any other demand deposit account maintained by any Borrower with Bank, for the amount of any payment due or past due hereunder or under any Loan Document, for the full amount thereof. Should there be insufficient funds in any such demand deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable in cash by Borrowers.

(c) In addition, Borrowers hereby authorize Bank at its option, without prior notice to Borrowers, to advance a Revolving Loan for any payment due or past due hereunder, including principal and interest owing on the Loans, the Fees and all Expenses, and to pay the proceeds of such Revolving Loan to Bank for application toward such due or past due payment.

1.13 Reserved.

1.14 Fees.

(a) Borrowers shall pay to Bank (i) a fee (the "Revolving Credit Commitment Fee") in the amount set forth in Section 1.14(a)(i) of the Summary of Credit Terms. The Revolving Credit Commitment Fee shall be fully earned and nonrefundable, and shall be due and payable, on the Closing Date, and each anniversary of the Closing Date.

(b) Reserved.

(c) If any payment due hereunder, whether for principal, interest, or otherwise, is not paid on or before the 10^th day after the date such payment is due, in addition to and not in substitution of any of Bank’s other rights and remedies with respect to such nonpayment, Borrowers shall pay to Bank a late payment fee (the “Late Payment Fee”) equal to the greater of 5% of the amount of such overdue payment, or $10. The Late Payment Fee shall be due and payable on the 11^th day after the due date of the overdue payment with respect thereto.

1.15 Protective Advances. Borrowers hereby authorize Bank, from time to time in Bank's sole discretion, (A) after the occurrence and during the continuance of an Event of Default or Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 3.2 are not satisfied, to make Revolving Loans to Borrowers in an aggregate amount not to exceed 10% of the Revolving Credit Commitment that Bank, in its discretion deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the likelihood of repayment of the Obligations, or (3) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement and/or any Loan Document, including Expenses (any of the Revolving Loans described in this Section 1.15 shall be referred to as "Protective Advances"). Each Protective Advance shall be deemed to be a Revolving Loan hereunder. The Protective Advances shall be repayable on demand, secured by the Collateral, constitute Obligations hereunder, and bear interest at the Prime Lending Rate for Revolving Loans. The provisions of this Section 1.15 are for the exclusive benefit of Bank and are not intended to benefit Borrowers in any way.

1.16 Taxes.

(a) Defined Terms. For purposes of this Section 1.16 the term "applicable law" includes FATCA.

(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. Any Recipient that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Administrative Borrower, at the time or times reasonably requested by Administrative Borrower, such properly completed and executed documentation reasonably requested by Administrative Borrower as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Recipient, if reasonably requested by Administrative Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by Administrative Borrower as will enable Administrative Borrower to determine whether or not Bank is subject to backup withholding or information reporting requirements. Without limiting the generality of the foregoing,

(i) a Recipient that is a U.S. Person shall deliver to Administrative Borrower on or prior to the Closing Date or later date on which such Recipient becomes a lender under this Agreement (and from time to time thereafter upon the reasonable request of Administrative Borrower), executed originals of IRS Form W-9 certifying that such Recipient is exempt from U.S. federal backup withholding Tax; and

(ii) a Recipient that is not a U.S. Person shall, deliver to Administrative Borrower (in such number of copies as shall be requested by Administrative Borrower) on or prior to the Closing Date or later date on which such Recipient becomes a lender under this Agreement (and from time to time thereafter upon the reasonable request of Administrative Borrower), whichever of the following is applicable, to establish that Recipient is exempt from U.S. federal withholding tax: (A) in the case such Recipient is 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, executed originals of IRS Form W-8BEN-E establishing an exemption from 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-E establishing an exemption from U.S. federal withholding Tax pursuant to the "business profits" or "other income" article of such Tax treaty, and establishing compliance with FATCA; (B) executed originals of IRS Form W-8ECI; (C) in the case such Recipient is claiming the benefits of the exemption for portfolio interest under Section 881(c) of the IRC, (x) a certificate to the effect that Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of the IRC, a "10 percent shareholder" of Borrowers within the meaning of Section 881(c)(3)(B) of the IRC, or a "controlled foreign corporation" described in Section 881(c)(3)(C) of the IRC and (y) executed originals of IRS Form W-8BEN-E, and establishing compliance with FATCA; or (D) if such Recipient is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by any certifications or documents required by Section 1.16(b)(i) or (ii) with respect to the beneficial owner, and establishing compliance with FATCA. Each Recipient agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Administrative Borrower in writing of its legal inability to do so.

(c) Payment of Other Taxes by Borrowers. Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Bank timely reimburse it for the payment of, any Other Taxes.

(d) Indemnification by Borrowers. Loan Parties shall jointly and severally indemnify each Recipient, 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 Section 1.16) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient 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. A certificate as to the amount of such payment or liability delivered to Administrative Borrower by Bank shall be conclusive absent manifest error.

(e) Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 1.16, such Loan Party shall deliver to Bank 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 Bank.

(f) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 1.16 (including by the payment of additional amounts pursuant to this Section 1.16), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified 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 repay to such indemnified party the amount paid over pursuant to this paragraph (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 paragraph, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph 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 paragraph 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.

(g) Survival. Each party's obligations under this Section 1.16 shall survive the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

1.17 Reserved.

1.18 Termination of Commitment. The Revolving Credit Commitment shall terminate on the Revolving Loans Maturity Date. Borrowers may terminate the Revolving Credit Commitment at any time, upon 3 Business Days’ written notice to Bank. In the event of any termination of the Revolving Credit Commitment, Borrowers shall, concurrent with such termination, pay to Bank, in immediately available funds, the entire outstanding balance of the Obligations.

1.19 Collections From Account Debtors. The provisions of this Section 1.19 shall take effect upon written notice from Bank to Administrative Borrower at any time and from time to time, that a Cash Dominion Event has occurred.

(a) Lockbox. As quickly as commercially practicable but in any event no later than 30 days after written notice from Bank to Borrower that a Cash Dominion Event has occurred, Borrowers shall establish the Lockbox and the Control Accounts. Borrowers shall deliver to Bank a detailed cash receipts journal on Friday of each week until the Lockbox is operational. Borrowers shall instruct all Account Debtors to make payments either directly to the Lockbox for deposit by Bank directly to the Control Account, or instruct them to deliver such payments to Bank by wire transfer, ACH, or other means as Bank may direct for deposit to the Lockbox or Control Account or for direct application to reduce the outstanding Loans. If any Borrower receives a payment of the Proceeds of Collateral directly, such Borrower will promptly deposit the payment or Proceeds into the Control Account. Until so deposited, such Borrower will hold all such payments and Proceeds in trust for Bank without commingling with other funds or property.

(b) Crediting Payments. Unless otherwise agreed between Borrowers and Bank, each payment shall be deposited into Borrowers' Account on the first Business Day following the Business Day of deposit to the Control Account of immediately available funds or other receipt of immediately available funds by Bank; provided such payment is received in accordance with Bank's usual and customary practices as in effect from time to time; provided further that If an Event of Default has occurred and is continuing, at Bank's option, in its sole and absolute discretion, Bank shall apply all amounts that are deposited into the Control Account in immediately available funds against the Obligations in such order as Bank shall determine in its sole discretion.

ARTICLE II

LETTERS OF CREDIT

2.1 Letters of Credit.

(a) Provided that no Event of Default or Default is continuing and subject to the other terms and conditions hereof, Bank agrees to issue letters of credit (“Letters of Credit”) for the account of Borrowers in such form as may be approved from time to time by Bank, subject to the following limitations:

(i) The face amount of the Letter of Credit if and when issued must not cause the sum of the aggregate principal amount outstanding of all Revolving Loans plus the Letter of Credit Usage to exceed the lesser of (i) the Borrowing Base, or (ii) the Revolving Credit Commitment;

(ii) The face amount of the Letter of Credit if and when issued must not cause the Letter of Credit Usage to exceed the Letter of Credit Sublimit;

(iii) The Letter of Credit may not have an expiry date or draw period which extends beyond the date which is 30 days prior to the Revolving Loans Maturity Date; and

(iv) The conditions specified in Section 3.2 shall have been satisfied on the date of issuance of such Letter of Credit.

(b) Each Letter of Credit shall (i) be denominated in Dollars, and (ii) be a standby or documentary letter of credit issued to support obligations of Borrowers or any Subsidiary, contingent or otherwise, to finance the working capital and business needs of Borrowers or such Subsidiary in the ordinary course of business.

(c) Each Letter of Credit shall be subject to the Uniform Customs or the ISP, as determined by Bank, in its Permitted Discretion, and, to the extent not inconsistent therewith, the laws of the State of California.

(d) Bank shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause Bank to exceed any limits imposed by its organizational or governing documents or by any Applicable Law or determination of an arbitrator or a court or other Governmental Authority to which Bank is subject.

2.2 Procedure for Issuance of Letters of Credit. Borrowers may request that Bank issue a Letter of Credit at any time prior to the date that is 30 days prior to the Revolving Loans Maturity Date by delivering to Bank a Letter of Credit Application at its address for notices specified herein therefor, completed to the satisfaction of Bank, together with such other certificates, documents and other papers and information as Bank may request. Upon receipt of any Letter of Credit Application, Bank will process such Letter of Credit Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall Bank be required to issue any Letter of Credit earlier than three (3) Business Days after its receipt of the Letter of Credit Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by Bank and Borrowers. Bank shall furnish a copy of such Letter of Credit to Borrowers promptly following the issuance thereof.

2.3 Fees, Commissions and Other Charges.

(a) With respect to each and every standby Letter of Credit, Borrowers shall pay to Bank, a fee in an amount equal to the face amount of such standby Letter of Credit times 4% per annum, pro-rated for the tenor of such standby Letter of Credit on the basis of a year of 360 days (the "Standby Letter of Credit Fee"). The Standby Letter of Credit Fee shall be due and payable upon issuance of the applicable standby Letter of Credit, and if applicable, upon each renewal thereof.

(b) With respect to each and every documentary Letter of Credit, Borrowers shall pay to Bank, a fee in an amount equal to the greater of (i) the product of (x) the face amount of such documentary Letter of Credit times (y) 0.125%, or (ii) $125, pro-rated for the tenor of such documentary Letter of Credit on the basis of a year of 360 days (the "Documentary Letter of Credit Fee"). The Documentary Letter of Credit Fee shall be due and payable upon issuance of the applicable documentary Letter of Credit, and if applicable, upon each renewal thereof.

(c) In addition to the foregoing, Borrowers shall pay or reimburse Bank for such normal and customary costs and expenses as are reasonably incurred or charged by Bank in issuing, effecting payment under, amending or otherwise administering any Letter of Credit.

2.4 Reimbursement Obligations.

(a) Borrowers shall reimburse Bank on the same Business Day on which a draft is presented under any Letter of Credit and paid by Bank, provided that Bank provides notice to Borrowers prior to 11:00 a.m., Pacific time, on such Business Day and otherwise Borrowers shall reimburse Bank on the next succeeding Business Day; provided, further, that the failure to provide such notice shall not affect Borrowers’ absolute and unconditional obligation to reimburse Bank when required hereunder for any draft paid under any Letter of Credit. Bank shall provide notice to Borrowers on such Business Day as a draft is presented and paid by Bank indicating the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by Bank in connection with such payment. Each such payment shall be made to Bank at its address specified in Section 1.12 in Dollars and in immediately available funds.

(b) Interest shall be payable on any and all amounts remaining unpaid by Borrowers under this Section from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full at the Prime Lending Rate for Revolving Loans, subject to Section 1.4(b), if applicable.

(c) Each drawing under any Letter of Credit shall constitute a request by Borrowers to Bank for a Borrowing of a Revolving Loan. The date of such drawing shall be deemed the date on which such Borrowing is made.

2.5 Obligations Absolute.

(a) Borrowers’ obligations under this Article II shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which Borrowers may have or have had against Bank or any beneficiary of a Letter of Credit.

(b) Borrowers agree with Bank that Borrowers’ Reimbursement Obligations under Section 2.4 shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any dispute between or among Borrowers and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or (iii) any claims whatsoever of Borrowers against the beneficiary of such Letter of Credit or any such transferee.

(c) Bank shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by Bank’s gross negligence or willful misconduct.

(d) Borrowers agree that any action taken or omitted by Bank under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the UCC, shall be binding on Borrowers and shall not result in any liability of Bank to Borrowers.

2.6 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the responsibility of Bank to Borrowers in connection with such draft shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit. In determining whether to pay under any Letter of Credit, only Bank shall be responsible for determining that the documents and certificates required to be delivered under the Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.

2.7 Outstanding Letters of Credit Following Event of Default or on the Revolving Loans Maturity Date.

(a) With respect to all Letters of Credit outstanding upon the occurrence and during the continuance of a Default or Event of Default, Borrowers shall either (i) replace such Letters of Credit, whereupon such Letters of Credit shall be canceled, with letters of credit issued by another issuer acceptable to the beneficiary of such Letter of Credit, or (ii) Cash Collateralize such Letters of Credit for so long as such Letters of Credit remain outstanding during the continuance of such Default or Event of Default.

(b) With respect to all Letters of Credit outstanding on the Revolving Loans Maturity Date, Borrowers shall either (i) replace such Letters of Credit, whereupon such Letters of Credit shall be canceled, with letters of credit issued by another issuer acceptable to the beneficiary of such Letter of Credit, or (ii) Cash Collateralize such Letters of Credit until such time as no Letters of Credit remain outstanding, all draw periods with respect to all Letters of Credit have expired, and all Reimbursement Obligations with respect thereto have been paid in full in cash.

(c) Each Borrower hereby grants to Bank a security interest in all cash collateral provided pursuant to Sections 2.7(a) and (b) to secure the Obligations. Amounts held in such cash collateral account shall be applied by Bank to the payment of drafts drawn under such Letters of Credit and the payment of customary costs and expenses charged or incurred by Bank in connection therewith, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other Obligations. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other Obligations shall have been paid in full in cash, and the obligations of Bank hereunder have terminated, the balance, if any, in such cash collateral account shall be returned to Borrowers. Borrowers shall execute and deliver to Bank, such further documents and instruments as Bank may request to evidence the creation and perfection of the within security interest in such cash collateral account.

2.8 Letter of Credit Applications. In the event of any conflict between the terms of this Article II and the terms of any Letter of Credit Application, the terms of such Letter of Credit Application shall govern and control any such conflict.

ARTICLE III

CONDITIONS to closing

3.1 Conditions to Initial Loans or Letter of Credit. Bank’s obligation to make the initial Loans and/or to issue the initial Letter of Credit is subject to and contingent upon the fulfillment of each of the conditions set forth in Annex 2 to the satisfaction of Bank and its counsel.

3.2 Conditions to all Loans and Letters of Credit. Bank’s obligation hereunder to make any Loans (including the initial Loans), and/or to issue any Letters of Credit (including the initial Letter of Credit), is further subject to and contingent upon the fulfillment of each of the following conditions to the satisfaction of Bank:

(a) (i) in the case of a Borrowing of a Revolving Loan, receipt by Bank of notice as required by Section 1.5(b), and (ii) in the case of a Letter of Credit, receipt by Bank of a Letter of Credit Application and the other papers and information required under Section 2.2;

(b) the fact that, immediately before and after such Borrowing or issuance of Letter of Credit, as the case may be, no Event of Default or Default shall have occurred or be continuing; and

(c) the fact that the representations and warranties of Loan Parties contained in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing, or issuance of Letter of Credit, as the case may be, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects on and as of the date of such Borrowing, or issuance of Letter of Credit, as the case may be, and except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects as of such earlier date.

3.3 Conditions Subsequent to all Loans and Letters of Credit. Bank's obligation hereunder to make any Loans to Borrower, and Bank's obligation to issue any Letters of Credit, is further subject to and contingent upon the fulfillment of each of the conditions set forth in Annex 3 to the satisfaction of Bank and its counsel. In the event that Borrowers shall fail to fulfill any or all of the conditions subsequent set forth in Annex 3 on or before the applicable due date indicated therein to the satisfaction of Bank, in its sole and absolute discretion, each such failure shall constitute a separate and independent Event of Default.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

In order to induce Bank to enter into this Agreement and to make Loans and/or issue any Letters of Credit, each Borrower represents and warrants to Bank that on the Closing Date and on the date of each Borrowing or issuance of a Letter of Credit:

4.1 Legal Status. Each Corporate Loan Party is the type of organization indicated in Schedule 4.1, and is duly organized and existing under the laws of the state of its organization, as indicated in Schedule 4.1. Each Corporate Loan Party has the power and authority to own its own Assets and to transact the business in which it is engaged, and is properly licensed, qualified to do business and in good standing in every jurisdiction in which it is doing business where failure to so qualify would reasonably be expected to have a Material Adverse Effect, as set forth in Schedule 4.1. Each Corporate Loan Party has delivered to Bank accurate and complete copies of its Governing Documents which are operative and in effect as of the Closing Date.

4.2 No Violation; Compliance. The execution, delivery and performance of the Loan Documents to which each Corporate Loan Party is a party, and the consummation of the transactions contemplated hereby and thereby, are within such Corporate Loan Party’s powers, are not in conflict with the terms of the Governing Documents of such Corporate Loan Party, and do not result in a breach of or constitute a default under any contract, obligation, indenture or other instrument to which such Corporate Loan Party is a party or by which such Corporate Loan Party is bound or affected, which breach or default would reasonably be expected to have a Material Adverse Effect. There is no law, rule or regulation (including Regulations T, U and X of the Federal Reserve Board), nor is there any judgment, decree or order of any court or Governmental Authority binding on any Corporate Loan Party which would be contravened by the execution, delivery, performance or enforcement of the Loan Documents to which any Corporate Loan Party is a party.

4.3 Authorization; Enforceability. Each Corporate Loan Party has taken all corporate, partnership or limited liability company, as applicable, action necessary to authorize the execution and delivery of the Loan Documents to which such Corporate Loan Party is a party, and the consummation of the transactions contemplated hereby and thereby. Upon their execution and delivery in accordance with the terms hereof, the Loan Documents to which each Loan Party is a party will constitute legal, valid and binding agreements and obligations of such Loan Party enforceable against such Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, and similar laws and equitable principles affecting the enforcement of creditors’ rights generally.

4.4 Approvals; Consents. No approval, consent, exemption or other action by, or notice to or filing with, any Governmental Authority is necessary in connection with the execution, delivery, performance or enforcement of the Loan Documents except those that have been obtained or which the failure to obtain would not reasonably be expected to have a Material Adverse Effect. All requisite Governmental Authorities and third parties have approved or consented to the transactions contemplated by the Loan Documents, and all applicable waiting periods have expired, to the extent the failure to obtain such approval or consent, or satisfy such waiting period, would reasonably be likely to have a Material Adverse Effect, and there is no governmental or judicial action, actual or threatened, that has or could have a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the transactions contemplated by the Loan Documents.

4.5 Liens. Each Corporate Loan Party and each of its Subsidiaries has good and marketable title to, or valid leasehold interests in, or licenses to, all of its Assets, free and clear of all Liens or rights of others, except for Permitted Liens.

4.6 Debt. Each Corporate Loan Party and each of its Subsidiaries has no Debt other than Permitted Debt.

4.7 Litigation. Except as set forth in Schedule 4.7, there are no suits, proceedings, claims or disputes pending or, to the Knowledge of Borrowers, threatened, against or affecting any Loan Party or any of any Loan Party’s Assets, or any Subsidiary or any of such Subsidiary’s Assets (a) that seeks damages in excess of $75,000 over applicable insurance, and as to which no reservation of rights has been taken by the insurer thereunder, or (b) which seek injunctive relief. No Loan Party or any of any Loan Party’s Assets, or any Subsidiary or any of such Subsidiary’s Assets, is subject to any injunction, writ, temporary restraining order or any other order of any court or other Governmental Authority.

4.8 No Default. No Event of Default or Default has occurred and is continuing or would result from the incurring of obligations by any Loan Party or any Subsidiary under this Agreement or the Loan Documents to which it is a party.

4.9 Capitalization.

(a) Set forth on Schedule 4.9(a) is a complete and accurate list showing the number of shares of each class of Equity Interests of Parent authorized, the number outstanding, and the number and percentage of the outstanding shares of each such class owned (directly or indirectly) by each Owner of Parent (except for any such Equity Interests that are publicly-traded). Except as set forth on Schedule 4.9(a), all of the outstanding Equity Interests of Parent have been validly issued, are fully paid and non-assessable, and are owned by the Owner indicated on Schedule 4.9(a), free and clear of all Liens (other than Permitted Liens), options, warrants, rights of conversion or purchase or any similar rights. Except as set forth on Schedule 4.9(a), neither Parent nor any Owner of Parent is a party to, or has Knowledge of, any agreement restricting the transfer or hypothecation of any Equity Interests of Parent.

(b) Set forth on Schedule 4.9(b) is a complete and accurate list showing all Subsidiaries of Parent and, as to each such Subsidiary, the jurisdiction of its organization, the number of shares of each class of Equity Interests authorized (if applicable), the number outstanding, and the number and percentage of the outstanding shares of each such class owned (directly or indirectly) by its Owner(s). Except as set forth on Schedule 4.9(b), all of the outstanding Equity Interests of each Subsidiary of Parent owned (directly or indirectly) by Parent have been validly issued, are fully paid and non-assessable (to the extent applicable) and are owned by Parent or a Subsidiary of Parent, free and clear of all Liens (other than Permitted Liens), options, warrants, rights of conversion or purchase or any similar rights. Except as set forth on Schedule 4.9(b), neither Parent nor any such Subsidiary of Parent is a party to, or has Knowledge of, any agreement restricting the transfer or hypothecation of any Equity Interests of any such Subsidiary, other than the Loan Documents. Neither Parent nor any Subsidiary of Parent owns or holds, directly or indirectly, any Equity Interests of any Person other than such Subsidiaries and Permitted Investments.

4.10 Taxes. All tax returns required to be filed by each Corporate Loan Party and each of its Subsidiaries in any jurisdiction have in fact been filed, except for such tax returns where the failure to file would not reasonably be expected to have a Material Adverse Effect. All material taxes, assessments, fees and other governmental charges upon each Corporate Loan Party and each of its Subsidiaries or upon any of their Assets, income or franchises, which are due and payable have been paid, other than such taxes, assessments, fees and other governmental charges being contested in good faith by appropriate proceedings, and for which adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of such contest or nonpayment, no property is subject to a material risk of loss or forfeiture. The provisions for taxes on the books of each Corporate Loan Party and each of its Subsidiaries are adequate for all open years, and for each Corporate Loan Party’s and each of its Subsidiaries current fiscal period.

4.11 Correctness of Financial Statements; No Material Adverse Change. Borrowers’ audited Financial Statement as of the Fiscal Year ended December 31, 2019, and Borrowers’ internally-prepared Financial Statements for the Fiscal Month ended September 30, 2020, and all other information and data furnished by Borrowers to Bank in connection therewith, taken as a whole, are complete and correct in all material respects, and accurately and fairly present the financial condition and results of operations of Borrowers in all material respects as of their respective dates. Any forecasts of future financial performance delivered by Borrowers to Bank have been made in good faith and are based on reasonable assumptions and investigations by Borrowers. All Financial Statements have been prepared in accordance with GAAP, subject to year-end adjustments and absence of footnotes in the case of monthly and quarterly Financial Statements. Since the date of the most recent Financial Statements delivered to Bank, there has been no change in any Loan Party’s financial condition or results of operations, taken as a whole, sufficient to have a Material Adverse Effect. No Loan Party has any contingent obligations, liabilities for taxes or other outstanding financial obligations which are material in the aggregate, except as disclosed in such Financial Statements.

4.12 Employee Benefits.

(a) Except as set forth on Schedule 4.12, no Loan Party, none of its Subsidiaries, nor any of their respective ERISA Affiliates maintains or contributes to any Employee Benefit Plan.

(b) Each Loan Party and each of the ERISA Affiliates has complied in all material respects with ERISA, the IRC and all applicable laws regarding each Employee Benefit Plan.

(c) Each Employee Benefit Plan is, and has been, maintained in substantial compliance with ERISA, the IRC, all applicable laws and the terms of each such Employee Benefit Plan.

(d) Each Employee Benefit Plan that is intended to qualify under Section 401(a) of the IRC is the subject of a favorable opinion, advisory or determination letter from the Internal Revenue Service or an application for such letter is currently being processed by the Internal Revenue Service. To the Knowledge of each Loan Party and the ERISA Affiliates after due inquiry, nothing has occurred which would prevent, or cause the loss of, such qualification.

(e) No liability to the PBGC (other than for the payment of current premiums which are not past due) by any Loan Party or ERISA Affiliate has been incurred or is expected by any Loan Party or ERISA Affiliate to be incurred with respect to any Pension Plan.

(f) No Notification Event exists or has occurred in the past 6 years.

(g) No Loan Party or ERISA Affiliate sponsors, maintains, or contributes to any Employee Benefit Plan, including, without limitation, any such plan maintained to provide benefits to former employees of such entities that may not be terminated by any Loan Party or ERISA Affiliate in its sole discretion at any time without material liability.

(h) No Loan Party or ERISA Affiliate has provided any security under Section 436 of the IRC.

4.13 Full Disclosure. Each Loan Party has disclosed to Bank all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. All information furnished in writing by or on behalf of any Loan Party and delivered to Bank in connection with this Agreement or the consummation of the transactions contemplated hereunder or thereunder (such information taken as a whole) does not, as of the time of delivery of such information, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein not misleading in light of the circumstances under which they were made (excluding projections made by Borrowers in good faith and used by Borrowers internally which are forwarded to Bank for which Borrowers may represent and warrant that the same were prepared on the basis of information and estimates that Borrowers believed to be reasonable at the time made, and such projections do not constitute a representation or warranty that the results set forth therewith be met; it being acknowledged and agreed by Bank that uncertainty is inherent in any forecasts, projections and other forward-looking information, projections as to future events or conditions are not to be viewed as facts, and the actual results during the period or periods covered by such forecasts may differ materially from the projected results).

4.14 Other Obligations. Neither any Loan Party nor any Subsidiary is in default on any Debt, other than defaults which individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

4.15 Investment Company Act. Neither any Loan Party nor any Subsidiary is an investment company, or a company controlled by an investment company, within the meaning of the Investment Company Act of 1940, as amended.

4.16 Patents, Trademarks, Copyrights, and Intellectual Property, etc. Except as set forth in Schedule 4.7, each Loan Party has all necessary patents, patent rights, licenses, trademarks, trademark rights, trade names, trade name rights, copyrights, permits, and franchises in order for it to conduct its business and to operate its Assets, without known conflict with the rights of third Persons, and all of same are valid and subsisting. Other than the Liens granted to Bank pursuant to the Loan Documents, the consummation of the transactions contemplated by this Agreement will not alter or impair any of such rights of any Loan Party or any Subsidiary. Except as set forth in Schedule 4.7, each Loan Party and each Subsidiary has not been charged or, to Borrowers’ Knowledge, threatened to be charged with any infringement or, after due inquiry, infringed on any, unexpired trademark, trademark registration, trade name, patent, copyright, copyright registration, or other proprietary right of any Person, which either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

4.17 Environmental Condition. Except as set forth on Schedule 4.17, (a) to Borrowers’ Knowledge, no Loan Party’s nor any of its Subsidiaries’ Assets has ever been used by a Loan Party, its Subsidiaries, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such disposal, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) to Borrowers’ Knowledge, after due inquiry, no Loan Party’s nor any of its Subsidiaries’ properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor any of its Subsidiaries has received notice that a Lien arising under any Environmental Law has attached to any revenues or to any real property owned or operated by a Loan Party or its Subsidiaries, and (d) no Loan Party nor any of its Subsidiaries nor any of their respective facilities or operations is subject to any outstanding written order, consent decree, or settlement agreement with any Person relating to any Environmental Law or Environmental Liability that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

4.18 Solvency. Each Borrower and each other Loan Party and each Subsidiary is Solvent. No transfer of property is being made by any Loan Party or any Subsidiary and no obligation is being incurred by any Loan Party or any Subsidiary in connection with the transactions contemplated by this Agreement or the Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party or any Subsidiary.

4.19 Labor Matters. There are no strikes, lockouts, slowdowns or other material labor disputes against Borrowers pending or, to the Knowledge of Borrowers, threatened. The hours worked by and payments made to employees of Borrowers comply with the Fair Labor Standards Act and any other applicable federal, state, local or foreign law dealing with such matters, except to the extent failure to comply would not reasonably be expected to result in a Material Adverse Effect. Borrowers have not incurred any liability or obligation under the Worker Adjustment and Retraining Act or similar state law which remains unpaid or unsatisfied. All payments due from Borrowers, or for which any claim may be made against Borrowers, on account of wages and employee health and welfare insurance and other benefits, have been paid or properly accrued in accordance with GAAP as a liability on the books of Borrowers except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect. Except as set forth on Schedule 4.19, Borrowers are not a party to or bound by any collective bargaining agreement. There are no representation proceedings pending or, to Borrowers’ Knowledge, threatened to be filed with the National Labor Relations Board, and no labor organization or group of employees of Borrowers has made a pending demand for recognition that would reasonably be expected to result in a Material Adverse Effect. There are no complaints, unfair labor practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or complaints against Borrowers pending or, to the Knowledge of Borrowers, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any employee of Borrowers, which either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. The consummation of the transactions contemplated by this Agreement and the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Borrower is bound.

4.20 Brokers. Except as set forth on Schedule 4.20, no broker or finder brought about the obtaining, making or closing of the Loans or transactions contemplated by the Loan Documents, and neither Borrowers nor any Affiliate thereof has any obligation to any Person in respect of any finder's or brokerage fees in connection therewith.

4.21 Customer and Trade Relations. There exists no actual or, to the Knowledge of Borrowers, threatened, termination or cancellation of, or any material adverse modification or change in the business relationship of Borrowers with any supplier material to its operations which either individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.

4.22 Material Contracts. Set forth on Schedule 4.22 is a reasonably detailed description of the Material Contracts of each Loan Party and each of its Subsidiaries. Except for matters which, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, each Material Contract (other than those that have expired at the end of their normal terms) (a) is in full force and effect and is binding upon and enforceable against the applicable Loan Party or the applicable Subsidiary and, to Borrower’s Knowledge, each other Person that is a party thereto in accordance with its terms, (b) has not been otherwise amended or modified (other than amendments or modifications permitted by Section 6.23), and (c) is not in default due to the action or inaction of the applicable Loan Party or the applicable Subsidiary.

4.23 Casualty. Neither the businesses nor the Assets of any Borrower or any of its Subsidiaries have been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

4.24 Eligible Accounts. Each Account included in the Borrowing Base is an “Eligible Account” as defined herein, and conforms to the definition thereof.

4.25 Eligible Inventory. All Inventory included in the Borrowing Base constitutes “Eligible Inventory” as defined herein, and conforms to the definition thereof.

4.26 Compliance with Sanctions and Anti-Terrorism Laws. As of the Closing Date and in the three years prior thereto, none of the Loan Parties nor any Subsidiary, either directly or through a third party acting on its behalf, nor, to the Knowledge of the Loan Parties, any of their respective directors, officers or employees (i) has or has had any of its assets in a country (a “Sanctioned Country”) that is subject to a sanctions program (a “Sanctions Program”) maintained by the U.S. Treasury Department/Office of Foreign Asset Control, the U.S. Treasury Department/Financial Crimes Enforcement Network, the U.S. State Department/Directorate of Defense Trade Controls, the U.S. Commerce Department/Bureau of Industry and Security or the U.S. Justice Department, (ii) does or has done business with or derives or has derived any of its operating income from investments in or transactions with any individual, entity, group or regime subject to, or specially designated under, any Sanctions Program (each, a “Sanctioned Person”), (iii) uses or has used any of its assets to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Country or (iv) is or was in violation of the Patriot Act, the Bank Secrecy Act of 1970, as amended, the Trading with the Enemy Act, the Racketeer Influenced and Corrupt Organizations Act, the U.S. Foreign Corrupt Practices Act of 1977, the UK Bribery Act of 2010 or the Iran Threat Reduction and Syria Human Rights Act of 2012, any other applicable Anti-Terrorism Law, any foreign asset control regulations of the United States Treasury Department or any enabling legislation or executive orders related to any of the foregoing (including, without limitation, Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) and Executive Order 13382 of June 28, 2005 Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters (70 Fed. Reg. (2005))) and the transactions contemplated hereby and use of the proceeds of the Loans will not violate any such law. The Loan Parties and their Subsidiaries have instituted and maintain appropriate policies, procedures and internal controls designed to ensure continued compliance with such laws.

4.27 OFAC. No Loan Party (i) is a Person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), or Executive Order 13382 of June 28, 2005 Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters (70 Fed. Reg. (2005)), (ii) engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise, to the Knowledge of the Loan Parties, associated with any such Person in any manner violative of such Section 2 of such executive order, or (iii) is a Person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other OFAC regulation or executive order.

4.28 Patriot Act. Each Loan Party is in compliance with the Patriot Act. No part of the proceeds of the Loans or the Letters of Credit will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

4.29 No Material Adverse Effect. Since the Closing Date, there has been no event, change, circumstance or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.

ARTICLE V

AFFIRMATIVE COVENANTS

Each Borrower covenants and agrees that from the Closing Date and thereafter until the payment, performance and satisfaction in full, in cash, of the Obligations, all of Bank’s obligations hereunder have been terminated and no Letters of Credit are outstanding, such Borrower shall:

5.1 Punctual Payments. Punctually pay the interest and principal on the Loans, the Fees and all Expenses and any other fees and liabilities due under this Agreement and the Loan Documents at the times and place and in the manner specified in this Agreement or the Loan Documents.

5.2 Books and Records; Collateral Audits; Appraisals; Account Verification.

(a) Maintain, and cause each of its Subsidiaries to maintain, adequate books and records in accordance with GAAP, and permit any officer, employee or agent of Bank, at any time and from time to time, to inspect, audit and examine such books and records, and to make copies of the same.

(b) Permit Bank (through any of its officers, employees, or agents), from time to time hereafter (but in any event no less frequently than twice per calendar year), to audit the Accounts and the Inventory in order to verify each Borrower’s financial condition or the amount, quality, value, condition of, or any other matter relating to, the Accounts and the Inventory. In connection therewith, Borrowers shall pay to Bank its standard and customary audit fee (“Audit Fee”) for each audit plus all Expenses in connection therewith, payable upon demand; provided that, so long as no Event of Default has occurred and is continuing, Borrower shall not be responsible for reimbursing Bank for more than 2 such audits per calendar year.

(c) Permit Bank (through any of its officers, employees, or agents), from time to time hereafter (but in any event no less frequently than twice per calendar year), to obtain at Borrowers’ expense, an appraisal of the Inventory by an appraiser acceptable to Bank in its sole discretion. In connection therewith, Borrowers shall pay to Bank its standard and customary appraisal fee ("Appraisal Fee") for each appraisal, plus all Expenses in connection therewith, payable upon demand; provided that, so long as no Event of Default has occurred and is continuing, Borrower shall not be responsible for reimbursing Bank for more than 2 such appraisals per calendar year.

(d) Whether or not a Default or Event of Default exists, permit Bank at any time and from time to time, in the name of Bank or Borrowers, to verify the validity, amount or any other matter relating to any Accounts of Borrowers by mail, telephone or otherwise. Borrowers shall cooperate fully with Bank in an effort to facilitate and promptly conclude any such verification process.

5.3 Collateral and Financial Reporting. Deliver to Bank the following, all in form and detail satisfactory to Bank:

(a) (i) as soon as available but not later than 15 days after the end of each Fiscal Month, (x) a detailed aging, by total, of the Accounts, together with a reconciliation to the detailed calculation of the Borrowing Base previously provided to Bank, (y) a summary aging, by vendor, of Borrowers’ accounts payable and any book overdraft, (z) an Inventory listing, and (aa) a Borrowing Base Certificate, (ii) upon Bank’s request, copies of invoices in connection with the Accounts, customer statements, credit memos, remittance advices, reports and deposit slips, and (iii) on a quarterly basis, a detailed list of Borrowers’ customers;

(b) as soon as available but not later than 30 days after the end of each Fiscal Month, (i) a Consolidating and Consolidated internally prepared Financial Statement for Parent and its Subsidiaries which shall include Parent’s and its Subsidiaries' Consolidating and Consolidated balance sheet as of the close of such period, and Parent’s and its Subsidiaries' Consolidating and Consolidated statement of income and retained earnings and statement of cash flow for such period and year to date, in each case setting forth in comparative form, as applicable, the figures for the corresponding Fiscal Quarter of the previous Fiscal Year and the corresponding portion of the previous Fiscal Year, all in reasonable detail, certified by the Chief Financial Officer of each Corporate Loan Party, to the best of his or her Knowledge after due and diligent inquiry, as being complete and correct and fairly presenting in all material respects Parent’s and its Subsidiaries' financial condition and results of operations for such period, in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes, (ii) a management prepared narrative discussion, in reasonable detail, signed by the Chief Financial Officer of Parent, describing the operations and financial condition of Parent and its Subsidiaries for the Fiscal Quarter and the portion of the Fiscal Year then ended, (iii) a detailed listing of all contingent liabilities incurred by any of the Corporate Loan Parties, and (iv) an updated listing of all rights each Corporate Loan Party has obtained to any new patentable inventions, trademarks, servicemarks, copyrightable works or other new Intellectual Property;

(c) concurrent with the Financial Statements required under Sections 5.3(b) and (e), a Compliance Certificate from the Chief Financial Officer of Parent, stating, among other things, that he or she has reviewed the provisions of the Loan Documents and that, to the best of his or her Knowledge after due and diligent inquiry there exists no Event of Default or Default, and containing the calculations and other details necessary to demonstrate compliance with Section 6.15;

(d) as soon as available but not later than 60 days after the end of each Fiscal Year, or sooner as Bank may reasonably request, an annual operating budget (including monthly balance sheet, statement of income and retained earnings, and statement of cash flows) for the following Fiscal Year;

(e) as soon as available but not later than 150 days after the end of each Fiscal Year, a complete copy of Parent’s and its Subsidiaries' Consolidated and Consolidating audited Financial Statement, which shall include at least Parent’s and its Subsidiaries' balance sheet as of the close of such Fiscal Year, and Parent’s and its Subsidiaries' statement of income and retained earnings and statement of cash flow for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, accompanied by (i) a report and opinion of a certified public accountant selected by Parent and satisfactory to Bank, which report and opinion shall not be subject to any "going concern" or like qualification or exception or any qualifications or exceptions as to the scope of such audit, and (ii) a certificate of such certified public accountant certifying such Financial Statements and stating that in making the examination necessary for their certification of such Financial Statements, such certified public accountant has not obtained any knowledge of the existence of any Default or Event of Default or, if any such Default or Event of Default shall exist, stating the nature and status of such event;

(f) to the extent applicable, as soon as available copies of all (i) annual or quarterly reports provided to the Mezzanine Lender not otherwise referenced herein, and (ii) press releases;

(g) promptly upon receipt by Borrowers, copies of any and all reports and management letters submitted to Borrowers or any Subsidiary by any certified public accountant in connection with any examination of Borrowers’ or any Subsidiary’s financial records made by such accountant;

(h) (i) promptly after the filing thereof with the United States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of each annual and other report with respect to each Pension Plan or any trust created thereunder, (ii) promptly upon becoming aware of the occurrence of any Notification Event or of any "prohibited transaction," as described in section 406 of ERISA or in section 4975 of the IRC in connection with any Pension Plan or any trust created thereunder, a written notice signed by a chief financial officer of Parent, specifying the nature thereof, what action the Loan Parties propose to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto, (iii) promptly upon receipt thereof, copies of any notice of the PBGC's intention to terminate or to have a trustee appointed to administer any Pension Plan, (iv) no later than March 15 of each year during the term of the Agreement, proof that each Loan Party submitted a request for a Withdrawal Liability estimate to each Multiemployer Plan no later than February 15 of each year during the term of the Agreement, and (v) promptly upon its receipt thereof, a copy of each estimate of Withdrawal Liability received by any Loan Party or ERISA Affiliate from a Multiemployer Plan; and

(i) from time to time, operating statistics, operating plans and any other information as Bank may reasonably request, promptly upon such request including, without limitation, all information that any Governmental Authority with regulatory oversight over Bank may request or require.

5.4 Existence; Preservation of Licenses; Compliance with Law. Preserve and maintain, and cause each Subsidiary to preserve and maintain, its corporate, limited liability company, or other entity existence and good standing in the state of its organization, qualify and remain qualified, and cause each Subsidiary to qualify and remain qualified, as a foreign corporation, limited liability company, or other entity existence in every jurisdiction except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect; and preserve, and cause each of its Subsidiaries to preserve, all of its licenses, permits, governmental approvals, rights, privileges and franchises required for its operations; and comply, and cause each of its Subsidiaries to comply, with the provisions of its Governing Documents; and comply, and cause each of its Subsidiaries to comply, with the requirements of all Applicable Laws of any Governmental Authority having authority or jurisdiction over it; and comply, and cause each of its Subsidiaries to comply, with all requirements for the maintenance of its business, insurance, licenses, permits, governmental approvals, rights, privileges and franchises, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect.

5.5 Insurance.

(a) Maintain with financially sound and reputable insurance companies, at Borrowers’ expense, and cause each Subsidiary to maintain at its expense, insurance respecting its Assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrowers also shall maintain, and cause each Subsidiary to maintain, business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation and directors and officers liability insurance. All such policies of insurance shall be in such amounts and with such insurance companies as are reasonably satisfactory to Bank. Borrowers shall deliver copies of all such policies to Bank with a satisfactory lender's loss payable endorsements (but only in respect of Collateral) and additional insured endorsements (with respect to general liability coverage), and shall contain a waiver of warranties. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days' (or 10 days in the case of non-payment) prior written notice to Bank in the event of cancellation of the policy, and the insurer's agreement that any loss payable thereunder shall be payable notwithstanding any act or negligence of Borrowers or Bank which might, absent such agreement, result in a forfeiture of all or a part of such insurance payment.

(b) Copies of policies or certificates thereof reasonably satisfactory to Bank evidencing such insurance shall be delivered to Bank at least 30 days prior to the expiration of the existing or preceding policies. Borrowers shall give Bank prompt notice of any loss covered by such insurance. Upon the occurrence and during the continuance of an Event of Default, Bank shall have the exclusive right to adjust any losses payable under any such insurance policies, without any liability to Borrowers whatsoever in respect of such adjustments. Any monies received as payment for any loss under any insurance policy mentioned above (other than liability insurance policies) or as payment of any award or compensation for condemnation or taking by eminent domain, shall be paid over to Bank to be applied at the option of Bank either to the prepayment of the Obligations or shall be disbursed to Borrowers under staged payment terms reasonably satisfactory to Bank for application to the cost of repairs, replacements, or restorations. Any such repairs, replacements, or restorations shall be effected with reasonable promptness and shall be of a value at least equal to the value of the items or property destroyed prior to such damage or destruction. Borrowers shall, concurrently with the annual Financial Statements required to be delivered by Borrowers pursuant to Section 5.3(e), deliver to Bank, as Bank may reasonably request, copies of certificates describing all insurance of Borrowers and its Subsidiaries then in effect.

5.6 Assets. Maintain, keep and preserve, and cause each Subsidiary to maintain, keep and preserve, all of its Assets (tangible or intangible) which are necessary to its business in good repair and condition (normal wear and tear, and casualty excepted, and from time to time make necessary repairs, renewals and replacements thereto so that such Assets shall be fully and efficiently preserved and maintained.

5.7 Taxes and Other Liabilities. Pay and discharge when due, and cause each Subsidiary to pay and discharge when due, (a) any and all assessments and taxes, both real or personal and including federal and state income taxes, other than such taxes and assessments being contested in good faith by appropriate proceedings, and for which adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of such contest or nonpayment, no property is subject to a material risk of loss or forfeiture, and (b) any and all of its other obligations and liabilities, other than obligations or liabilities being contested in good faith by appropriate proceedings, and for which adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of such contest or nonpayment, no property is subject to a material risk of loss or forfeiture.

5.8 Notices to Bank. Promptly, upon Borrowers acquiring Knowledge thereof, give written notice to Bank of:

(a) all litigation affecting any Loan Party or any Subsidiary that (i) seeks damages in excess of $75,000 or where the amount of damages is undetermined or unspecified, or (ii) seeks injunctive relief;

(b) any dispute which may exist between any Loan Party or any Subsidiary, on the one hand, and any Governmental Authority, on the other hand which would reasonably be expected to result in liabilities in excess of $75,000 or otherwise result in a Material Adverse Effect;

(d) any proposal by any Governmental Authority to acquire the Assets or business of any Loan Party or any Subsidiary, or to compete with Borrowers or any Subsidiary;

(e) (i) any Environmental Lien has been filed against any of the real or personal property of Parent or its Subsidiaries, (ii) the commencement of any Environmental Action or written notice that an Environmental Action will be filed against Parent or its Subsidiaries, and (iii) any written notice of a material violation, citation, or other administrative order from a Governmental Authority.

(f) all notices alleging default received or sent by a Loan Party or any Subsidiary thereof to or from the holders of any Mezzanine Obligations;

(g) any amendment, supplement, waiver or other modification with respect to any material Mezzanine Loan Document;

(h) any Event of Default or Default; and

(i) any other matter which has resulted or could reasonably be expected to result in a Material Adverse Effect.

5.9 Compliance with ERISA and the IRC. In addition to and without limiting the generality of Section 5.4, (a) comply in all material respects with applicable provisions of ERISA and the IRC with respect to all Employee Benefit Plans, (b) without the prior written consent of Bank, not take any action or fail to take action the result of which could result in a Loan Party or ERISA Affiliate incurring a material liability to the PBGC or to a Multiemployer Plan (other than to pay contributions or premiums payable in the ordinary course), (c) not allow any facts or circumstances to exist with respect to one or more Employee Benefit Plans that, in the aggregate, would reasonably be expected to result in a Material Adverse Effect, (d) not participate in any prohibited transaction that could result in other than a de minimis civil penalty, excise tax, fiduciary liability or correction obligation under ERISA or the IRC, (e) operate each Employee Benefit Plan in such a manner that will not incur any material tax liability under the IRC (including Section 4980B of the IRC), and (f) furnish to Bank upon Bank’s written request such additional information about any Employee Benefit Plan for which any Loan Party or ERISA Affiliate could reasonably expect to incur any material liability. With respect to each Pension Plan (other than a Multiemployer Plan) except as could not reasonably be expected to result in liability to the Loan Parties, the Loan Parties and the ERISA Affiliates shall (i) satisfy in full and in a timely manner, without incurring any late payment or underpayment charge or penalty and without giving rise to any Lien, all of the contribution and funding requirements of the IRC and of ERISA, and (ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all premiums required pursuant to ERISA.

5.10 Further Assurances. Execute and deliver, or cause to be executed and delivered, upon the request of Bank and at Borrowers’ expense, such additional documents, instruments and agreements as Bank may reasonably determine to be necessary or advisable to carry out the provisions of this Agreement and the Loan Documents, and the transactions and actions contemplated hereunder and thereunder.

5.11 Cash Management Services. As soon as practicable but in any event no later than 90 days following the Closing Date, and at all times thereafter, maintain its primary Cash Management Services with Bank. Borrowers shall (a) close all deposit accounts maintained with any other financial institution(s) as soon as possible but in no event later than 90 days following the Closing Date, and (b) provide Bank, as soon as possible but in no event later than 90 days following the Closing Date, with bank account statements reflecting a “closed” status evidencing that all of Borrower’s previous business deposits accounts and Cash Management Services with any other financial institution(s) have been closed. Notwithstanding the foregoing, Borrowers and its Subsidiaries shall be permitted to maintain cash in deposit accounts at depository institutions other than with Bank, provided that (i) such deposit accounts are listed on Schedule 1 to the Security Agreement, (ii) the aggregate cash on deposit in all of such deposit accounts does not exceed $10,000, in the aggregate, at any time, and (iii) if requested by Bank at any time, Borrowers shall promptly deliver to Bank a deposit account control agreement covering such deposit accounts, duly executed by the applicable Borrower and the depository institution where such deposit accounts are maintained and otherwise in form and content satisfactory to Bank in its Permitted Discretion.

5.12 Environment.

(a) Keep, and cause each of its Subsidiaries to keep, any property either owned or operated by Parent or its Subsidiaries free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens;

(b) Comply, and cause each of its Subsidiaries to comply, in all material respects, with Environmental Laws and provide to Bank documentation of such compliance which Bank reasonably requests; and

(c) Promptly notify Bank of any release of which any Borrower has Knowledge of a Hazardous Material in any reportable quantity from or onto property owned or operated by Parent or its Subsidiaries and take any Remedial Actions required to abate said release or otherwise to come into compliance, in all material respects, with applicable Environmental Law.

5.13 Additional Collateral. With respect to any Assets (or any interest therein) acquired after the Closing Date by any Loan Party that are of a type covered by the Lien created by any of the Loan Documents but which are not so subject, promptly (and in any event within 30 days after the acquisition thereof): (i) execute and deliver, or cause such Loan Party to execute and deliver, to Bank such amendments to the relevant Loan Documents or such other documents as Bank shall deem in its Permitted Discretion necessary or advisable to grant to Bank a Lien on such Assets (or such interest therein), (ii) take all actions, or cause such Subsidiary to take all actions, necessary or advisable to cause such Lien to be duly perfected in accordance with all Applicable Laws, including, without limitation, the filing of financing statements in such jurisdictions as may be reasonably requested by Bank, and (iii) if reasonably requested by Bank, deliver to Bank evidence of insurance as required by Section 5.5.

5.14 Subsidiaries.

(a) Cause each and every now existing and hereafter acquired or formed Domestic Subsidiary to become either a Borrower or a Guarantor, and execute and deliver to Bank each of the following, concurrent with any such acquisition or formation:

(i) an Addendum if such Domestic Subsidiary will be a Borrower, or a Facility Guaranty in all other cases;

(ii) a joinder to the Security Agreement in the form of Annex 2 thereto;

(iii) a supplement to the Intercompany Subordination Agreement in the form of Annex 1 thereto; and

(iv) such other agreements, instruments and documents as Bank shall reasonably request in connection therewith.

(b) Cause each and every now existing and hereafter acquired or formed Foreign Subsidiaries to execute and deliver to Bank each of the following, concurrent with any such acquisition or formation:

(i) a supplement to the Intercompany Subordination Agreement in the form of Annex 1 thereto; and

(ii) such other agreements, instruments and documents as Bank shall reasonably request in connection therewith.

5.15 Material Contracts. Maintain, and cause each of its Subsidiaries to maintain, all Material Contracts in full force and effect and not default in the payment or performance of any obligations thereunder.

ARTICLE VI

NEGATIVE COVENANTS

Each Borrower further covenants and agrees that from the Closing Date and thereafter until the payment, performance and satisfaction in full, in cash, of the Obligations, all of Bank’s, obligations hereunder have been terminated and no Letters of Credit are outstanding, such Borrower shall not:

6.1 Use of Funds; Margin Regulation.

(a) Use any proceeds of the Revolving Loans for any purpose other than for working capital;

(b) Reserved;

(d) Use any portion of the proceeds of the Loans in any manner which might cause the Loans, the application of the proceeds thereof, or the transactions contemplated by this Agreement to violate Regulation T, U, or X of the Board of Governors of the Federal Reserve System, or any other regulation of such board, or to violate the Securities and Exchange Act of 1934, as amended or supplemented.

6.2 Debt. Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Debt except Permitted Debt.

6.3 Liens. Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Lien (including the Lien of an attachment, judgment or execution) on any of its Assets, whether now owned or hereafter acquired, except Permitted Liens; or authorize, or permit any Subsidiary to authorize, the filing under the UCC as adopted in any jurisdiction, a financing statement which names such Borrower or such Subsidiary as a debtor, except with respect to Permitted Liens, or sign, or permit any Subsidiary to sign, any security agreement authorizing any secured party thereunder to file such a financing statement, except with respect to Permitted Liens.

6.4 Merger, Consolidation, and Transfer or Acquisition of Assets. Wind up, liquidate or dissolve, reorganize, reincorporate, divide, merge or consolidate with or into any other Person, or directly or indirectly acquire all or substantially all of the Assets or the business of any other Person or any business or division of any other Person, or permit any Subsidiary to do so.

6.5 Reserved.

6.6 Sales and Leasebacks. Sell, transfer, or otherwise dispose of, or permit any Subsidiary to sell, transfer, or otherwise dispose of, any real or personal property to any Person, and thereafter directly or indirectly leaseback the same or similar property.

6.7 Dispositions. Conduct, or permit any Subsidiary to conduct, any Dispositions, other than Permitted Dispositions.

6.8 Investments. Make, or permit any Subsidiary to make, directly or indirectly, any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment, other than Permitted Investments.

6.9 Character of Business. Engage in any business activities or operations substantially different from or unrelated to its present business activities and operations, or permit any Subsidiary to do so.

6.10 Restricted Payments. Declare or pay, or permit any Subsidiary to declare or pay, any Distributions, or pay any other Restricted Payments, other than Permitted Restricted Payments.

6.11 Guarantee. Except for Permitted Debt or any Guarantee of Permitted Debt, assume, Guarantee, endorse (other than checks and drafts received by such Borrower in the ordinary course of business), or otherwise be or become directly or contingently responsible or liable, or permit any Subsidiary to assume, Guarantee, endorse, or otherwise be or become directly or contingently responsible or liable (including, any agreement to purchase any obligation, stock, Assets, goods, or services or to supply or advance any funds, Assets, goods, or services, or any agreement to maintain or cause such Person to maintain, a minimum working capital or net worth, or otherwise to assure the creditors of any Person against loss) for the obligations of any other Person; or pledge or hypothecate, or permit any Subsidiary to pledge or hypothecate, any of its Assets as security for any liabilities or obligations of any other Person.

6.12 Reserved .

6.13 Transactions with Affiliates. Enter into any transaction, including borrowing or lending and the purchase, sale, or exchange of property or the rendering of any service (including management services), with any Affiliate, or permit any Subsidiary to enter into any transaction, including borrowing or lending and the purchase, sale, or exchange of property or the rendering of any service (including management services), with any Affiliate, other than in the ordinary course of and pursuant to the reasonable requirements of Borrowers’ or such Subsidiary’s business and upon fair and reasonable terms no less favorable to such Borrower or such Subsidiary than would obtain in a comparable arm’s length transaction with a Person not an Affiliate.

6.14 Stock Issuance. Permit any Pledged Company to issue any additional Equity Interests.

6.15 Financial Condition. Permit or suffer:

(a) Liquidity, measured as of the end of each Fiscal Month, at any time to be less than the amount set forth in Section 6.15(a) of the Summary of Credit Terms.

6.16 OFAC. Permit or cause any of its Subsidiaries to, (i) become a Person whose property or interests in property are blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) engage in any dealings or transactions prohibited by Section 2 of such executive order, or be otherwise, to the Knowledge of such Borrower, associated with any such person in any manner violative of such Section 2 of such executive order, or (iii) otherwise become a Person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other OFAC regulation or executive order.

6.17 Fiscal Year. Change its Fiscal Year.

6.18 Reserved.

6.19 Burdensome Agreements. Enter into or permit to exist any contractual obligation (other than any Loan Document or Mezzanine Loan Document) that: (a) limits the ability (i) of any Subsidiary to make Restricted Payments or other Distributions to any Corporate Loan Party or to otherwise transfer property to or invest in a Corporate Loan Party, (ii) of any Subsidiary to Guarantee the Obligations, (iii) of any Subsidiary to make or repay loans to a Loan Party, or (iv) of the Loan Parties or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person in favor of Bank; (b) would be violated or breached by the Loan Parties’ performance and payment of the Obligations; or (c) requires the grant of a Lien (other than a Permitted Lien) to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

6.20 Reserved.

6.21 Amendments of Certain Documents. Amend or otherwise modify, or waive any rights under (a) any provisions of any Subordinate Debt (other than as expressly permitted by the applicable Subordination Agreement), (b) any provisions of any Mezzanine Loan Document in a manner prohibited by the Intercreditor Agreement, or (c) any Governing Document other than amendments, modifications and waivers that are not materially adverse to the interests of Bank.

6.22 Employee Benefits.

(a) Terminate, or permit any ERISA Affiliate to terminate, any Pension Plan in a manner, or take any other action with respect to any Pension Plan, which could reasonably be expected to result in any liability of any Loan Party or ERISA Affiliate to the PBGC.

(b) Fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any Employee Benefit Plan, agreement relating thereto or applicable Law, any Loan Party or ERISA Affiliate is required to pay if such failure could reasonably be expected to have a Material Adverse Effect.

(c) Permit to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding deficiency within the meaning of section 302 of ERISA or section 412 of the IRC, whether or not waived, with respect to any Pension Plan which exceeds $10,000 with respect to all Pension Plans in the aggregate.

(d) Acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to a Loan Party or with respect to any ERISA Affiliate if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to, (i) any Pension Plan or (ii) any Multiemployer Plan.

(e) Contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan not set forth on Schedule 4.12.

(f) Amend, or permit any ERISA Affiliate to amend, a Pension Plan resulting in a material increase in current liability such that a Loan Party or ERISA Affiliate is required to provide security to such Pension Plan under the IRC.

6.23 Material Contracts. Directly or indirectly, amend, modify, or change any of the terms or provisions of any Material Contract except to the extent that such amendment, modification, or change could not, individually or in the aggregate, reasonably be expected to be materially adverse to the interests of Bank.

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

7.1 Events of Default. The occurrence of any one or more of the following events, acts or occurrences shall constitute an event of default (an “Event of Default”) hereunder:

(a) Borrowers fail to pay when due any payment of principal or interest due on the Loans, the Fees, any Expenses, or any other amount payable hereunder or under any Loan Document;

(b) Borrowers fail to observe or perform any of the covenants and agreements set forth in Section 1.19, 3.3, 5.2 or 5.3, or any Section within Article VI;

(c) Any Loan Party fails to observe or perform any covenant or agreement set forth in this Agreement or the Loan Documents (other than those covenants and agreements described in Sections 7.1(a) and 7.1(b)), and such failure continues for 30 days after the earlier to occur of (i) Borrowers obtaining Knowledge of such failure or (ii) Bank's dispatch of notice to Administrative Borrower of such failure;

(d) Any representation, warranty or certification made by any Loan Party or any officer or employee of any Loan Party in this Agreement or any Loan Document, in any certificate, financial statement or other document delivered pursuant to this Agreement or any Loan Document proves to have been misleading or untrue in any material respect when made or if any such representation, warranty or certification is withdrawn;

(e) Any Loan Party fails to pay when due any payment in respect of its Debt (other than under this Agreement) in excess of $75,000 after giving effect to any applicable grace period;

(f) Any event or condition occurs that: (i) results in the acceleration of the maturity of any of any Loan Party's Debt (other than under this Agreement) in excess of $75,000; or (ii) permits (or, with the giving of notice or lapse of time or both, would permit) the holder or holders of such Debt or any Person acting on behalf of such holder or holders to accelerate the maturity thereof;

(g) Any Loan Party commences a voluntary Insolvency Proceeding seeking liquidation, reorganization or other relief with respect to itself or its Debt or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official over it or any substantial part of its property, or consents to any such relief or to the appointment of or taking possession by any such official in an involuntary Insolvency Proceeding or fails generally to pay its Debt as it becomes due, or takes any action to authorize any of the foregoing;

(h) An involuntary Insolvency Proceeding is commenced against any Loan Party seeking liquidation, reorganization or other relief with respect to it or its Debt or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property and any of the following events occur: (i) the petition commencing the Insolvency Proceeding is not timely controverted; (ii) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof; (iii) an interim trustee is appointed to take possession of all or a substantial portion of the Assets of, or to operate all or any substantial portion of the business of, such Loan Party; or (iv) an order for relief shall have been issued or entered therein;

(i) Any one or more Loan Parties suffers (i) one or more judgments in the aggregate amount in excess of $75,000 which are not otherwise covered by insurance, or (ii) one or more writs, warrant of attachment, or similar process which are not released, vacated or fully bonded within 15 days of its issue or levy;

(j) A judgment creditor obtains possession of any of the Assets valued in the aggregate in excess of $75,000 of any one or more Loan Parties by any means, including levy, distraint, replevin, or self-help;

(k) (i) Any order, judgment or decree is entered decreeing the dissolution of any Loan Party, or (ii) any individual Guarantor dies or becomes incompetent, and the Facility Guaranty of such Guarantor is not reaffirmed by his or her estate or legal guardian within 30 days of such death or incompetency pursuant to documentation in form and substance satisfactory to Bank;

(l) Any Loan Party is enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or any Loan Party voluntarily ceases to conduct its business as a going concern;

(m) A notice of lien, levy or assessment is filed of record with respect to any or all of any Loan Party's Assets valued in the aggregate in excess of $75,000 by any Governmental Authority, or any taxes or debts owing at any time hereafter to any Governmental Authority becomes a Lien, whether inchoate or otherwise, upon any or all of any Loan Party's Assets and the same is not paid on the payment date thereof;

(n) Any Loan Party makes any payment on account of (i) any Subordinate Debt except as otherwise permitted under the terms of the applicable Subordination Agreement, or (ii) the Mezzanine Obligations, except as otherwise permitted under the terms of the Intercreditor Agreement;

(o) The occurrence of any of the following events: (i) any Loan Party or ERISA Affiliate fails to make full payment when due of all amounts which any Loan Party or ERISA Affiliate is required to pay as contributions, installments, or otherwise to or with respect to a Pension Plan or Multiemployer Plan, and such failure could reasonably be expected to result in liability in excess of $10,000, (ii) an accumulated funding deficiency or funding shortfall in excess of $10,000 occurs or exists, whether or not waived, with respect to any Pension Plan, individually or in the aggregate, (iii) a Notification Event, which could reasonably be expected to result in liability in excess of $10,000, either individually or in the aggregate, or (iv) any Loan Party or ERISA Affiliate completely or partially withdraws from one or more Multiemployer Plans and incurs Withdrawal Liability in excess of $10,000 in the aggregate, or fails to make any Withdrawal Liability payment when due;

(p) Any Change of Control occurs;

(q) Any of the Loan Documents fails to be in full force and effect for any reason, or Bank fails to have a perfected, first priority Lien (subject only to Permitted Liens) in and upon all of the Collateral, or a breach, default or an event of default occurs under any Loan Document not otherwise described in this Section 7.1 which, if capable of cure, continues for 30 days after the earlier to occur of (x) Borrowers obtaining Knowledge of such breach, default or an event of default, or (y) Bank's delivery of notice to Borrowers of such breach, default or an event of default;

(r) Any Guarantor revokes or disputes the validity of, or liability under, his, her or its Facility Guaranty;

(s) Any "Event of Default" shall occur under and as defined in the Mezzanine Loan Agreement;

(t) A breach, default or an event of default occurs under any Bank Product Agreement that is not cured within an applicable cure period; or

(u) (i) There occurs a nonpayment by any Loan Party of any Swap Obligation when due, after taking into account any applicable grace periods or (ii) there occurs an early termination date resulting from (A) any event of default under such Swap Obligation as to which any Loan Party is the defaulting party or (B) any termination event as to which any Loan Party is an affected party, and, in either event, the Swap Termination Value owed by the Loan Party is not paid within 10 days after when due after, in each case, taking into account any applicable grace periods; or

(v) Any other Material Adverse Effect occurs.

7.2 Remedies. Upon the occurrence of any Event of Default described in Section 7.1(g) or 7.1(h), the Commitments shall immediately terminate, Bank’s obligation hereunder to make Loans to Borrowers and/or Bank’s obligation to issue Letters of Credit shall immediately terminate, and the Obligations (other than Swap Obligations) shall become immediately due and payable without any election or action on the part of Bank, without presentment, demand, protest or notice of any kind, all of which each Borrower hereby expressly waives, and Borrowers shall Cash Collateralize all outstanding L/C Obligations and Bank Product Obligations. Upon the occurrence and continuance of any other Event of Default, either or both of the following actions may be taken: (i) Bank may without notice of its election and without demand, immediately terminate the Commitments, whereupon Bank’s obligation to make Loans to Borrowers and/or to issue Letters of Credit shall immediately terminate; (ii) Bank may, without notice of its election and without demand, declare the Obligations to be due and payable, whereupon the Obligations (other than Swap Obligations) shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which each Borrower hereby expressly waives, and (iii) Borrowers shall Cash Collateralize all outstanding L/C Obligations and Bank Product Obligations. Any demand in respect of any Swap Obligation shall be made in accordance with the terms of the Swap Documents relating thereto.

7.3 Reserved.

7.4 Appointment of Receiver or Trustee. Each Borrower hereby irrevocably agrees that Bank has the right under this Agreement, upon the occurrence and during the continuance of an Event of Default, to seek the appointment of a receiver, trustee or similar official over such Borrower to effect the transactions contemplated by this Agreement, and that Bank is entitled to seek such relief. Each Borrower hereby irrevocably agrees not to object to such appointment on any grounds.

7.5 Power of Attorney. Each Borrower hereby appoints Bank (and all Persons designated by Bank) as such Borrower’s true and lawful attorney (and agent-in-fact) for the purposes provided in this section. Bank, or Bank's designee, may, without notice and in either its or such Borrower’s name, but at the cost and expense of Borrowers:

(a) Endorse such Borrower's name on any payment item or other proceeds of Collateral (including proceeds of insurance) that come into Bank's possession or control; and

(b) During the continuance of an Event of Default, (i) notify any Account Debtors of the assignment of their Accounts, demand and enforce payment of Accounts by legal proceedings or otherwise, and generally exercise any rights and remedies with respect to Accounts; (ii) settle, adjust, modify, compromise, discharge or release any Accounts or other Collateral, or any legal proceedings brought to collect Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral upon such terms, for such amounts and at such times as Bank deems advisable; (iv) collect, liquidate and receive balances in deposit accounts or investment accounts, and take control, in any manner, of proceeds of Collateral; (v) prepare, file and sign such Borrower's name to a proof of claim or other document in a bankruptcy of an Account Debtor, or to any notice, assignment or satisfaction of Lien or similar document; (vi) receive, open and dispose of mail addressed to such Borrower, and notify postal authorities to deliver any such mail to an address designated by Bank; (vii) endorse any Chattel Paper, Document, Instrument, bill of lading, or other document or agreement relating to any Accounts, Inventory or other Collateral; (viii) use such Borrower's stationery and sign its name to verifications of Accounts and notices to Account Debtors; (ix) use information contained in any data processing, electronic or information systems relating to Collateral; (x) make and adjust claims under insurance policies; (xi) take any action as may be necessary or appropriate to obtain payment under any letter of credit, banker's acceptance or other instrument for which such Borrower is a beneficiary; and (xii) take all other actions as Bank reasonably deems appropriate to fulfill such Borrower's obligations under this Agreement and the Loan Documents.

7.6 Remedies Cumulative. The rights and remedies of Bank herein and in the Loan Documents are cumulative, and are not exclusive of any other rights, powers, privileges, or remedies, now or hereafter existing, at law, in equity or otherwise.

ARTICLE VIII

MISCELLANEOUS

8.1 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:

(i) if to Borrowers, to:

c/o Winc, Inc.

5340 Alla Road, Suite 105

Los Angeles, CA, 90066

Attn: Carol Brault, VP Finance

Telephone: 614 406-0525

Email: [email protected]

(ii) if to Bank, to:

Pacific Mercantile Bank

949 South Coast Drive, 1st Floor

Costa Mesa, CA 92626

Attn: George Burnett

Telephone: 714.438.2506

Email: [email protected]

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b) Electronic Communications. Notices and other communications to Bank hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by Bank. Bank or Borrowers may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless Bank otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c) Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

8.2 No Waivers. No failure or delay by Bank in exercising any right, power or privilege hereunder or under any Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

8.3 Expenses; Indemnification; Damage Waiver.

(a) Costs and Expenses. Borrowers shall pay all Expenses.

(b) Indemnification by Borrowers. Borrowers shall indemnify Bank, and each Related Party of Bank (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee incurred by any Indemnitee or asserted against any Indemnitee by any Person (including Borrowers or any other Loan Party) other than such Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. This Section 8.3(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, Borrowers shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit, or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

(e) Payments. All amounts due under this Section 8.3 shall be payable not later than 1 Business Day after demand therefor.

(f) Survival. Each party’s obligations under this Section 8.3 shall survive the termination of the Loan Documents and payment of the Obligations and are in addition to, and not in substitution of, any other of its obligations set forth in the Loan Documents.

8.4 Amendments and Waivers. Neither this Agreement nor any Loan Document (other than Bank Product Agreements), nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 8.4. Bank may from time to time, (a) enter into with Borrowers or any other Person written amendments, supplements or modifications hereto and to the Loan Documents or (b) waive, on such terms and conditions as Bank may specify in such instrument, any of the requirements of this Agreement or the Loan Documents or any Event of Default or Default and its consequences, if, but only if, such amendment, supplement, modification or waiver is in writing and is signed by the party asserted to be bound thereby, and then such amendment, supplement, modification or waiver shall be effective only in the specific instance and the specific purpose for which given. Any such waiver and any such amendment, supplement or modification shall be binding upon Borrowers, Bank and all future holders of the Loans.

8.5 Successors and Assigns; Participations; Disclosure; Register.

(a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that Borrowers may not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of Bank and any such prohibited assignment or transfer by Borrowers shall be void.

(b) Bank may make, carry or transfer the Loans at, to or for the account of, any of its branch offices or the office of an Affiliate of Bank or to any Federal Reserve Bank, all without Borrowers’ consent.

(c) Bank may, at its own expense, assign to one or more banks or other financial institutions all or a portion of its rights (including voting rights) and obligations under this Agreement and the Loan Documents; provided that, except in the case of an assignment to an Affiliate of Bank, Administrative Borrower must give its prior written consent to such assignment (which consent shall not be unreasonably withheld, delayed or conditioned); provided further that no consent of Administrative Borrower shall be required if an Event of Default has occurred and is continuing. In the event of any such assignment by Bank pursuant to this Section 8.5(c), Bank’s obligations under this Agreement arising after the effective date of such assignment shall be released and concurrently therewith, transferred to and assumed by Bank’s assignee to the extent provided for in the document evidencing such assignment. The provisions of this Section 8.5 relate only to absolute assignments (whether or not arising as the result of foreclosure of a security interest) and such provisions do not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by Bank of any Loan or any Note to any Federal Reserve Bank in accordance with Applicable Law.

(d) Bank may at any time sell to one or more banks or other financial institutions (each a “Participant”) participating interests in the Loans, the Letters of Credit and in any other interest of Bank hereunder. In the event of any such sale by Bank of a participating interest to a Participant, Bank’s obligations under this Agreement shall remain unchanged, Bank shall remain solely responsible for the performance thereof, and Borrowers shall continue to deal solely and directly with Bank in connection with Bank’s rights and obligations under this Agreement. Borrowers agree that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Section 1.16 with respect to its participating interest subject to the requirements and limitations therein, including the requirements under Section 1.16 (it being understood that the documentation required under Section 1.16 shall be delivered to Bank) to the same extent as if it were a Recipient and had acquired its interest by assignment pursuant to paragraph (c) of this Section 8.5; provided that such Participant shall not be entitled to receive any greater payment under Sections 1.7 or 1.16, with respect to any participation, than Bank would have been entitled to receive except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. If Bank sells a participation then it shall, acting solely for this purpose as an agent of 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 "Participant Register"). The entries in the Participant Register shall be conclusive absent manifest error, and Bank 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.

(e) Borrowers authorize Bank to disclose to any assignee under Section 8.5(c) or any Participant (either, a “Transferee”) and any prospective Transferee any and all financial information in Bank’s possession concerning Borrowers that has been delivered to Bank by Borrowers pursuant to this Agreement or that has been delivered to Bank by Borrowers in connection with Bank’s credit evaluation prior to entering into this Agreement.

(f) Bank, acting solely for this purpose as an agent of Borrowers, shall maintain at its office in Irvine, California, a register for the recordation of the names and addresses of Bank, and the commitments of, and principal amounts of the loans owing to Bank pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrowers and Bank shall treat the 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 Borrowers and lenders at any reasonable time and from time to time upon reasonable prior notice. The obligations of Borrowers under this Agreement and the Loan Documents are registered obligations and the right, title and interest of Bank and its assignees in and to such obligations shall be transferable only upon notation of such transfer in the Register. This Section 8.5(f) shall be construed so that such obligations are at all times maintained in "registered form" within the meaning of Section 163(f), 871(h)(2) and 881(c)(2) of the IRC and any related regulations (and any other relevant or successor provisions of the IRC or such regulations).

(g) Borrowers agree that Bank may use Borrowers’ and their Subsidiaries’ name(s) in advertising and promotional materials, and in conjunction therewith, Bank may disclose the amount of the Loans and the purpose thereof; provided that Administrative Borrower has given its prior written consent, which shall not be unreasonably withheld, delayed, or conditioned.

8.6 Reserved.

8.7 Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic transmission (including by e-mail delivery of a “.pdf” format data file) shall be as effective as delivery of an original counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile or other electronic transmission also shall deliver a manually executed counterpart of this Agreement but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. This Agreement and the other Loan Documents constitute the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

8.8 Severability. The provisions of this Agreement are severable. The invalidity, in whole or in part, of any provision of this Agreement shall not affect the validity or enforceability of any other of its provisions. If one or more provisions hereof shall be declared invalid or unenforceable, the remaining provisions shall remain in full force and effect and shall be construed in the broadest possible manner to effectuate the purposes hereof.

8.9 Knowledge. For purposes of this Agreement, an individual will be deemed to have knowledge of a particular fact or other matter if: (a) such individual is actually aware of such fact or other matter; or (b) a prudent individual would reasonably be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonably comprehensive investigation concerning the existence of such fact or other matter. Each Borrower will be deemed to have knowledge of a particular fact or other matter if the president, chief executive officer, chief operating officer, chief financial officer, controller, treasurer, president, senior vice president or other Authorized Officer of such Borrower has, or at any time had, knowledge of such fact or other matter.

8.10 Additional Waivers.

(a) Borrowers agree that checks and other instruments received by Bank in payment or on account of the Obligations constitute only conditional payment until such items are actually paid to Bank and Borrowers waive the right to direct the application of any and all payments at any time or times hereafter received by Bank on account of the Obligations and Borrowers agree that Bank shall have the continuing exclusive right to apply and reapply such payments in any manner as Bank may deem advisable, notwithstanding any entry by Bank upon its books.

(b) Borrowers waive demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Borrowers may in any way be liable.

(c) So long as Bank complies with its obligations, if any, under the UCC, (i) Bank shall not in any way or manner be liable or responsible for (x) the safekeeping of the Collateral; (y) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (z) any diminution in the value thereof; or (aa) any act or default of any carrier, warehouseman, bailee, forwarding agency or other person whomsoever, and (ii) all risk of loss, damage or destruction of the Collateral shall be borne by Borrowers.

(d) Borrowers waive the right and the right to assert a confidential relationship, if any, it may have with any accountant, accounting firm and/or service bureau or consultant in connection with any information requested by Bank pursuant to or in accordance with this Agreement, and agrees that Bank may contact directly any such accountants, accounting firm and/or service bureau or consultant in order to obtain such information.

8.11 Destruction Of Borrowers’ Documents. Any documents, schedules, invoices or other papers delivered to Bank may be destroyed or otherwise disposed of by Bank 6 months after they are delivered to or received by Bank, unless Borrowers request, in writing, the return of the said documents, schedules, invoices or other papers and makes arrangements, at Borrowers’ expense, for their return.

8.12 CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; CLASS ACTION WAIVER.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF LAWS.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT BANK’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE BANK ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND BANK WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 8.12.

(c) BORROWERS AND BANK HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND BANK REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

(d) IF PERMITTED BY APPLICABLE LAW, EACH PARTY ALSO WAIVES THE RIGHT TO LITIGATE IN COURT OR AN ARBITRATION PROCEEDING ANY DISPUTE AS A CLASS ACTION, EITHER AS A MEMBER OF A CLASS OR AS A REPRESENTATIVE, OR TO ACT AS A PRIVATE ATTORNEY GENERAL. EACH PARTY (I) CERTIFIES THAT NO ONE HAS REPRESENTED TO SUCH PARTY THAT THE OTHER PARTY WOULD NOT SEEK TO ENFORCE JURY AND CLASS ACTION WAIVERS IN THE EVENT OF SUIT, AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS, AND CERTIFICATIONS IN THIS SECTION.

8.13 Reference Provision. In the event the Jury Trial Waiver set forth above is not enforceable, the parties elect to proceed under this Judicial Reference Provision.

(a) With the exception of the items specified in clause (b) below, any controversy, dispute or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement or any other Loan Document will be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents, venue for the reference proceeding will be in the state or federal court in the county or district where the real property involved in the action, if any, is located or in the state or federal court in the county or district where venue is otherwise appropriate under applicable law (the “Court”).

(b) The matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). This reference provision does not limit the right of any party to exercise or oppose any of the rights and remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items does not waive the right of any party to a reference pursuant to this reference provision as provided herein.

(c) The referee shall be a retired judge or justice selected by mutual written agreement of the parties. If the parties do not agree within 10 days of a written request to do so by any party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). A request for appointment of a referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party shall have one peremptory challenge to the referee selected by the Presiding Judge of the Court (or his or her representative).

(d) The parties agree that time is of the essence in conducting the reference proceedings. Accordingly, the referee shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within 15 days after the date of selection of the referee, (ii) if practicable, try all issues of law or fact within 120 days after the date of the conference and (iii) report a statement of decision within 20 days after the matter has been submitted for decision.

(e) The referee will have power to expand or limit the amount and duration of discovery. The referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based upon good cause shown, no party shall be entitled to “priority” in conducting discovery, depositions may be taken by either party upon 7 days written notice, and all other discovery shall be responded to within 15 days after service. All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding.

(f) Except as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the referee, and the referee will be provided a courtesy copy of the transcript. The party making such a request shall have the obligation to arrange for and pay the court reporter. Subject to the referee’s power to award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial.

(g) The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding. The referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims of the parties that are the subject of the reference. Pursuant to CCP § 644, such decision shall be entered by the Court as a judgment or an order in the same manner as if the action had been tried by the Court and any such decision will be final, binding and conclusive. The parties reserve the right to appeal from the final judgment or order or from any appealable decision or order entered by the referee. The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding under this provision.

(h) If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration. The arbitration will be conducted by a retired judge or justice, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to discovery set forth above shall apply to any such arbitration proceeding.

(i) THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

8.14 Revival and Reinstatement of Obligations. If the incurrence or payment of the Obligations by any Loan Party or the transfer to Bank or any Bank Product Provider of any property should for any reason subsequently be asserted, or declared, to be void or voidable under any state or federal law relating to creditors' rights, including provisions of Debtor Relief Laws relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (each, a "Voidable Transfer"), and if Bank or such Bank Product Provider is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Bank or such Bank Product Provider is required or elects to repay or restore, and as to all reasonable costs, Expenses, and reasonable attorneys' fees of Bank and such Bank Product Provider related thereto, the liability of each Loan Party automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

8.15 Updating Disclosure Schedules. To the extent necessary to cause the representations and warranties set forth in Article IV to remain true, complete and accurate as of the Closing Date, the date of each and every Borrowing and the date of each issuance of a Letter of Credit, Borrowers shall update in writing any Schedules provided for in Article IV to the extent they have Knowledge of any circumstance which may have the effect of making any representation or warranty contained in Article IV untrue or incomplete in any material respect. The requirement of Borrowers to update the Schedules provided for herein shall not have the effect of a cure of any Event of Default occurring prior to any such update or existing at the time of any such update without the written waiver of such Event of Default by Bank.

8.16 Patriot Act Notification. Bank is subject to the Patriot Act and hereby notifies Borrowers that pursuant to the requirements of the Patriot Act, Bank is required to obtain, verify and record information that identifies Borrowers, which information includes the names and addresses of Borrowers and other information that will allow Bank to identify Borrowers in accordance with the Patriot Act.

8.17 Debtor-Creditor Relationship. The relationship between Bank, on the one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor. Bank has no (nor shall be deemed to have any) fiduciary relationship or duty to any Loan Party arising out of or in connection with the Loan Documents or the transactions contemplated thereby, and there is no agency or joint venture relationship between Bank, on the one hand, and the Loan Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein.

8.18 Amendment to Mezzanine Loan Documents. If any amendment or modification to the Mezzanine Loan Documents amends or modifies any covenant (including any financial covenant) or event of default contained in the Mezzanine Loan Documents (or any related definitions), in each case, in a manner that is more restrictive than the applicable provisions permit as of the date thereof, or if any amendment or modification to the Mezzanine Credit Agreement or other Mezzanine Loan Document adds an additional covenant or event of default therein, Borrowers acknowledge and agree that this Agreement or the other Loan Documents, as the case may be, shall be automatically amended or modified to affect similar amendments or modifications with respect to this Agreement or such Loan Documents, without the need for any further action or consent by any Borrower or any other party. In furtherance of the foregoing, Borrowers shall permit Bank to document each such similar amendment or modification to this Agreement or such other Loan Document or insert a corresponding new covenant or event of default in this Agreement or such other Loan Document without any need for any further action or consent by Borrowers.

ARTICLE IX

JOINT AND SEVERAL LIABILITY; SINGLE LOAN ACCOUNT

9.1 Joint and Several Liability. Each Borrower agrees that it is jointly and severally, directly and primarily liable to Bank for payment, performance and satisfaction in full of the Obligations and that such liability is independent of the duties, obligations, and liabilities of the other Borrower. Bank may bring a separate action or actions on each, any, or all of the Obligations against any Borrower, whether action is brought against the other Borrowers or whether the other Borrowers are joined in such action. In the event that any Borrower fails to make any payment of any Obligations on or before the due date thereof, the other Borrowers immediately shall cause such payment to be made or each of such Obligations to be performed, kept, observed, or fulfilled.

9.2 Primary Obligation; Waiver of Marshaling. This Agreement and the Loan Documents to which Borrowers are a party are a primary and original obligation of each Borrower, are not the creation of a surety relationship, and are an absolute, unconditional, and continuing promise of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law or any invalidity or irregularity with respect to this Agreement or the Loan Documents to which Borrowers are a party. Each Borrower agrees that its liability under this Agreement and the Loan Documents which Borrowers are a party shall be immediate and shall not be contingent upon the exercise or enforcement by Bank of whatever remedies they may have against the other Borrowers, or the enforcement of any lien or realization upon any security Bank may at any time possess. Each Borrower consents and agrees that Bank shall be under no obligation to marshal any assets of any Borrower against or in payment of any or all of the Obligations.

9.3 Financial Condition of Borrowers. Each Borrower acknowledges that it is presently informed as to the financial condition of the other Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower hereby covenants that it will continue to keep informed as to the financial condition of the other Borrowers, the status of the other Borrowers and of all circumstances which bear upon the risk of nonpayment. Absent a written request from any Borrower to Bank for information, each Borrower hereby waives any and all rights it may have to require Bank to disclose to such Borrower any information which Bank may now or hereafter acquire concerning the condition or circumstances of the other Borrowers.

9.4 Continuing Liability. The liability of each Borrower under this Agreement and the Loan Documents to which Borrowers are a party includes Obligations arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing the Obligations, changing the interest rate, payment terms, or other terms and conditions thereof, or creating new or additional Obligations after prior Obligations have been satisfied in whole or in part. To the maximum extent permitted by law, each Borrower hereby waives any right to revoke its liability under this Agreement and Loan Documents as to future indebtedness, and in connection therewith, each Borrower hereby waives any rights it may have under Section 2815 of the California Civil Code.

9.5 Additional Waivers. Each Borrower absolutely, unconditionally, knowingly, and expressly waives:

(a) (1) notice of acceptance hereof; (2) notice of any Loans or other financial accommodations made or extended under this Agreement and the Loan Documents to which Borrowers are a party or the creation or existence of any Obligations; (3) notice of the amount of the Obligations, subject, however, to each Borrower’s right to make inquiry of Bank to ascertain the amount of the Obligations at any reasonable time; (4) notice of any adverse change in the financial condition of the other Borrowers or of any other fact that might increase such Borrower’s risk hereunder; (5) notice of presentment for payment, demand, protest, and notice thereof as to any instruments among the Loan Documents to which Borrowers are a party; and (6) all other notices (except if such notice is specifically required to be given to Borrowers hereunder or under the Loan Documents to which Borrowers are a party) and demands to which such Borrower might otherwise be entitled.

(b) its right, under Sections 2845 or 2850 of the California Civil Code, or otherwise, to require Bank to institute suit against, or to exhaust any rights and remedies which Bank has or may have against, the other Borrowers or any third party, or against any collateral for the Obligations provided by the other Borrowers, or any third party. Each Borrower further waives any defense arising by reason of any disability or other defense (other than the defense that the Obligations shall have been fully and finally performed and indefeasibly paid) of the other Borrowers or by reason of the cessation from any cause whatsoever of the liability of the other Borrowers in respect thereof.

(c) (1) any rights to assert against Bank any defense (legal or equitable), set-off, counterclaim, or claim which such Borrower may now or at any time hereafter have against the other Borrowers or any other party liable to Bank; (2) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor; (3) any defense such Borrower has to performance hereunder, and any right such Borrower has to be exonerated, provided by Sections 2819, 2822, or 2825 of the California Civil Code, or otherwise, arising by reason of: the impairment or suspension of Bank’s rights or remedies against the other Borrowers; the alteration by Bank of the Obligations; any discharge of the other Borrowers’ obligations to Bank by operation of law as a result of Bank’s intervention or omission; or the acceptance by Bank of anything in partial satisfaction of the Obligations; and (4) the benefit of any statute of limitations affecting such Borrower’s liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to such Borrower’s liability hereunder.

(d) Each Borrower absolutely, unconditionally, knowingly, and expressly waives any defense arising by reason of or deriving from (i) any claim or defense based upon an election of remedies by Bank including any defense based upon an election of remedies by Bank under the provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any similar law of California or any other jurisdiction; or (ii) any election by Bank under Section 1111(b) of the Bankruptcy Code to limit the amount of, or any collateral securing, its claim against Borrowers. Pursuant to California Civil Code Section 2856(b):

(i) Each Borrower waives all rights and defenses arising out of an election of remedies by the creditor, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Borrower’s rights of subrogation and reimbursement against the other Borrowers by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise.

(ii) Each Borrower waives all rights and defenses that such Borrower may have because the Obligations are secured by real property. This means, among other things: (1) Bank may collect from such Borrower without first foreclosing on any real or personal property collateral pledged by the other Borrowers; and (2) if Bank forecloses on any real property collateral pledged by the other Borrowers: (A) the amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (B) Bank may collect from such Borrower even if Bank, by foreclosing on the real property collateral, has destroyed any right such Borrower may have to collect from the other Borrowers. This is an unconditional and irrevocable waiver of any rights and defenses each Borrower may have because the Obligations are secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.

(e) Each Borrower hereby absolutely, unconditionally, knowingly, and expressly waives: (i) any right of subrogation such Borrower has or may have as against the other Borrowers with respect to the Obligations; (ii) any right to proceed against the other Borrowers or any other Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims, whether direct or indirect, liquidated or contingent, whether arising under express or implied contract or by operation of law, which such Borrower may now have or hereafter have as against the other Borrowers with respect to the Obligations; and (iii) any right to proceed or seek recourse against or with respect to any property or asset of the other Borrowers.

(f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS AGREEMENT, EACH BORROWER HEREBY ABSOLUTELY, KNOWINGLY, UNCONDITIONALLY, AND EXPRESSLY WAIVES AND AGREES NOT TO ASSERT ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2825, 2839, 2845, 2848, 2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c, 580d, AND 726, CALIFORNIA UNIFORM COMMERCIAL CODE SECTIONS 3116, 3118, 3119, 3419, 3605, 9504, 9505, AND 9507, AND CHAPTER 2 OF TITLE 14 OF PART 4 OF DIVISION 3 OF THE CALIFORNIA CIVIL CODE.

9.6 Settlements or Releases. Each Borrower consents and agrees that, without notice to or by such Borrower, and without affecting or impairing the liability of such Borrower hereunder, Bank may, by action or inaction:

(a) compromise, settle, extend the duration or the time for the payment of, or discharge the performance of, or may refuse to or otherwise not enforce this Agreement and the Loan Documents, or any part thereof, with respect to the other Borrowers or any Guarantor;

(b) release the other Borrowers or any Guarantor or grant other indulgences to the other Borrowers or any Guarantor in respect thereof;

(d) release or substitute any Guarantor, if any, of the Obligations, or enforce, exchange, release, or waive any security for the Obligations or any other guaranty of the Obligations, or any portion thereof.

9.7 No Election. Bank shall have the right to seek recourse against each Borrower to the fullest extent provided for herein, and no election by Bank to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Bank’s right to proceed in any other form of action or proceeding or against other parties unless Bank has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Bank under this Agreement and the Loan Documents shall serve to diminish the liability of any Borrower under this Agreement and the Loan Documents to which Borrowers are a party except to the extent that Bank finally and unconditionally shall have realized indefeasible payment by such action or proceeding.

9.8 Indefeasible Payment. The Obligations shall not be considered indefeasibly paid unless and until all payments to Bank are no longer subject to any right on the part of any Person, including any Borrower, any Borrower as a debtor in possession, or any trustee (whether appointed pursuant to Debtor Relief Laws, or otherwise) of any Borrower’s Assets to invalidate or set aside such payments or to seek to recoup the amount of such payments or any portion thereof, or to declare same to be fraudulent or preferential. Upon such full and final performance and indefeasible payment of the Obligations, Bank shall have no obligation whatsoever to transfer or assign its interest in this Agreement and the Loan Documents to any Borrower. In the event that, for any reason, any portion of such payments to Bank is set aside or restored, whether voluntarily or involuntarily, after the making thereof, then the obligation intended to be satisfied thereby shall be revived and continued in full force and effect as if said payment or payments had not been made, and any Borrower shall be liable for the full amount Bank is required to repay plus any and all costs and expenses (including attorneys’ fees and attorneys’ fees incurred in proceedings brought under Debtor Relief Laws) paid by Bank in connection therewith.

9.9 Single Loan Account. At the request of Borrowers to facilitate and expedite the administration and accounting processes and procedures of the Loans and Borrowings, Bank has agreed, in lieu of maintaining separate loan accounts on Bank’s books in the name of each of the Borrowers, that Bank may maintain a single loan account under the name of all Borrowers (the “Loan Account”). All Loans shall be made jointly and severally to Borrowers and shall be charged to the Loan Account, together with all interest and other charges as permitted under and pursuant to the Loan Documents. The Loan Account shall be credited with all repayments of Obligations received by Bank, on behalf of Borrowers, from any Borrower pursuant to the terms of the Loan Documents.

9.10 Apportionment of Proceeds of Loans. Each Borrower expressly agrees and acknowledges that Bank shall have no responsibility to inquire into the correctness of the apportionment or allocation of or any disposition by any of Borrowers of (a) the Loans or any Borrowings, or (b) any of the expenses and other items charged to the Loan Account pursuant to this Agreement. The Loans and all such Borrowings and such expenses and other items shall be made for the collective, joint, and several account of Borrowers and shall be charged to the Loan Account.

9.11 Parent as Agent for Borrowers. Each Borrower hereby irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers ("Administrative Borrower") which appointment shall remain in full force and effect unless and until Bank shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (a) to provide Bank with all notices with respect to Loans and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under the Loan Documents, and (b) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Loans and Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of the Loan Documents. It is understood that the handling of the Loans and Collateral of Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Bank shall not incur liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loans and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce Bank to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify Bank, and hold Bank harmless against, any and all liability, expense, loss or claim of damage, or injury, made against Bank by any Borrower or by any third Person whosoever, arising from or incurred by reason of (a) the handling of the Loans and Collateral of Borrowers as herein provided, (b) Bank’s relying on any instructions of the Administrative Borrower, or (c) any other action taken by Bank hereunder or under the other Loan Documents, except that Borrowers will have no liability to Bank under this Section 9.11 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of Bank.

* * *

[remainder of this page intentionally left blank]

* * *

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BORROWERS:	WINC, INC.,
	a Delaware corporation

By:

	Name: Brian Smith
	Title: President

	BWSC, LLC,
	a California limited liability company

By:

	Name: Brian Smith
	Title: President

Credit Agreement

BANK:	PACIFIC MERCANTILE BANK,
	a California state-chartered commercial bank

By:

	Name: George Burnett
	Title: Vice President

Credit Agreement

Annex 1
To
Credit Agreement

Definitions and Construction

1.1 Definitions. Initially capitalized terms used in this Agreement shall have the following meanings:

“Acceptable Letter of Credit” means a standby letter of credit, issued by a bank or financial institution acceptable to Bank in its Permitted Discretion, in form and substance satisfactory to Bank in its Permitted Discretion, in an amount equal to 105% of the Letter of Credit Usage, naming Bank as beneficiary to reimburse payments of drafts drawn under outstanding Letters of Credit.

“Account” and “Account Debtor” have the meanings given to such terms in the UCC.

“ACH Transactions” means the Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve Fedline system provided by a Bank Product Provider for the account of any Borrower.

“Administrative Borrower” has the meaning given to such term in Section 9.11.

“Affiliate” means, with respect to any Person, any other Person (i) that, directly or indirectly, controls, is controlled by or is under common control with such Person; (ii) that directly or indirectly beneficially owns or controls 5% or more of any class of Equity Interests of such Person; or (iii) 5% or more of the voting stock of which is directly or indirectly beneficially owned or held by such Person. For purposes of the foregoing, control (including controlled by and under common control with) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” means this Credit Agreement, as amended or restated from time to time in accordance with its terms.

“Anti-Terrorism Laws" means all Applicable Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering, or bribery, including, without limitation, all laws, regulations and executive orders expressly referenced in Section 4.26.

“Applicable Laws” means all applicable laws, rules, regulations and orders of any Governmental Authority, including without limitation, regulations issued by the Office of the Comptroller of the Currency, the Fair Labor Standards Act, and the Americans With Disabilities Act.

“Appraisal Fee” has the meaning given to such term in Section 5.2(c).

“Asset” means any interest of a Person in any kind of property or asset, whether real, personal, or mixed real and personal, and whether tangible or intangible.

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease Obligation of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease, agreement or instrument were accounted for as a capital lease.

Annex 1

-1-

“Audit Fee” has the meaning given to such term in Section 5.2(b).

“Authorized Officer” means, with respect to each Borrower, any officer of such Borrower authorized by specific resolution of such Borrower to execute this Agreement and the Loan Documents, and to request Loans as set forth in such Borrower’s resolutions delivered to Bank on the Closing Date (and updated from time to time as necessary), and with respect to any Guarantor, any officer of such Guarantor authorized by specific resolution of such Guarantor to execute the Loan Documents as set forth in such Guarantor’s resolutions delivered to Bank on the Closing Date (and updated from time to time as necessary).

“Availability Reserve” means, as of any date of determination, such amounts (expressed as either a specified amount or as a percentage of a specified category or item) as Bank may from time to time establish and adjust in reducing the Borrowing Base (a) to reflect events, conditions, contingencies or risks which, as reasonably determined by Bank in its Permitted Discretion, do or may affect (i) the Collateral or its value, (ii) the Assets, business or prospects of Borrowers, or (iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority thereof), or (b) to reflect Bank’s judgment in its Permitted Discretion that any collateral report or financial information furnished by or on behalf of Borrowers to Bank is or may have been incomplete, inaccurate or misleading in any material respect, or (c) in respect of any state of facts that Bank determines in its Permitted Discretion constitutes an Event of Default or Default. On the Closing Date Availability Reserves shall include a reserve to cover accounts payable aged over 90 days (which shall be released once Bank has received Collateral Access Agreements duly executed by the applicable third party logistics provider and otherwise in form and substance satisfactory to Bank).

“Bank” is defined in the Preamble.

“Bank Product” means the following financial accommodation extended to any Loan Party by a Bank Product Provider (other than pursuant to the Agreement): (a) credit cards, (b) credit card processing services, (c) debit cards, (d) stored value cards, (e) purchase cards (including so-called “procurement cards” or “P-cards”), (f) Cash Management Services, and (g) Swaps.

“Bank Product Agreements” means those agreements entered into from time to time by any Borrower with a Bank Product Provider in connection with the obtaining of any of the Bank Products.

“Bank Product Obligations” means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by a Borrower to a Bank Product Provider pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.

“Bank Product Provider” means Bank or any of its Affiliates.

“Bank Product Reserve” means a reserve against the Borrowing Base established by Bank from time to time in its Permitted Discretion in respect of Bank Product Obligations.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978, as heretofore and hereafter amended and codified as 11 U.S.C. §§ 101 et seq. and any successor statute.

“Borrower” and “Borrowers” are defined in the Preamble.

“Borrowers’ Account” means Borrowers’ general deposit account number 41410698 maintained with Bank.

Annex 1

-2-

“Borrowing” means a borrowing of Revolving Loan from Bank pursuant to the terms and conditions hereof.

“Borrowing Base” means, as of the date of determination, the sum of (a) 85% of the Eligible Accounts, plus (b) the lesser of (i) 50% of the Eligible Inventory, or (ii) the Inventory Sublimit, minus (c) the Reserves; provided, however, Bank may reduce the advance rates, in its sole and absolute discretion, without declaring an Event of Default if it determines in its Permitted Discretion that there has occurred a Material Adverse Effect; provided, further, that Bank may also decrease or increase the advance rates, in its sole and absolute discretion, to address the results of any audit or appraisal performed by Bank from time to time after the Closing Date.

“Borrowing Base Certificate” means Bank’s standard form of Borrowing Base Certificate.

“Business Day” means any day other than a Saturday, a Sunday, or a day on which commercial banks in the City of Irvine, California, are authorized or required by law or executive order or decree to close.

“Capital Expenditures” means expenditures made in cash, or financed with long term debt, by any Person for the acquisition of any fixed Assets or improvements, replacements, substitutions, or additions thereto that have a useful life of more than 1 year, including the direct or indirect acquisition of such Assets by way of increased product or service charges, offset items, or otherwise, and the principal portion of payments with respect to Capital Lease Obligations, calculated in accordance with GAAP.

“Capital Lease” means any lease of an Asset by a Person as lessee which would, in conformity with GAAP, be required to be accounted for as an Asset and corresponding liability on the balance sheet of that Person.

“Capital Lease Obligations” of a Person means the amount of the obligations of such Person under all Capital Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP.

“Cash Collateralize” means the delivery of cash or an Acceptable Letter of Credit to Bank, as security for the payment of Obligations, in an amount equal to (a) with respect to the L/C Obligations, 105% of the L/C Obligations, and (b) with respect to any inchoate, contingent or other Obligations (including Bank Product Obligations), Bank’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations. "Cash Collateralization" has a correlative meaning.

“Cash Dominion Event” means the occurrence of any of the following:

(a) an Event of Default;

(b) an Overadvance that remains uncured for 1 Business Day;

(d) any Material Adverse Effect with respect to the Collateral.

“Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including ACH Transactions) and other cash management arrangements.

Annex 1

-3-

“Change in Law” means the occurrence after the date of the Agreement of: (a) the adoption or effectiveness of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law, rule, regulation, judicial ruling, judgment or treaty or in the administration, interpretation, implementation or application by any Governmental Authority of any law, rule, regulation, guideline or treaty, or (c) the making or issuance by any Governmental Authority of any request, rule, guideline or directive, whether or not having the force of law; provided that notwithstanding anything in the Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and Basel III and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

“Change of Control” means the time at which:

(a) any Person (including a Person’s Affiliates and associates) or group (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) (other than the direct or indirect Owners of Parent on the Closing Date) becomes the beneficial owner (as defined in Rule 13d 3 under the Securities Exchange Act of 1934) of a percentage of the Equity Interests of Parent equal to at least 20%; or

(b) Parent shall cease to own 100% of the Equity Interests of each other Borrower;

(c) there shall be consummated any consolidation or merger of any Loan Party pursuant to which such Loan Party’s Equity Interests would be converted into cash, securities or other property, other than a merger or consolidation of such Loan Party in which the holders of such Equity Interests immediately prior to the merger have the same proportionate ownership, directly or indirectly, of Equity Interests of the surviving Person immediately after the merger as they had immediately prior to such merger; or

(d) all or substantially all of any Loan Party’s Assets shall be sold, leased, conveyed or otherwise disposed of as an entirety or substantially as an entirety to any Person (including any Affiliate or associate of any Loan Party) in one or a series of transactions.

“Closing Date” means the date when all of the conditions set forth in Section 3.1 have been fulfilled to the satisfaction of Bank and its counsel.

“Collateral” has the meaning given to such term in any Loan Document.

“Collateral Access Agreement” means a landlord waiver, mortgagee waiver, bailee letter, or acknowledgement agreement of any warehouseman, processor, lessor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the Collateral, in each case, in form and substance satisfactory to Bank.

“Collections” means all cash, checks, notes, instruments, and other items of payment (including insurance Proceeds, cash Proceeds of asset sales, rental Proceeds, and tax refunds).

“Commitment” means the Revolving Credit Commitment.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Compliance Certificate” means Bank’s standard form of Compliance Certificate in the form of Exhibit 5.3(c), to be delivered in accordance with Section 5.3(c).

Annex 1

-4-

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“Consolidated” means the consolidation in accordance with GAAP of the accounts or other items as to which such term applies. “Consolidating” has a correlative meaning.

“Control Account” means a blocked deposit account in each Borrower’s name maintained with Bank over which Borrowers have no right to withdraw funds.

“Corporate Loan Party” means each Loan Party other than any Loan Party who is an individual (collectively, “Corporate Loan Parties”).

“Debt” means, as of the date of determination, the sum, but without duplication, of any and all of a Person’s: (i) indebtedness heretofore or hereafter created, issued, incurred or assumed by such Person (directly or indirectly) for or in respect of money borrowed; (ii) Attributable Indebtedness; (iii) obligations evidenced by bonds, debentures, notes, or other similar instruments; (iv) obligations for the deferred purchase price of property or services (other than trade payables which are not more than 90 days past due incurred in the ordinary course of business); (v) current liabilities in respect of unfunded vested benefits under any Pension Plan; (vi) contingent obligations under letters of credit; (vii) obligations under acceptance facilities; (viii) Guarantees of Debt; (ix) indebtedness (excluding prepaid interest thereon) in accordance with GAAP that is secured by any Lien on any Asset of such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness has been assumed or is limited in recourse; (x) the net obligations under Swaps; and (xi) obligations to purchase, redeem, retire, defease or otherwise make any payment in respect of Disqualified Equity Interests, or any warrant, right or option to acquire Disqualified Equity Interests, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends.

For all purposes hereof, the Debt of any Person shall include the Debt of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Debt is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any Debt of any Person for purposes of clause (ix) that is expressly made non-recourse or limited-recourse (limited solely to the Assets securing such Debt) to such Person shall be deemed to be equal to the lesser of (i) the aggregate principal amount of such Debt and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith.

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.

“Default” means any condition or event which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

“Dilution” means, as of any date of determination, a percentage that is the result of dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising allowances, credits, deductions, or other dilutive items as determined by Bank in its Permitted Discretion with respect to the Accounts, by (b) Borrowers’ billings with respect to Accounts.

“Dilution Reserve” means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by 1 percentage point for each percentage point by which Dilution is in excess of 5%.

Annex 1

-5-

“Disposition” means the sale, transfer, license, lease or other disposition (whether in one transaction or in a series of transactions, and including any sale and leaseback transaction and any sale, transfer, license or other disposition) of any property (including, without limitation, any Equity Interests) by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“Disqualified Equity Interest” means any Equity Interest that, by its terms (or the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Equity Interests that are not Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a Change of Control or asset sale so long as any rights of the holders thereof upon the occurrence of a Change of Control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for scheduled payments of Distributions in cash, or (d) is or becomes convertible into or exchangeable for Debt or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Revolving Loans Maturity Date; provided that if such Equity Interests are issued pursuant to a plan for the benefit of employees of Borrower or any Subsidiary or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.

“Distributions” means dividends or distributions of earnings made by a Person to its Owners.

“Documentary Letter of Credit Fee” has the meaning given to such term in Section 2.3(b).

“Dollars” or “$” means lawful currency of the United States of America.

“Domestic Subsidiary” means any direct or indirect Subsidiary of Parent organized under the laws of any state of the United States or the District of Columbia.

“ECP” means, with respect to any Swap Obligation, an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time this Agreement, or any Facility Guaranty of, or the grant of a security interest to secure, becomes effective with respect to such Swap Obligation.

“Eligible Accounts” means those Accounts created by a Borrower in the ordinary course of business, that arise out of such Borrower's sale of goods or rendition of services, that strictly comply with each and all of the representations and warranties respecting Eligible Accounts made by Borrowers to Bank in this Agreement and the Loan Documents; provided, however, that standards of eligibility may be fixed and revised from time to time by Bank in Bank’s Permitted Discretion to address the results of any audit or appraisal performed by Bank from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits and unapplied cash remitted to the applicable Borrower. Eligible Accounts shall not include the following:

(a) (i) Accounts that the Account Debtor has failed to pay within 90 days of invoice date or (ii) Accounts with selling terms of more than 60 days;

(b) Accounts owed by an Account Debtor or any of its Affiliates where 20% or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a)(ii) above;

Annex 1

-6-

(c) Accounts with respect to which the Account Debtor or any of its Affiliates is an officer, director, shareholder, employee, Affiliate, or agent of Borrowers;

(d) Accounts with respect to which goods are placed on consignment, guaranteed sale, sale or return, sale on approval, bill and hold, or other terms by reason of which the payment by the Account Debtor may be conditional;

(e) Accounts that are not payable in Dollars or with respect to which the Account Debtor: (i) does not maintain its chief executive office in the United States or Canada, or (ii) is not organized under the laws of the United States or any State thereof, or the District of Columbia, or Canada or any Province thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (y) the Account is supported by an irrevocable letter of credit satisfactory to Bank (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Bank and is directly drawable by Bank, or (z) the Account is covered by credit insurance in form and amount, and by an insurer, satisfactory to Bank;

(f) Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which the applicable Borrower has complied, to the reasonable satisfaction of Bank, with the Assignment of Claims Act, 31 USC § 3727), or (ii) any state of the United States (exclusive, however, of (y) Accounts owed by any state that does not have a statutory counterpart to the Assignment of Claims Act, or (z) Accounts owed by any state that does have a statutory counterpart to the Assignment of Claims Act as to which the applicable Borrower has complied to Bank’s satisfaction),

(g) Accounts with respect to which the Account Debtor or any of its Affiliates is a creditor of the applicable Borrower, has or has asserted a right of setoff, has disputed its liability, or has made any claim with respect to the Account, to the extent of such setoff, dispute or claim;

(h) Accounts with respect to an Account Debtor and its Affiliates whose total obligations owing to Borrowers exceed 25% of all Accounts, to the extent of the obligations owing by such Account Debtor and its Affiliates in excess of such percentage;

(i) Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which the applicable Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor, or whose credit standing is unacceptable to Bank;

(j) Accounts the collection of which Bank, in its Permitted Discretion, believes to be doubtful by reason of the Account Debtor's financial condition;

(k) Accounts not supported ay any electronic or written record;

(l) Accounts which are in default or collection;

(m) Accounts on C.O.D. terms;

(n) Accounts with respect to which the goods giving rise to such Account have not been shipped and billed to the Account Debtor, the services giving rise to such Account have not been performed and accepted by the Account Debtor, or the Account otherwise does not represent a final sale;

(o) Accounts that are not subject to a valid and perfected first priority Lien in favor of Bank;

(p) bonded Accounts;

(q) Accounts that represent progress payments or other advance billings that are due prior to the completion of performance by the applicable Borrower of the subject contract for goods or services;

(r) Accounts evidenced by Chattel Paper or an Instrument (as such terms are defined in the Security Agreement) unless such Chattel Paper or Instrument has been duly assigned and delivered to Bank, in accordance with the terms of the Security Agreement; and

(s) any other Accounts that Bank in its Permitted Discretion deems ineligible.

Annex 1

-7-

“Eligible Inventory” means Inventory consisting of first quality finished goods held for sale in the ordinary course of a Borrower’s business and raw materials used or consumed by a Borrower in the ordinary course of business in the manufacture or production of other Inventory that complies with each of the representations and warranties respecting Eligible Inventory made by Borrowers in the Loan Documents, and that is not excluded as ineligible by virtue of the one or more of the criteria set forth below; provided, however, that such criteria may be fixed and revised from time to time by Bank in Bank’s sole and absolute discretion to address the results of any audit or appraisal performed by Bank from time to time after the Closing Date. In determining the amount to be so included, Inventory shall be valued at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices. An item of Inventory shall not be included in Eligible Inventory if:

(a) it is not located in the United States;

(b) the applicable Borrower does not have good, valid, and marketable title thereto;

(c) it is not located at one of Borrowers’ locations set forth on Schedule 1E (or in-transit between any such locations);

(d) it is located on real property leased by the applicable Borrower or in a contract warehouse, in each case, unless (i) it is subject to a Collateral Access Agreement duly executed by the lessor, warehouseman, or other third party, as the case may be, and unless it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises, or (ii) a Rent Reserve has been established;

(e) it is not subject to a valid and perfected first priority Lien in favor of Bank;

(f) it consists of goods returned or rejected by the applicable Borrower’s customers;

(g) it consists of Slow Moving Inventory or goods that are obsolete, restrictive or custom items, work-in-process, or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in the applicable Borrower’s business, bill and hold goods, defective goods, “seconds,” or Inventory acquired on consignment;

(h) it is subject to third party Intellectual Property, licensing or other proprietary rights, unless Bank has received a Licensor Consent covering such Inventory, duly executed by the Licensor thereof, providing, to Bank's satisfaction, that such Inventory can be freely sold by Bank on and after the occurrence of an Event of a Default despite such third party rights; or

(i) it is otherwise any Inventory that Bank in its Permitted Discretion deems ineligible.

“Employee Benefit Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA, (a) that is or within the preceding six (6) years has been sponsored, maintained or contributed to by any Loan Party or ERISA Affiliate or (b) to which any Loan Party or ERISA Affiliate has, or has had at any time within the preceding six (6) years, any liability, contingent or otherwise.

Annex 1

-8-

“Environmental Action” means any written complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses of Borrower, any Subsidiary of Borrower, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by Borrower, any Subsidiary of Borrower, or any of their predecessors in interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on Parent or its Subsidiaries, relating to the environment, the effect of the environment on employee health, or Hazardous Materials, in each case as amended from time to time.

“Environmental Liabilities” means all liabilities, monetary obligations, losses, damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action.

“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

“Equipment” has the meaning given to such term in the UCC.

“Equity Interests” means, as to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statutes, and all regulations and guidance promulgated thereunder. Any reference to a specific section of ERISA shall be deemed to be a reference to such section of ERISA and any successor statutes, and all regulations and guidance promulgated thereunder.

“ERISA Affiliate” means each entity, trade or business (whether or not incorporated) that together with a Loan Party or a Subsidiary would be (or has been) treated as a “single employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the IRC. ERISA Affiliate shall include any Subsidiary of any Loan Party.

“Event of Default” has the meaning set forth in Section 7.1.

Annex 1

-9-

“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of this Agreement (or the Facility Guaranty of such Loan Party of), or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any Facility Guaranty thereof, including pursuant to this Agreement) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an ECP. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which this Agreement or such Facility Guaranty or security interest is or becomes illegal.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (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 Recipient being organized under the laws of, or having its principal office or, in the case of Bank, 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 Bank, U.S. federal withholding Taxes imposed on amounts payable to or for the account of Bank with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) Bank acquires such interest in the Loan or Commitment, or (ii) Bank changes its lending office, and (c) any U.S. federal withholding Taxes imposed under FATCA.

“Expenses” means (i) all reasonable, documented out of pocket expenses incurred by Bank and its Affiliates (including the reasonable fees, charges and disbursements of counsel for Bank, in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents, or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable, documented out of pocket expenses incurred by Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all documented out of pocket expenses incurred by Bank (including the fees, charges and disbursements of any counsel for Bank), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under Section 8.3, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

“Extraordinary Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustments net of any taxes paid or payable in connection with such receipt and any cash expense relating to the collection of such Extraordinary Receipts.

“Facility Guaranties” and “Facility Guaranty” means, individually or collectively as the context requires, each certain Continuing Guaranty executed by a Guarantor in favor of Bank.

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this Agreement (or any amended or successor version) and any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the IRC.

“Fees” means the Revolving Credit Commitment Fee, the Late Payment Fee, the Standby Letter of Credit Fees, the Documentary Letter of Credit Fees, the Audit Fees, and the Appraisal Fees.

“Financial Statement(s)” means, with respect to any accounting period of any Person, statements of income and statements of cash flows of such Person for such period, and balance sheets of such Person as of the end of such period, setting forth in each case in comparative form figures for the corresponding period in the preceding Fiscal Year or, if such period is a full Fiscal Year, corresponding figures from the preceding annual audit, all prepared in reasonable detail and in accordance with GAAP, subject to year-end adjustments and the absence of footnotes in the case of monthly and quarterly Financial Statements. Financial Statement(s) shall include the schedules thereto and annual Financial Statements shall also include the footnotes thereto.

Annex 1

-10-

“Fiscal Month” means any of the monthly accounting periods of Borrowers.

“Fiscal Year” means the 12-Fiscal Month period of Borrowers ending December 31 of each year. Subsequent changes of the Fiscal Year of Borrowers shall not change the term “Fiscal Year” unless Bank shall consent in writing to such change.

“Foreign Subsidiary” means any direct or indirect Subsidiary of Parent that is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles in the United States of America, consistently applied, which are in effect as of the date of this Agreement. If any changes in accounting principles from those in effect on the date hereof are hereafter occasioned by promulgation of rules, regulations, pronouncements or opinions by or are otherwise required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions), and any of such changes results in a change in the method of calculation of, or affects the results of such calculation of, any of the financial covenants, standards or terms found herein, then the parties hereto agree to enter into and diligently pursue negotiations in order to amend such financial covenants, standards or terms so as to equitably reflect such changes, with the desired result that the criteria for evaluating financial condition and results of operations of Borrowers and their Subsidiaries shall be the same after such changes as if such changes had not been made.

“Governing Documents” means the certificate or articles or certificate of incorporation, by-laws, articles or certificate of organization, operating agreement, or other organizational or governing documents of any Person.

“Governmental Authority” means any federal, state, local or other governmental department, commission, board, bureau, agency, central bank, court, tribunal or other instrumentality or authority or subdivision thereof, domestic or foreign, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Debt or other obligation of the payment or performance of such Debt or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Debt or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Debt or other obligation of any other Person (or any right, contingent or otherwise, of any holder of such Debt to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

“Guarantor(s)” means, individually or collectively as the context requires, all Domestic Subsidiaries and every other Person who now or hereafter executes a Facility Guaranty in favor of Bank with respect to the Obligations, including without limitation, the Swap Obligations under the Swap Documents, but excluding all Excluded Swap Obligations.

Annex 1

-11-

“Hazardous Materials” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity,” (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million.

“Indemnitee” has the meaning given to such term in Section 8.3(b).

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Insolvency Proceeding” means any proceeding commenced by or against any Person, under any provision of Debtor Relief Laws, or under any other bankruptcy or insolvency law, including, but not limited to, assignments for the benefit of creditors, formal or informal moratoriums, compositions, or extensions with some or all creditors.

“Intellectual Property” means all present and future: trade secrets, know-how and other proprietary information; trademarks, trademark applications, internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing) indicia and other source and/or business identifiers, and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world; copyrights and copyright applications; (including copyrights for computer programs) and all tangible and intangible property embodying the copyrights, unpatented inventions (whether or not patentable); patents and patent applications; industrial design applications and registered industrial designs; license agreements related to any of the foregoing and income therefrom; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; all other intellectual property; and all common law and other rights throughout the world in and to all of the foregoing.

“Intellectual Property Security Agreement” means each certain Intellectual Property Security Agreement now or hereafter entered into by Borrower, or an Owner of Borrower, as the case may be, on the one hand, and Bank, on the other hand.

“Intercompany Subordination Agreement” means that certain Intercompany Subordination Agreement, dated as of even date herewith, among Corporate Loan Parties and Bank.

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of even date herewith, among Borrowers, Mezzanine Lender, and Bank.

“Interest Payment Date” means the 1^st day of each and every month, and the Revolving Loans Maturity Date.

“Inventory” has the meaning given to such term in the UCC.

Annex 1

-12-

“Inventory Reserves” means a reserve in an amount equal to 50% of outstanding gift cards, and such other reserves as may be established from time to time by Bank in its Permitted Discretion, with respect to the determination of the salability, at retail, of the Eligible Inventory, which reflect such other factors as affect the market value of the Eligible Inventory or which reflect claims and liabilities that Bank determines in its Permitted Discretion, will need to be satisfied in connection with the realization upon the Inventory. Without limiting the generality of the foregoing, Inventory Reserves may, in Bank’s Permitted Discretion, include (but are not limited to) reserves based on:

(a) Obsolescence;

(b) Seasonality;

(d) Imbalance;

(e) Change in Inventory character;

(f) Change in Inventory composition;

(g) Change in Inventory mix;

(h) Mark-downs (both permanent and point of sale);

(i) Retail mark-ons and mark-ups inconsistent with prior period practice and performance, industry standards, current business plans or advertising calendar and planned advertising events; and

(j) Out-of-date and/or expired Inventory.

“Inventory Sublimit” has the meaning given to such term in Section 1.1 of the Summary of Credit Terms.

“Investment” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, Guarantees, advances, capital contributions, and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP, and any purchase or acquisition of any Equity Interests, or any obligations or other securities of, any Person, including the establishment or creation of a Subsidiary.

“IRC” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute, and any and all regulations thereunder. Any reference to a specific section of the IRC shall be deemed to be a reference to such section of the IRC and any successor statutes, and all regulations and guidance promulgated thereunder.

“ISP” means the International Standby Practices (1998 version), and any subsequent versions or revisions approved by a Congress of the International Chamber of Commerce Publication 590 and adhered to by Bank.

“Knowledge” has the meaning given to such term in Section 8.9.

“Late Payment Fee” has the meaning given to such term in Section 1.14(c).

“L/C Obligations” means the sum (without duplication) of (a) all Reimbursement Obligations; and (b) the Letter of Credit Usage.

Annex 1

-13-

“Letter(s) of Credit” means any standby or documentary letter(s) of credit issued by Bank, pursuant to Section 2.1(a).

“Letter of Credit Application” means Bank’s standard form of Letter of Credit Application.

“Letter of Credit Sublimit” has the meaning given to such term in Section 2.1(a) of the Summary of Credit Terms.

“Letter of Credit Usage” means, on any date of determination, the aggregate maximum amounts available to be drawn under all outstanding Letters of Credit, without regard to whether any conditions to drawing could then be met.

“Licensor” means an owner of certain Intellectual Property that licenses all or any portion of such Intellectual Property to a Borrower.

“Licensor Consent” means an agreement between a Licensor and Bank in form and substance reasonably satisfactory to Bank and pursuant to which, among other things, the Licensor grants to Bank a limited license to exercise all rights that the applicable Borrower could exercise under its license agreement with the Licensor assuming there exists no defaults under such license agreement.

“Lien” means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement or other preferential arrangement, charge or encumbrance (including, any conditional sale or other title retention agreement, or finance lease) of any kind.

“Liquidity” means, as of the date of determination, the sum of Qualified Cash plus Net Availability.

“Loan Document(s)” means this Agreement and each of the following documents, instruments, and agreements individually or collectively, as the context requires:

(a) the Security Agreement;

(b) the Facility Guaranties;

(d) the Intercreditor Agreement;

(e) the Licensor Consents;

(f) the Intercompany Subordination Agreement;

(g) the Subordination Agreements;

(h) the Collateral Access Agreements;

(i) the Letter of Credit Applications;

(j) all Bank Product Agreements (other than any Bank Product Agreement providing for a Swap); and

(k) such other documents, instruments, and agreements as Bank may reasonably request in connection with the transactions contemplated hereunder or to perfect or protect the liens and security interests granted to Bank in connection herewith.

Annex 1

-14-

“Loan Parties” means individually and collectively, Borrowers and Guarantors (each a “Loan Party”).

“Loans” means the Revolving Loans (each, a “Loan”).

“Loan Year” means each 365 day period (or 366 day period in the case of any period that includes February 29) commencing on the Closing Date and each anniversary thereof.

“Lockbox” means “Lockbox” as such term (or similar term) is defined in the lockbox or similar agreements between Borrower and Bank.

“Material Adverse Effect” means a material adverse effect on (i) the business, Assets, condition (financial or otherwise), results of operations, or prospects of any Loan Party; (ii) the ability of any Loan Party to perform its obligations under the Loan Documents to which it is a party, (iii) the validity or enforceability of the Loan Documents, or the rights or remedies of Bank hereunder and thereunder, (iv) the value of the Collateral, or (v) the priority of Bank’s Liens with respect to the Collateral.

“Material Contract” means, with respect to any Person, any contract or agreement, the loss of which could reasonably be expected to result in a Material Adverse Effect.

“Mezzanine Lender” means Multiplier Capital II, LP, a Delaware limited partnership.

“Mezzanine Loan Agreement” means that certain Loan and Security Agreement, dated as of even date herewith, between Borrowers and Mezzanine Lender, as the same may be amended or restated from time to time.

“Mezzanine Loan Documents” has the meaning of “Loan Documents” in the Mezzanine Loan Agreement.

“Mezzanine Obligations” has the meaning of “Obligations” in the Mezzanine Loan Agreement.

“Multiemployer Plan” means any multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA with respect to which any Loan Party or ERISA Affiliate has an obligation to contribute or has any liability, contingent or otherwise or could be assessed withdrawal liability assuming a complete withdrawal from any such multiemployer plan.

“Net Availability” means, as of the date of determination, the difference of (a) the lesser of (i) the Borrowing Base, or (ii) the Revolving Credit Commitment, minus (b) the sum of (i) the aggregate outstanding Revolving Loans, plus (ii) the Letter of Credit Usage.

“Notification Event” means (a) the occurrence of a “reportable event” described in Section 4043 of ERISA for which the 30-day notice requirement has not been waived by applicable regulations issued by the PBGC, (b) the withdrawal of any Loan Party or ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC or any Pension Plan or Multiemployer Plan administrator, (e) any other event or condition that would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, (f) the imposition of a Lien pursuant to the IRC or ERISA in connection with any Employee Benefit Plan or the existence of any facts or circumstances that could reasonably be expected to result in the imposition of a Lien, (g) the partial or complete withdrawal of any Loan Party or ERISA Affiliate from a Multiemployer Plan (other than any withdrawal that would not constitute an Event of Default under Section 8.12), (h) any event or condition that results in the reorganization or insolvency of a Multiemployer Plan under Sections of ERISA, (i) any event or condition that results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings to terminate or to appoint a trustee to administer a Multiemployer Plan under ERISA, (j) any Pension Plan being in “at risk status” within the meaning of IRC Section 430(i), (k) any Multiemployer Plan being in “endangered status” or “critical status” within the meaning of IRC Section 432(b) or the determination that any Multiemployer Plan is or is expected to be insolvent or in reorganization within the meaning of Title IV of ERISA, (l) with respect to any Pension Plan, any Loan Party or ERISA Affiliate incurring a substantial cessation of operations within the meaning of ERISA Section 4062(e), (m) an “accumulated funding deficiency” within the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of ERISA) or the failure of any Pension Plan or Multiemployer Plan to meet the minimum funding standards within the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of ERISA), in each case, whether or not waived, (n) the filing of an application for a waiver of the minimum funding standards within the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of ERISA) with respect to any Pension Plan or Multiemployer Plan, (o) the failure to make by its due date a required payment or contribution with respect to any Pension Plan or Multiemployer Plan, (p) any event that results in or could reasonably be expected to result in a liability by a Loan Party pursuant to Title I of ERISA or the excise tax provisions of the IRC relating to Employee Benefit Plans or any event that results in or could reasonably be expected to result in a liability to any Loan Party or ERISA Affiliate pursuant to Title IV of ERISA or Section 401(a)(29) of the IRC, or (q) any of the foregoing is reasonably likely to occur in the following 30 days.

Annex 1

-15-

“Obligations” means (i) any and all obligations of Borrowers (or any of them) to Bank with respect to the Loans, including without limitation all principal, interest, and other amounts, costs and Fees and Expenses payable under this Agreement and the Loan Documents; excluding, however, all Excluded Swap Obligations; (ii) any and all obligations of Borrowers (or any of them) to any Bank Product Provider arising under or in connection with any transaction now existing or hereafter entered into between Borrowers (or any of them) and such Bank Product Provider which is a Swap; excluding, however, all Excluded Swap Obligations; and (iii) all other indebtedness, liabilities, and obligations of Borrowers (or any of them) owing to Bank, and/or the Bank Product Providers, and to their successors and assigns, previously, now, or hereafter incurred, and howsoever evidenced, whether direct or indirect, absolute or contingent, joint or several, liquidated or unliquidated, voluntary or involuntary, due or not due, legal or equitable, whether incurred before, during, or after any Insolvency Proceeding and whether recovery thereof is or becomes barred by a statute of limitations or is or becomes otherwise unenforceable or unallowable as claims in any Insolvency Proceeding, together with all interest thereupon (including interest under Section 1.4(b) and including any interest that, but for the provisions of Debtor Relief Laws, would have accrued during the pendency of an Insolvency Proceeding). The Obligations shall include, without limiting the generality of the foregoing, all principal and interest and other payment obligations owing under the Loans, all Reimbursement Obligations, all Bank Product Obligations, all Expenses, the Fees, any other fees and expenses due hereunder and under the Loan Documents (including any fees or expenses that, but for the provisions of Debtor Relief Laws, would have accrued during the pendency of an Insolvency Proceeding), and all other indebtedness evidenced by this Agreement, the Loan Documents, and/or the Bank Product Agreements; excluding, however, all Excluded Swap Obligations.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient 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).

Annex 1

-16-

“Other Taxes” 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.

“Overadvance” has the meaning set forth in Section 1.1(c).

“Owner” means, with respect to any Person, any other Person owning Equity Interests of such Person.

“Parent” is defined in the Preamble.

“Participant” has the meaning set forth in Section 8.5(d).

“Participant Register” has the meaning set forth in Section 8.5(d).

“Patriot Act” means the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV or Section 302 of ERISA or Sections 412 or 430 of the IRC sponsored, maintained, or contributed to by any Loan Party or ERISA Affiliate or to which any Loan Party or ERISA Affiliate has any liability, contingent or otherwise.

“Permitted Debt” means:

(a) Debt owing to Bank in accordance with the terms of the Loan Documents;

(b) Capital Lease Obligations and other Debt secured by Purchase Money Liens so long as the aggregate outstanding principal amount of such Debt for all Corporate Loan Parties does not exceed $100,000 at any time;

(c) Mezzanine Obligations in an amount not to exceed the Maximum Subordinate Debt Amount (as defined in the Intercreditor Agreement);

(d) Subordinate Debt;

(e) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Debt (b) through (d) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or any Subsidiary, as the case may be;

(f) unsecured Debt to trade creditors incurred in the ordinary course of business;

(g) Debt by and among Loan Parties, subject to the Intercompany Subordination Agreement;

(h) unsecured credit card Debt in an aggregate amount outstanding not to exceed $300,000; and

(i) other unsecured Debt in an aggregate amount outstanding not to exceed $100,000.

Annex 1

-17-

“Permitted Discretion” means a determination made in the exercise of reasonable (from the perspective of a secured commercial lender) business judgment.

“Permitted Dispositions” means:

(a) Dispositions in the ordinary course of business of equipment that is substantially worn, damaged, obsolete, surplus, or no longer useful; and

(b) sales of inventory to buyers in the ordinary course of business.

“Permitted Investments” means Investments in cash and cash equivalents maintained in accordance with Section 5.11.

“Permitted Liens” means:

(a) Liens in favor of Bank in accordance with the Loan Documents;

(b) Purchase Money Liens securing Debt described in clause (b) of the definition of “Permitted Debt” above;

(c) Liens for current taxes, assessments or other governmental charges which are not delinquent or remain payable without any penalty, or are being contested in good faith by appropriate proceedings, provided that, if delinquent, adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of nonpayment, no property is subject to a material risk of loss or forfeiture;

(d) statutory Liens, such as inchoate mechanics’, inchoate materialmen’s, landlord’s, warehousemen’s, and carriers’ liens, and other similar liens, other than those described in clause (a) above, arising in the ordinary course of business with respect to obligations which are not delinquent or are being contested in good faith by appropriate proceedings; provided that, if delinquent, adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of nonpayment, no property is subject to a material risk of loss or forfeiture; and

(e) Liens securing Mezzanine Obligations, subject to the terms of the Intercreditor Agreement.

“Permitted Restricted Payments” means (a) payments on the Mezzanine Obligations to the extent permitted by the Intercreditor Agreement. and (b) payments to Atticus Publishing, LLC, a California limited liability company, pursuant to that certain Collaboration Agreement, dated as of February 1, 2019, in connection with the transactions contemplated thereby.¹

“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

¹Is this a Restricted Payment?

Annex 1

-18-

“Pledged Company” means BWSC and any other Subsidiary the Equity Interests of which has been pledged to Bank to secure the Obligations pursuant to the terms and conditions hereof or any Loan Document.

“Prime Lending Rate” with respect to the Revolving Loans, has the meaning given to such term in Section 1.4(a)(i) of the Summary of Credit Terms.

“Prime Rate” means that variable interest rate which is subject to change from time to time based upon changes in the independent index which is the Prime Rate as published in the Money Rates Section of the Western Edition of the Wall Street Journal (the “Index”). The Index is not necessarily the lowest rate charged by Bank on its commercial loans. If the Index becomes unavailable during the term of this loan, Bank may designate a substitute index after notice to Borrowers. Bank will advise Borrowers of the current Index rate upon request. Interest changes shall not occur more often than daily. Adjustment shall become effective the next Business Day after publication or announcement of the Index change. Borrowers understand that Bank may make loans based upon other rates and indexes as well.

“Prohibited Transaction” means a transaction described in Section 4975(c) of the IRC that is not exempt from the tax imposed by Section 4975(a) of the IRC under Section 4975(d) of the IRC.

“Protective Advances” has the meaning given to such term in Section 1.12.

“Purchase Money Lien” means a Lien on any item of equipment of Borrowers securing a purchase-money obligation; provided that (i) such Lien attaches only to that item of equipment, and (ii) the purchase-money obligation secured by such item of equipment does not exceed 100% of the purchase price of such item of equipment.

“Qualified Cash” means, as of any date of determination, the amount of unrestricted cash of Borrowers that is held in a deposit account at Bank.

“Recipient” means (a) Bank and (b) any assignee of Bank, as applicable.

“Register” has the meaning set forth in Section 8.5(f).

“Reimbursement Obligations” means the obligations of Borrowers to reimburse Bank pursuant to Section 2.4 amounts drawn under Letters of Credit.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials required by Environmental Laws.

“Rent Reserve” means a reserve for rent at leased locations subject to landlords liens, past due rent, and up to three months future rent that would be payable to a landlord that has not executed and delivered a Collateral Access Agreement,. established by Bank in its Permitted Discretion.

Annex 1

-19-

“Reserves” means the Availability Reserve, the Bank Product Reserve, the Dilution Reserve, the Inventory Reserves, and the Rent Reserve. Bank shall have the right, at any time and from time to time after the Closing Date in its Permitted Discretion to establish, modify or eliminate Reserves.

“Restricted Payment” means (a) any payment of principal or interest or any purchase, redemption, retirement, acquisition or defeasance with respect to any Subordinate Debt or Mezzanine Obligations, (b) any Distribution on account of any Equity Interests of any Loan Party, now or hereafter outstanding, (c) any purchase, redemption, retirement, sinking fund, or other direct or indirect acquisition for value of any Equity Interests of any Loan Party now or hereafter outstanding, (d) any distribution of Assets to any Owners of any Loan Party, whether in cash, Assets, or in obligations of such Loan Party, (e) any allocation or other set apart of any sum for the payment of any Distribution on, or for the purchase, redemption or retirement of, any Equity Interests of any Loan Party, or (f) any other distribution by reduction of capital or otherwise in respect of any Equity Interests of any Loan Party.

“Revolving Credit Commitment” has the meaning given to such term in Section 1.1 of the Summary of Credit Terms.

“Revolving Credit Commitment Fee” has the meaning set forth in Section 1.14(a).

“Revolving Loans” has the meaning given to such term in Section 1.1.

“Revolving Loans Daily Balances” means the amount determined by taking the amount of the obligations owed under the Revolving Loans at the beginning of a given day, adding any new Revolving Loans advanced or incurred on such date, and subtracting any payments or collections on the Revolving Loans which are deemed to be paid on that date under the provisions of this Agreement.

“Revolving Loans Maturity Date” has the meaning given to such term in Section 1.1 of the Summary of Credit Terms.

“Sanctioned Country” has the meaning set forth in Section 4.26.

“Sanctioned Person” has the meaning set forth in Section 4.26.

“Sanctions Program” has the meaning set forth in Section 4.26.

“Security Agreement” means that certain Security Agreement, dated as of even date herewith, among Corporate Loan Parties and Bank.

“Slow Moving Inventory” means Inventory of a Borrower that is (a) held for sale in the ordinary course of such Borrower’s business and (b) remains unsold in such Borrower’s stock for greater than 12 months.

“Solvent” means, with respect to any Person on the date any determination thereof is to be made, that on such date: (a) the present fair valuation of the Assets of such Person is greater than such Person’s probable liability in respect of existing debts; (b) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature; and (c) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, which would leave such Person with Assets remaining which would constitute unreasonably small capital after giving effect to the nature of the particular business or transaction. For purposes of this definition (i) the fair valuation of any property or assets means the amount realizable within a reasonable time, either through collection or sale of such Assets at their regular market value, which is the amount obtainable by a capable and diligent Person from an interested buyer willing to purchase such property or assets within a reasonable time under ordinary circumstances; and (ii) the term debts includes any payment obligation, whether or not reduced to judgment, equitable or legal, matured or unmatured, liquidated or unliquidated, disputed or undisputed, secured or unsecured, absolute, fixed or contingent.

Annex 1

-20-

“Standby Letter of Credit Fee” has the meaning given to such term in the Section 2.3(a).

“Subordinate Debt” means any other Debt that is subordinated to the Obligations pursuant to a Subordination Agreement in form and substance satisfactory to Bank.

“Subordination Agreement” means any subordination agreement accepted by Bank from time to time in its sole discretion.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, trust or other entity (whether now existing or hereafter organized or acquired) of which such Person or one or more Subsidiaries of such Person at the time owns or controls directly or indirectly more than 50% of the shares of stock or partnership or other ownership interest having general voting power under ordinary circumstances to elect a majority of the board of directors, managers or trustees or otherwise exercising control of such corporation, limited liability company, partnership, trust or other entity (irrespective of whether at the time stock or any other form of ownership of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

“Summary of Credit Terms” means the Summary of Credit Terms at the head of this Agreement.

“Swap” means and includes any transaction now existing or hereafter entered into between any Borrower and a Bank Product Provider which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures, including without limitation the interest rate swap transaction entered into pursuant to the Swap Documents.

“Swap Documents” means and includes the ISDA Master Agreement and Schedule thereto between any Borrower and Bank, and all Confirmations (as such term is defined in such ISDA Master Agreement) between any Borrower and Bank executed in connection with any Swaps.

“Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“Swap Termination Value” means, with respect to any Swap, at any time, after taking into account the effect of any legally enforceable netting or master agreement relating to such Swap and the effect of all Swaps outstanding under such netting or master agreement, (a) for any date on or after the date that such Swaps have been closed out pursuant to an early termination date, the net close-out, settlement or termination value derived thereby, and (b) for any other date, the net close-out, settlement or termination value that would be determined as of such date under the relevant netting or master agreement, if any, as if such Swaps were subject to early termination due to default of any Borrower or its Affiliates.

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

Annex 1

-21-

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Transferee” has the meaning set forth in Section 8.5(e).

“UCC” means the California Uniform Commercial Code, as amended or supplemented from time to time.

“Uniform Customs” means the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, as the same may be amended from time to time.

“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the IRC.

“Withdrawal Liability” means liability with respect to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

“Withholding Agent” means any Loan Party and Bank.

1.2 Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP.

1.3 UCC Terms. Any and all terms used in this Agreement or in any Loan Document which are defined in the UCC shall be construed and defined in accordance with the meaning and definition ascribed to such terms under the UCC, unless otherwise defined herein or in such Loan Document.

1.4 Computation of Time Periods. In this Agreement, with respect to the computation of periods of time from a specified date to a later specified date, the word from means from and including and the words to and until each mean to but excluding. Periods of days referred to in this Agreement shall be counted in calendar days unless otherwise stated.

1.5 Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and to the singular include the plural, references to any gender include any other gender, the part includes the whole, the term including is not limiting, and the term or has, except where otherwise indicated, the inclusive meaning represented by the phrase and/or. References in this Agreement to determination by Bank include good faith estimates by Bank (in the case of quantitative determinations), and good faith beliefs by Bank (in the case of qualitative determinations). The words hereof, herein, hereby, hereunder, and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Article, section, subsection, clause, exhibit and schedule references are to this Agreement, unless otherwise specified. Any reference in this Agreement or any of the Loan Documents to this Agreement or any of the Loan Documents includes any and all permitted alterations, amendments, changes, extensions, modifications, renewals, or supplements thereto or thereof, as applicable.

1.6 Annexes, Exhibits and Schedules. All of the annexes, exhibits and schedules attached hereto shall be deemed incorporated herein by reference.

1.7 No Presumption Against Any Party. Neither this Agreement, any of the Loan Documents, any other document, agreement, or instrument entered into in connection herewith, nor any uncertainty or ambiguity herein or therein shall be construed or resolved using any presumption against any party hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement, the Loan Documents, and the other documents, instruments, and agreements entered into in connection herewith have been reviewed by each of the parties and their counsel and shall be construed and interpreted according to the ordinary meanings of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

1.8 Independence of Provisions. All agreements and covenants hereunder, under the Loan Documents, and the other documents, instruments, and agreements entered into in connection herewith shall be given independent effect such that if a particular action or condition is prohibited by the terms of any such agreement or covenant, the fact that such action or condition would be permitted within the limitations of another agreement or covenant shall not be construed as allowing such action to be taken or condition to exist.

Annex 1

-22-

Annex 2
To
Credit Agreement

Closing Conditions

Bank must receive each of the following prior to December 30, 2020 each in form and substance satisfactory to Bank.

Each of the Loan Documents (other than such Loan Documents to be delivered pursuant to Section 3.3), all duly executed by Borrowers and/or the other Persons party thereto, and acknowledged where required;

A Certificate of the Secretary of each Corporate Loan Party, dated as of the Closing Date, certifying (i) the incumbency and signatures of the Authorized Officers who are executing the Loan Documents on behalf of such Corporate Loan Party; (ii) the Bylaws or Operating Agreement, as applicable, of such Corporate Loan Party and all amendments thereto as being true and correct and in full force and effect; and (iii) the resolutions of the Owners and boards of directors (or similar governing bodies), as applicable of such Corporate Loan Party as being true and correct and in full force and effect, authorizing the execution and delivery of the Loan Documents, and authorizing the transactions contemplated hereunder and thereunder, and authorizing the Authorized Officers to execute the same on behalf of such Corporate Loan Party;

Each Corporate Loan Party's Articles of Incorporation or Certificate of Formation, as applicable, and all amendments thereto, certified by the applicable Secretary of State and dated a recent date prior to the Closing Date;

A certificate of status and good standing for each Corporate Loan Party, dated a recent date prior to the Closing Date, showing that such Corporate Loan Party is in good standing under the laws of the state indicated in Schedule 4.1;

Certificates of foreign qualification and good standing for each Corporate Loan Party, dated a recent date prior to the Closing Date, showing that such Corporate Loan Party is in good standing under the laws of the states indicated in Schedule 4.1;

A certificate signed by the President and Chief Executive Officer of each Corporate Loan Party, dated as of the Closing Date, certifying that (i) both immediately before and immediately after giving effect to the transactions contemplated by the Loan Documents, such Corporate Loan Party is and will be Solvent; (ii) to their Knowledge, the representations and warranties of Corporate Loan Party contained in the Loan Documents are true and correct, and (iii) to their Knowledge after due and diligent inquiry, both immediately before and immediately after giving effect to the transactions contemplated by the Loan Documents and the Purchase Documents, no Event of Default, Default or Material Adverse Effect is continuing or shall occur;

The original certificates evidencing (i) 100% of the issued and outstanding Equity Interests of each Domestic Subsidiary, and (ii) 65% of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2) and 100% of the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) of each Foreign Subsidiary, and (iii) with respect to each of the certificates referenced in clauses (i) and (ii), undated stock powers with respect thereto, duly executed in blank;

True and correct copies of the Mezzanine Loan Agreement and the Mezzanine Loan Documents;

KYC with respect to the Loan Parties and the Owners of the Corporate Loan Parties;

10.

UCC and other public record searches with respect to Corporate Loan Parties;

11.

The Revolving Credit Commitment Fee and all Expenses owing on the Closing Date;

12.

Evidence that no Material Adverse Effect shall have occurred since December 31, 2019;

13.

Copies of insurance binders or insurance certificates evidencing Borrowers' having caused to be obtained insurance in accordance with Section 5.5, including product liability coverage and the endorsements required by such Section; and

14.

Such other documents, instruments and agreements as Bank may reasonably request in connection with the transactions contemplated hereunder or to perfect or protect the Liens granted to Bank.

Annex 2

Annex 3

Credit Agreement

Post-Closing Conditions

Bank must receive each of the following prior to the applicable date indicated below, each in form and substance satisfactory to Bank.

N/A

Exhibit 5.3(c)

Credit Agreement

Form of Compliance Certificate

Schedule 1E

Credit Agreement

Locations of Eligible Inventory

5340 Alla Rd., Suite 105, Los Angeles, CA

1515 Garnet Mine Rd., Garnet Valley, PA

850 E. Stowell Rd., Santa Maria, CA

860 E. Stowell Rd., Santa Maria, CA

2727 Aviation Way, Santa Maria, CA

2121 Alisos Rd., Santa Ynez, CA

1525 E. Janhant Rd., Acampo, CA

8418 S. Lac Jac Ave., Parlier, CA

1160B Hopper Ave., Santa Rosa, CA

35 Industrial Way, Buellton, CA

Schedule 4.1

Credit Agreement

Legal Status

Corporate Loan Party	Type of Entity	Jurisdiction of Organization	Jurisdictions of Foreign Qualification
Winc, Inc.	Corporation	Delaware	California
BWSC	Limited Liability company	California	[N/A]

Schedule 4.1

Schedule 4.7

Credit Agreement

Litigation

TBC

Schedule 4.7

Schedule 4.9(a)

Credit Agreement

Ownership of Parent

Class of Stock	Number of Shares Authorized	Owner	Number of Shares Issued and Outstanding to Owner	% of Total
TBC	TBC	TBC	TBC	TBC

Schedule 4.9(a)

Schedule 4.9(b)

Credit Agreement

Ownership of Subsidiaries

Subsidiary	Jurisdiction of Organization	Number of Shares Authorized (by class)	Owner	Number of Shares Issued and Outstanding to Owner	% of Total
BWSC, LLC	California	TBC	Winc, Inc.	TBC	TBC

Schedule 4.9(b)

Schedule 4.12

Credit Agreement

Employee Benefit Plans

TBC

Schedule 4.12

Schedule 4.17

Credit Agreement

Environmental Disclosures

TBC

Schedule 4.17

Schedule 4.19

Credit Agreement

Labor Matters

TBC

Schedule 4.19

Schedule 4.20

Credit Agreement

Brokers

None

Schedule 4.20

Schedule 4.22

Credit Agreement

Material Contracts

TBC

Schedule 5.12

Exhibit 6.5

STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT (the “Pledge Agreement”) is entered into as of February 1, 2021, by and between Geoffrey McFarlane (“Pledgor”), and Winc, Inc., a Delaware corporation (the “Secured Party”).

RECITALS

WHEREAS, concurrently with the execution and delivery of this Pledge Agreement, Pledgor has executed and delivered a Secured Full Recourse Promissory Note of even date herewith in the principal amount of $498,023.38 (the “Note”) in connection with Pledgor’s purchase of 3,982,233 shares (the “Shares”) of the Secured Party’s common stock, par value $0.0001 per share, pursuant to certain Notice of Stock Option Excise Agreements detailed in Schedule A attached hereto, by and between Pledgor and Secured Party (the “Purchase Agreement”). Capitalized terms used but not defined herein shall have the meanings set forth in the Purchase Agreement.

WHEREAS, the Secured Party and Pledgor desire to secure performance of Pledgor’s obligations and indebtedness under the Note.

AGREEMENT

1. Grant of Security Interest. Pledgor confirms, pledges and grants to the Secured Party a security interest in all of Pledgor’s right, title, and interest in the property described in paragraph 2 below (collectively and severally, the “Collateral”), to secure performance of the Obligations (as defined below).

Collateral. The Collateral consists of the following:

(a) the Shares, together with all new, substituted and additional securities issued at any time during the term hereof with respect to the Shares (collectively and severally, the “Pledged Shares”);

(b) all now existing and hereafter arising rights of the holder of Pledged Shares with respect to all distributions, dividends or monies of any kind or nature payable with respect to the Pledged Shares; and

(c) all Proceeds of the foregoing Collateral. For purposes of this Pledge Agreement, the term “Proceeds” includes whatever is receivable or received when the Collateral is sold, collected, exchanged or otherwise disposed of (including, without limitation, by way of distribution upon dissolution or merger of the Secured Party), whether such disposition is voluntary or involuntary.

3. Obligations. The obligations (“Obligations”) secured by this Pledge Agreement shall consist of any and all obligations and indebtedness of Pledgor under the Note and under this Pledge Agreement.

4. Administration of the Pledged Shares. The following provisions shall govern the administration of the Pledged Shares:

(a) Concurrently with the execution of this Pledge Agreement, Pledgor shall deliver the certificates representing the Pledged Shares, together with one or more duly executed stock assignments separate from certificate, and such items shall be held during the term of this Pledge Agreement by the Secured Party.

(b) Until there shall have occurred a default under the Note, Pledgor shall be entitled to vote or consent with respect to the Pledged Shares in any manner not inconsistent with this Pledge Agreement, or any document or instrument delivered or to be delivered pursuant to or in connection herewith. If there shall have occurred and be continuing a default under the Note and the Secured Party shall have notified Pledgor that the Secured Party desires to exercise its proxy rights with respect to all or a portion of the Pledged Shares, Pledgor grants to the Secured Party an irrevocable proxy for the Pledged Shares pursuant to which proxy the Secured Party shall be entitled to vote or consent, in its discretion, and in such event Pledgor agrees to deliver to the Secured Party such further evidence of the grant of such proxy as Secured Party may request.

(c) In the event that at any time or from time to time after the date hereof, Pledgor, as record and beneficial owner of the Pledged Shares, shall receive or shall become entitled to receive, any dividends or any other distribution whether in securities or property by way of stock- split, spin-off, split-up or reclassification, combination of shares or the like, or in case of any reorganization, consolidation or merger, and Pledgor, as record and beneficial owner of the Pledged Shares, shall thereby be entitled to receive securities or property in respect to such Pledged Shares, then and in each such case, Pledgor shall deliver to the Secured Party and the Secured Party shall be entitled to receive and retain such securities or property as security for the payment and performance of the Obligations.

5. Default and Remedies. In the event Pledgor defaults in the performance of any of the terms of the Note or the Purchase Agreement, the Secured Party shall have all of the remedies of a secured party under any applicable statute, case, ruling, regulation or law; subject, however, to all permits, orders, consents, rules and regulations under applicable securities law.

6. Release of Collateral. So long as Pledgor is not in breach of any material term or provision of this Pledge Agreement or the Note, the Collateral shall be released to Pledgor upon payment of the Note.

7. Binding Upon Successors. All rights of the Secured Party under this Pledge Agreement shall inure to the benefit of the Secured Party and its successors and assigns, and all obligations of Pledgor shall bind his or her successors and assigns.

8. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address set forth opposite below or at such other address(es) as Pledgor or the Secured Party may designate by ten (10) days advance written notice to the other party hereto.

	If to Pledgor:	Geoffrey McFarlane 1409 S Filbert Way Denver, CO 80222

	If to Secured Party:	Winc, Inc. 12405 Venice Blvd. #1 Los Angeles, CA 90066
		Attention: Legal Department

9. Severability. If any of the provisions of this Pledge Agreement shall be held invalid or unenforceable, this Pledge Agreement shall be construed as if not containing those provisions, and the rights and obligations of the parties hereto shall be construed and enforced accordingly.

10. Choice of Law. This Pledge Agreement shall be construed in accordance with and governed by the laws of the State of Delaware.

11. Amendments. This Pledge Agreement may not be amended or modified except by a writing signed by each of the parties hereto.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has duly executed this Stock Pledge Agreement as of the day and year first above written.

SECURED PARTY:	WINC, INC.,
	a Delaware corporation

	By:
		Name:
		Title:

PLEDGOR:
	Geoffrey McFarlane

SCHEDULE A

Grant Date	Award type	Vesting start date	Options granted	Total vested as of 2/1/2021	Strike Price
08/29/2013	ISO	05/01/2013	1,239,064	1,239,064	$0.06
12/12/2013	ISO	05/01/2013	312,500	312,500	$0.06
05/13/2019	ISO/NSO	09/01/2015	250,000	250,000	$0.16
05/13/2019	ISO/NSO	01/01/2018	400,000	308,333	$0.16
05/13/2019	ISO/NSO	04/01/2014	450,211	450,211	$0.16
06/21/2019	ISO/NSO	04/01/2019	3,000,000	1,375,000	$0.16
04/28/2020	ISO/NSO	01/01/2020	174,000	47,125	$0.50

SECURED FULL RECOURSE PROMISSORY NOTE

Principal Amount: $498,023.38

Issuance Date: February 1, 2021

Geoffrey McFarlane (the “Maker”), for value received, hereby promises to pay to the order of Winc, Inc., a Delaware corporation (the “Holder”), or to the Holder’s registered assigns, the principal amount set forth above, together with accrued and unpaid interest, on or before the Maturity Date (as defined in Section 1 below) as provided herein. This Secured Full Recourse Promissory Note (this “Note”) is being tendered by Maker to Holder pursuant to that certain Notice of Stock Option Excise Agreements detailed in Schedule A attached hereto by and between Maker and Holder (the “Purchase Agreement”), and is issued as consideration for the purchase by Maker of 3,982,233 shares (the “Shares”) of Holder’s common stock, par value $0.0001 per share (“Common Stock”), pursuant to the Purchase Agreement.

1. Maturity Date. The principal amount of this Note, together with any accrued and unpaid interest (computed in accordance with Section 3 below), shall be paid in full upon the first to occur of any of the following (the “Maturity Date”): (a) the date of any sale, transfer or other disposition of all or any portion of the Shares (including Holder’s repurchase of such Shares); (b) the five (5)-year anniversary of the date of this Note; or (c) the latest date repayment must be made in order to prevent a violation of Section 13(k) of the Securities Exchange Act of 1934, as amended. On the Maturity Date, the Maker shall pay to the Holder, at the Holder’s principal place of business or at such other place as the Holder may direct, an amount in cash representing any outstanding principal and accrued and unpaid interest, and the Holder shall surrender this Note to Maker upon request and receipt of all payments required under this Note.

2. Form of Payment. All payments made under this Note may, at Maker’s option, be paid by delivery of lawful tender of the United States of America by check or by wire transfer to an account designated by Holder, or surrender and cancellation of all or any portion of the Collateral (as defined below) based on the Fair Market Value (as defined below) thereof. For purposes of this Note, the term “Fair Market Value” shall mean, as of the date of payment: (a) if such payment is made in connection with a sale, transfer or other disposition for value of all or any portion of the Shares pursuant to Section 1(a), the Fair Market Value of the Collateral shall be equal to the express or implied price per Share at which the Collateral was sold, transferred or otherwise disposed (with any such determination of the implied price per Share to be made by the Company’s Board of Directors acting in good faith); (b) if such payment is made while the Company is in the process of registering Company’s initial public offering of its Common Stock, the Fair Market Value of the Collateral shall be deemed to be price per Share that is estimated by the Company’s underwriters to be the middle of the range of price per share at which the shares of the Common Stock are expected to be offered to the public in such public offering; and (c) in all other cases, the Fair Market Value of the Collateral shall be equal to the fair market value per Share as determined by the Company’s Board of Directors acting in good faith.

3. Interest. The unpaid principal balance of this Note shall bear simple interest at a rate equal to 2.25% per annum from the date hereof until paid in full. All interest hereunder shall be calculated based on a 365-day year and paid for the actual number of days elapsed. All accrued and unpaid interest shall be payable in full on the Maturity Date. Notwithstanding the foregoing, the rate of interest payable under this Note from time to time shall in no event exceed the maximum rate, if any, permissible under applicable law.

4. Prepayment. The Maker may prepay, in whole or in part, the outstanding principal and accrued interest under this Note without penalty. Any such payment shall be made by tender to the Holder of funds by check or wire transfer.

5. Security Interest. Payment of this Note is secured by the Shares (the “Collateral”) pursuant to the terms of that certain Stock Pledge Agreement, of even date herewith, by and between the Maker and the Holder (the “Pledge Agreement”). The Maker hereby pledges and grants to Holder a continuing security interest in all of Maker’s right, title, and interest in the Collateral to secure performance of the Maker’s obligations under this Note.

Defaults and Remedies.

(a)

Events of Default. An “Event of Default” shall occur if:

(i) the Maker defaults in the payment of the principal and interest of this Note, when and as the same shall become due and payable and shall not have cured such default within ten business days of the due date;

(ii) the Maker commits a material breach of or default under the Purchase Agreement, the Pledge Agreement, or any other provision of this Note;

(iii) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (a) relief in respect of the Maker, or of a substantial part of Maker’s property or assets, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, or (b) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Maker, or for a substantial part of Maker’s property or assets; and such proceeding or petition shall continue undismissed for sixty (60) days, or an order or decree approving or ordering any of the foregoing shall be entered; or

(iv) the Maker shall (a) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (b) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in paragraph (iii) of this Section 6(a), (c) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Maker, or for a substantial part of Maker’s property or assets, (d) file an answer admitting the material allegations of a petition filed against Maker in any such proceeding, (e) make a general assignment for the benefit of creditors, (f) become unable, admit in writing Maker’s inability or fail generally to pay Maker’s debts as they become due or (g) take any action for the purpose of effecting any of the foregoing.

(b)

Remedies.

(i) Upon the occurrence of any Event of Default hereunder, Holder shall have all the legal and equitable rights and remedies available to it under this Note and applicable law, including, without limitation, full recourse against the Collateral and the right to declare all or part of the principal and accrued and unpaid interest under this Note immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are expressly waived in Section 9 below. THE MAKER ACCEPTS AND AGREES THAT THIS NOTE IS A FULL RECOURSE NOTE AND THAT THE HOLDER MAY EXERCISE ANY AND ALL LEGAL AND/OR EQUITABLE REMEDIES AVAILABLE TO IT UNDER APPLICABLE LAW.

(ii) The remedies of Holder as provided herein, or at law or in equity, shall be cumulative and concurrent, and may be pursued singly, successively, or together at the sole discretion of Holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

7. Release and Termination. Upon payment in full of the outstanding principal balance of the Note and all accrued and unpaid interest thereon, Holder shall promptly execute and deliver to the Maker such documents, instruments, termination statements and releases as shall be requested by the Maker in order to terminate and discharge all of the liens, security interests and encumbrances created by or pursuant to this Note.

8. Loss, Etc., of Note. Upon receipt of evidence satisfactory to the Maker of the loss, theft, destruction or mutilation of this Note, and of indemnity reasonably satisfactory to the Maker if lost, stolen or destroyed, and upon surrender and cancellation of this Note if mutilated, and upon reimbursement of the Maker’s reasonable incidental expenses, the Maker shall execute and deliver to the Holder a new Note of like date, tenor and denomination.

9. Waiver. The Maker hereby waives presentment, demand, notice of nonpayment, protest and all other demands and notices in connection with the delivery, acceptance, performance or enforcement of this Note. If an action is brought for collection under this Note, the Holder shall be entitled to receive all costs of collection, including, but not limited to, its reasonable attorneys’ fees.

10. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address set forth opposite below or at such other address(es) as Maker or Holder may designate by ten (10) days advance written notice to the other party hereto.

If to Maker:	Geoffrey McFarlane 1409 S Filbert Way Denver, CO 80222

If to Holder:	Winc, Inc. 12405 Venice Blvd. #1 Los Angeles, CA 90066
	Attention: Legal Department

11. Transferability. This Note evidenced hereby may not be pledged, sold, assigned or transferred except in compliance with applicable federal and state securities laws. Any pledge, sale, assignment or transfer in violation of the foregoing shall be null and void.

12. Successors and Assigns. Subject to Section 11, all of the covenants, stipulations, promises, and agreements in this Note shall bind and inure to the benefit of the parties’ respective successors and assigns, whether so expressed or not.

13. Amendments. The provisions of this Note may not be waived, altered, amended or repealed, in whole or in part, except with the written consent of the Maker and the Holder.

14. Applicable Law. This Note shall be governed by the laws of the State of Delaware, and the laws of such state (other than conflicts of laws principles) shall govern the construction, validity, enforcement and interpretation hereof, except to the extent federal laws otherwise govern the validity, construction, enforcement and interpretation hereof.

15. Attorneys’ Fees. In the event that any dispute among the parties to this Note should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Note, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

16. Payment of Collection, Enforcement and Other Costs. If (a) this Note is placed in the hands of an attorney or other agent for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Maker or other proceedings affecting Maker’s creditors' rights and involving a claim under this Note, then the Maker shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, financial advisory fees and attorneys’ fees and disbursements.

17. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

[Signature page follows]

IN WITNESS WHEREOF, Maker has caused this Note to be duly executed as of the Issuance Date set forth above.

	MAKER:

	Geoffrey McFarlane

SCHEDULE A

Grant Date	Award type	Vesting start date	Options granted	Total vested as of 2/1/2021	Strike Price
08/29/2013	ISO	05/01/2013	1,239,064	1,239,064	$0.06
12/12/2013	ISO	05/01/2013	312,500	312,500	$0.06
05/13/2019	ISO/NSO	09/01/2015	250,000	250,000	$0.16
05/13/2019	ISO/NSO	01/01/2018	400,000	308,333	$0.16
05/13/2019	ISO/NSO	04/01/2014	450,211	450,211	$0.16
06/21/2019	ISO/NSO	04/01/2019	3,000,000	1,375,000	$0.16
04/28/2020	ISO/NSO	01/01/2020	174,000	47,125	$0.50

Exhibit 6.6

STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT (the “Pledge Agreement”) is entered into as of February 1, 2021, by and between Brian Smith (“Pledgor”), and Winc, Inc., a Delaware corporation (the “Secured Party”).

RECITALS

WHEREAS, concurrently with the execution and delivery of this Pledge Agreement, Pledgor has executed and delivered a Secured Full Recourse Promissory Note of even date herewith in the principal amount of $389,562.50 (the “Note”) in connection with Pledgor’s purchase of 2,334,625 shares (the “Shares”) of the Secured Party’s common stock, par value $0.0001 per share, pursuant to certain Notice of Stock Option Excise Agreements detailed in Schedule A attached hereto, by and between Pledgor and Secured Party (the “Purchase Agreement”). Capitalized terms used but not defined herein shall have the meanings set forth in the Purchase Agreement.

WHEREAS, the Secured Party and Pledgor desire to secure performance of Pledgor’s obligations and indebtedness under the Note.

AGREEMENT

Collateral. The Collateral consists of the following:

4. Administration of the Pledged Shares. The following provisions shall govern the administration of the Pledged Shares:

If to Pledgor:	Brian Smith
	3502 Mt Bonnell Rd. Austin TX 78731

If to Secured Party:	Winc, Inc.
	12405 Venice Blvd. #1 Los Angeles, CA 90066
	Attention: Legal Department

10. Choice of Law. This Pledge Agreement shall be construed in accordance with and governed by the laws of the State of Delaware.

11. Amendments. This Pledge Agreement may not be amended or modified except by a writing signed by each of the parties hereto.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has duly executed this Stock Pledge Agreement as of the day and year first above written.

SECURED PARTY:	WINC, INC.,
	a Delaware corporation

	By:
		Name:
		Title:

PLEDGOR:

	Brian Smith

SCHEDULE A

Grant Date	Award type	Vesting start date	Options granted		Total vested as of 2/1/2021		Strike Price
05/13/2019	ISO/NSO	01/01/2018		600,000		462,500	$	0.16
05/13/2019	ISO/NSO	04/01/2014		200,000		200,000	$	0.16
05/13/2019	ISO/NSO	09/01/2015		250,000		250,000	$	0.16
06/21/2019	ISO/NSO	04/01/2019		3,000,000		1,375,000	$	0.16
04/28/2020	ISO/NSO	01/01/2020		174,000		47,125	$	0.50

SECURED FULL RECOURSE PROMISSORY NOTE

Principal Amount: $389,562.50

Issuance Date: February 1, 2021

Brian Smith (the “Maker”), for value received, hereby promises to pay to the order of Winc, Inc., a Delaware corporation (the “Holder”), or to the Holder’s registered assigns, the principal amount set forth above, together with accrued and unpaid interest, on or before the Maturity Date (as defined in Section 1 below) as provided herein. This Secured Full Recourse Promissory Note (this “Note”) is being tendered by Maker to Holder pursuant to that certain Notice of Stock Option Excise Agreements detailed in Schedule A attached hereto by and between Maker and Holder (the “Purchase Agreement”), and is issued as consideration for the purchase by Maker of 2,334,625 shares (the “Shares”) of Holder’s common stock, par value $0.0001 per share (“Common Stock”), pursuant to the Purchase Agreement.

1. Maturity Date. The principal amount of this Note, together with any accrued and unpaid interest (computed in accordance with Section 2 below), shall be paid in full upon the first to occur of any of the following (the “Maturity Date”): (a) the date of any sale, transfer or other disposition of all or any portion of the Shares (including Holder’s repurchase of such Shares); (b) the five (5)-year anniversary of the date of this Note; or (c) the latest date repayment must be made in order to prevent a violation of Section 13(k) of the Securities Exchange Act of 1934, as amended. On the Maturity Date, the Maker shall pay to the Holder, at the Holder’s principal place of business or at such other place as the Holder may direct, an amount in cash representing any outstanding principal and accrued and unpaid interest, and the Holder shall surrender this Note to Maker upon request and receipt of all payments required under this Note.

Defaults and Remedies.

(a)

Events of Default. An “Event of Default” shall occur if:

(ii) the Maker commits a material breach of or default under the Purchase Agreement, the Pledge Agreement, or any other provision of this Note;

(b)

Remedies.

10. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified;

(b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address set forth opposite below or at such other address(es) as Maker or Holder may designate by ten (10) days advance written notice to the other party hereto.

If to Maker:	Brian Smith
	3502 Mt Bonnell Rd. Austin TX 78731

If to Holder:	Winc, Inc.
	12405 Venice Blvd. #1 Los Angeles, CA 90066
	Attention: Legal Department

13. Amendments. The provisions of this Note may not be waived, altered, amended or repealed, in whole or in part, except with the written consent of the Maker and the Holder.

[Signature page follows]

IN WITNESS WHEREOF, Maker has caused this Note to be duly executed as of the Issuance Date set forth above.

	MAKER:


	Brian Smith

SCHEDULE A

Grant Date	Award type	Vesting start date	Options granted		Total vested as of 2/1/2021		Strike Price
05/13/2019	ISO/NSO	01/01/2018		600,000		462,500	$	0.16
05/13/2019	ISO/NSO	04/01/2014		200,000		200,000	$	0.16
05/13/2019	ISO/NSO	09/01/2015		250,000		250,000	$	0.16
06/21/2019	ISO/NSO	04/01/2019		3,000,000		1,375,000	$	0.16
04/28/2020	ISO/NSO	01/01/2020		174,000		47,125	$	0.50

Exhibit 6.7

STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT (the “Pledge Agreement”) is entered into as of February 1, 2021, by and between Matthew Thelen (“Pledgor”), and Winc, Inc., a Delaware corporation (the “Secured Party”).

RECITALS

WHEREAS, concurrently with the execution and delivery of this Pledge Agreement, Pledgor has executed and delivered a Secured Full Recourse Promissory Note of even date herewith in the principal amount of $155,420.16 (the “Note”) in connection with Pledgor’s purchase of 683,617 shares (the “Shares”) of the Secured Party’s common stock, par value $0.0001 per share, pursuant to certain Notice of Stock Option Excise Agreements detailed in Schedule A attached hereto, by and between Pledgor and Secured Party (the “Purchase Agreement”). Capitalized terms used but not defined herein shall have the meanings set forth in the Purchase Agreement.

WHEREAS, the Secured Party and Pledgor desire to secure performance of Pledgor’s obligations and indebtedness under the Note.

AGREEMENT

2. Collateral. The Collateral consists of the following:

4. Administration of the Pledged Shares. The following provisions shall govern the administration of the Pledged Shares:

	If to Pledgor:	Matthew Thelen
		8011 Bleriot Ave.
		Los Angeles, CA 90045

	If to Secured Party:	Winc, Inc.
		12405 Venice Blvd. #1
		Los Angeles, CA 90066
		Attention: Legal Department

10. Choice of Law. This Pledge Agreement shall be construed in accordance with and governed by the laws of the State of Delaware.

11. Amendments. This Pledge Agreement may not be amended or modified except by a writing signed by each of the parties hereto.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has duly executed this Stock Pledge Agreement as of the day and year first above written.

SECURED PARTY:	WINC, INC.,
	a Delaware corporation

	By:
		Name:
		Title:

PLEDGOR:

Matthew Thelen

SCHEDULE A

Grant Date	Award type	Vesting start date	Options granted		Total vested as of 2/1/2021		Strike Price
05/13/2019	ISO	01/01/2018		125,000		96,354	$	0.16
05/13/2019	ISO	01/01/2017		20,000		20,000	$	0.16
05/13/2019	ISO	03/07/2016		10,000		10,000	$	0.16
05/13/2019	ISO	10/21/2014		102,000		102,000	$	0.16
06/21/2019	ISO	04/01/2019		697,850		319,847	$	0.16
04/28/2020	ISO/NSO	01/01/2020		500,000		135,416	$	0.50

SECURED FULL RECOURSE PROMISSORY NOTE

Principal Amount: $155,420.16

Issuance Date: February 1, 2021

Matthew Thelen (the “Maker”), for value received, hereby promises to pay to the order of Winc, Inc., a Delaware corporation (the “Holder”), or to the Holder’s registered assigns, the principal amount set forth above, together with accrued and unpaid interest, on or before the Maturity Date (as defined in Section 1 below) as provided herein. This Secured Full Recourse Promissory Note (this “Note”) is being tendered by Maker to Holder pursuant to that certain Notice of Stock Option Excise Agreements detailed in Schedule A attached hereto by and between Maker and Holder (the “Purchase Agreement”), and is issued as consideration for the purchase by Maker of 683,617 shares (the “Shares”) of Holder’s common stock, par value $0.0001 per share (“Common Stock”), pursuant to the Purchase Agreement.

6. Defaults and Remedies.

(a)

Events of Default. An “Event of Default” shall occur if:

(ii) the Maker commits a material breach of or default under the Purchase Agreement, the Pledge Agreement, or any other provision of this Note;

(b)

Remedies.

	If to Maker:	Matthew Thelen
		8011 Bleriot Ave.
		Los Angeles, CA 90045

	If to Holder:	Winc, Inc.
		12405 Venice Blvd. #1
		Los Angeles, CA 90066
		Attention: Legal Department

13. Amendments. The provisions of this Note may not be waived, altered, amended or repealed, in whole or in part, except with the written consent of the Maker and the Holder.

[Signature page follows]

IN WITNESS WHEREOF, Maker has caused this Note to be duly executed as of the Issuance Date set forth above.

MAKER:


	Matthew Thelen

SCHEDULE A

Grant Date	Award Type (ISO/NSO)	Vesting Start Date	Options Granted		Total Vested at Issuance Date		Strike Price
5/13/19	ISO	10/21/14		102,000		102,000	$	.16
5/13/19	ISO	3/7/16		10,000		10,000	$	.16
5/13/19	ISO	1/1/17		20,000		20,000	$	.16
5/13/19	ISO	1/1/18		125,000		96,354	$	.16
6/21/19	ISO	4/1/19		697,850		319,847	$	.16
4/28/20	ISO/NSO	1/1/20		500,000		135,416	$	.50

Exhibit 6.8

STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT (the “Pledge Agreement”) is entered into as of April 29, 2021, by and between Carol Brault (“Pledgor”), and Winc, Inc., a Delaware corporation (the “Secured Party”).

RECITALS

WHEREAS, concurrently with the execution and delivery of this Pledge Agreement, Pledgor has executed and delivered a Secured Full Recourse Promissory Note of even date herewith in the principal amount of $54,807.92 (the “Note”) in connection with Pledgor’s purchase of 299,718 shares (the “Shares”) of the Secured Party’s common stock, par value $0.0001 per share, pursuant to certain Notice of Stock Option Excise Agreements detailed in Schedule A attached hereto, by and between Pledgor and Secured Party (the “Purchase Agreement”). Capitalized terms used but not defined herein shall have the meanings set forth in the Purchase Agreement.

WHEREAS, the Secured Party and Pledgor desire to secure performance of Pledgor’s obligations and indebtedness under the Note.

AGREEMENT

1. Grant of Security Interest. Pledgor confirms, pledges and grants to the Secured Party a security interest in all of Pledgor’s right, title, and interest in the property described in paragraph 2 below (collectively and severally, the “Collateral”), to secure performance of the Obligations (as defined below).

2. Collateral. The Collateral consists of the following:

3. Obligations. The obligations (“Obligations”) secured by this Pledge Agreement shall consist of any and all obligations and indebtedness of Pledgor under the Note and under this Pledge Agreement.

4. Administration of the Pledged Shares. The following provisions shall govern the administration of the Pledged Shares:

(c) In the event that at any time or from time to time after the date hereof, Pledgor, as record and beneficial owner of the Pledged Shares, shall receive or shall become entitled to receive, any dividends or any other distribution whether in securities or property by way of stock-split, spin-off, split-up or reclassification, combination of shares or the like, or in case of any reorganization, consolidation or merger, and Pledgor, as record and beneficial owner of the Pledged Shares, shall thereby be entitled to receive securities or property in respect to such Pledged Shares, then and in each such case, Pledgor shall deliver to the Secured Party and the Secured Party shall be entitled to receive and retain such securities or property as security for the payment and performance of the Obligations.

5. Default and Remedies. In the event Pledgor defaults in the performance of any of the terms of the Note or the Purchase Agreement, the Secured Party shall have all of the remedies of a secured party under any applicable statute, case, ruling, regulation or law; subject, however, to all permits, orders, consents, rules and regulations under applicable securities law.

6. Release of Collateral. So long as Pledgor is not in breach of any material term or provision of this Pledge Agreement or the Note, the Collateral shall be released to Pledgor upon payment of the Note.

7. Binding Upon Successors. All rights of the Secured Party under this Pledge Agreement shall inure to the benefit of the Secured Party and its successors and assigns, and all obligations of Pledgor shall bind his or her successors and assigns.

8. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address set forth opposite below or at such other address(es) as Pledgor or the Secured Party may designate by ten (10) days advance written notice to the other party hereto.

If to Pledgor:		Carol Brault
		12510W Fielding Circle, Unit 6
		Playa Vista, CA 90094

If to Secured Party:		Winc, Inc.
		12405 Venice Blvd. #1
		Los Angeles, CA 90066
		Attention: Legal Department

9. Severability. If any of the provisions of this Pledge Agreement shall be held invalid or unenforceable, this Pledge Agreement shall be construed as if not containing those provisions, and the rights and obligations of the parties hereto shall be construed and enforced accordingly.

10. Choice of Law. This Pledge Agreement shall be construed in accordance with and governed by the laws of the State of Delaware.

11. Amendments. This Pledge Agreement may not be amended or modified except by a writing signed by each of the parties hereto.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has duly executed this Stock Pledge Agreement as of the day and year first above written.

SECURED PARTY:

WINC, INC.,

a Delaware corporation

	By:
		Name:
		Title:

PLEDGOR:

Carol Brault

SCHEDULE A

Grant Date	Award type	Vesting start date	Options granted		Total vested as of 4/29/2021		Strike Price
05/13/2019	ISO	02/26/2018		64,500		20,156	$	0.50
06/21/2019	ISO	04/01/2019		197,574		156,412	$	0.16
04/28/20	ISO	01/01/2020		264,300		123,150	$	0.16

SECURED FULL RECOURSE PROMISSORY NOTE

Principal Amount: $54,807.92

Issuance Date: April 29, 2021

Carol Brault (the “Maker”), for value received, hereby promises to pay to the order of Winc, Inc., a Delaware corporation (the “Holder”), or to the Holder’s registered assigns, the principal amount set forth above, together with accrued and unpaid interest, on or before the Maturity Date (as defined in Section 1 below) as provided herein. This Secured Full Recourse Promissory Note (this “Note”) is being tendered by Maker to Holder pursuant to that certain Notice of Stock Option Excise Agreements detailed in Schedule A attached hereto by and between Maker and Holder (the “Purchase Agreement”), and is issued as consideration for the purchase by Maker of 299,718 shares (the “Shares”) of Holder’s common stock, par value $0.0001 per share (“Common Stock”), pursuant to the Purchase Agreement.

B. Maturity Date. The principal amount of this Note, together with any accrued and unpaid interest (computed in accordance with Section 3 below), shall be paid in full upon the first to occur of any of the following (the “Maturity Date”): (a) the date of any sale, transfer or other disposition of all or any portion of the Shares (including Holder’s repurchase of such Shares); (b) the five (5)-year anniversary of the date of this Note; or (c) the latest date repayment must be made in order to prevent a violation of Section 13(k) of the Securities Exchange Act of 1934, as amended. On the Maturity Date, the Maker shall pay to the Holder, at the Holder’s principal place of business or at such other place as the Holder may direct, an amount in cash representing any outstanding principal and accrued and unpaid interest, and the Holder shall surrender this Note to Maker upon request and receipt of all payments required under this Note.

C. Form of Payment. All payments made under this Note may, at Maker’s option, be paid by delivery of lawful tender of the United States of America by check or by wire transfer to an account designated by Holder, or surrender and cancellation of all or any portion of the Collateral (as defined below) based on the Fair Market Value (as defined below) thereof. For purposes of this Note, the term “Fair Market Value” shall mean, as of the date of payment: (a) if such payment is made in connection with a sale, transfer or other disposition for value of all or any portion of the Shares pursuant to Section 1(a), the Fair Market Value of the Collateral shall be equal to the express or implied price per Share at which the Collateral was sold, transferred or otherwise disposed (with any such determination of the implied price per Share to be made by the Company’s Board of Directors acting in good faith); (b) if such payment is made while the Company is in the process of registering Company’s initial public offering of its Common Stock, the Fair Market Value of the Collateral shall be deemed to be price per Share that is estimated by the Company’s underwriters to be the middle of the range of price per share at which the shares of the Common Stock are expected to be offered to the public in such public offering; and (c) in all other cases, the Fair Market Value of the Collateral shall be equal to the fair market value per Share as determined by the Company’s Board of Directors acting in good faith.

D. Interest. The unpaid principal balance of this Note shall bear simple interest at a rate equal to 2.25% per annum from the date hereof until paid in full. All interest hereunder shall be calculated based on a 365-day year and paid for the actual number of days elapsed. All accrued and unpaid interest shall be payable in full on the Maturity Date. Notwithstanding the foregoing, the rate of interest payable under this Note from time to time shall in no event exceed the maximum rate, if any, permissible under applicable law.

E. Prepayment. The Maker may prepay, in whole or in part, the outstanding principal and accrued interest under this Note without penalty. Any such payment shall be made by tender to the Holder of funds by check or wire transfer.

F. Security Interest. Payment of this Note is secured by the Shares (the “Collateral”) pursuant to the terms of that certain Stock Pledge Agreement, of even date herewith, by and between the Maker and the Holder (the “Pledge Agreement”). The Maker hereby pledges and grants to Holder a continuing security interest in all of Maker’s right, title, and interest in the Collateral to secure performance of the Maker’s obligations under this Note.

G. Defaults and Remedies.

1. Events of Default. An “Event of Default” shall occur if:

(a) the Maker defaults in the payment of the principal and interest of this Note, when and as the same shall become due and payable and shall not have cured such default within ten business days of the due date;

(b) the Maker commits a material breach of or default under the Purchase Agreement, the Pledge Agreement, or any other provision of this Note;

(c) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (a) relief in respect of the Maker, or of a substantial part of Maker’s property or assets, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, or (b) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Maker, or for a substantial part of Maker’s property or assets; and such proceeding or petition shall continue undismissed for sixty (60) days, or an order or decree approving or ordering any of the foregoing shall be entered; or

(d) the Maker shall (a) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (b) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in paragraph (iii) of this Section 6(a), (c) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Maker, or for a substantial part of Maker’s property or assets, (d) file an answer admitting the material allegations of a petition filed against Maker in any such proceeding, (e) make a general assignment for the benefit of creditors, (f) become unable, admit in writing Maker’s inability or fail generally to pay Maker’s debts as they become due or (g) take any action for the purpose of effecting any of the foregoing.

2. Remedies.

(a) Upon the occurrence of any Event of Default hereunder, Holder shall have all the legal and equitable rights and remedies available to it under this Note and applicable law, including, without limitation, full recourse against the Collateral and the right to declare all or part of the principal and accrued and unpaid interest under this Note immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are expressly waived in Section 9 below. THE MAKER ACCEPTS AND AGREES THAT THIS NOTE IS A FULL RECOURSE NOTE AND THAT THE HOLDER MAY EXERCISE ANY AND ALL LEGAL AND/OR EQUITABLE REMEDIES AVAILABLE TO IT UNDER APPLICABLE LAW.

(b) The remedies of Holder as provided herein, or at law or in equity, shall be cumulative and concurrent, and may be pursued singly, successively, or together at the sole discretion of Holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

H. Release and Termination. Upon payment in full of the outstanding principal balance of the Note and all accrued and unpaid interest thereon, Holder shall promptly execute and deliver to the Maker such documents, instruments, termination statements and releases as shall be requested by the Maker in order to terminate and discharge all of the liens, security interests and encumbrances created by or pursuant to this Note.

I. Loss, Etc., of Note. Upon receipt of evidence satisfactory to the Maker of the loss, theft, destruction or mutilation of this Note, and of indemnity reasonably satisfactory to the Maker if lost, stolen or destroyed, and upon surrender and cancellation of this Note if mutilated, and upon reimbursement of the Maker’s reasonable incidental expenses, the Maker shall execute and deliver to the Holder a new Note of like date, tenor and denomination.

J. Waiver. The Maker hereby waives presentment, demand, notice of nonpayment, protest and all other demands and notices in connection with the delivery, acceptance, performance or enforcement of this Note. If an action is brought for collection under this Note, the Holder shall be entitled to receive all costs of collection, including, but not limited to, its reasonable attorneys’ fees.

K. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address set forth opposite below or at such other address(es) as Maker or Holder may designate by ten (10) days advance written notice to the other party hereto.

If to Maker:		Carol Brault
		12510 W Fielding Circle, Unit 6
		Playa Vista, CA 90094

If to Holder:		Winc, Inc.
		12405 Venice Blvd. #1
		Los Angeles, CA 90066
		Attention: Legal Department

L. Transferability. This Note evidenced hereby may not be pledged, sold, assigned or transferred except in compliance with applicable federal and state securities laws. Any pledge, sale, assignment or transfer in violation of the foregoing shall be null and void.

M. Successors and Assigns. Subject to Section 11, all of the covenants, stipulations, promises, and agreements in this Note shall bind and inure to the benefit of the parties’ respective successors and assigns, whether so expressed or not.

N. Amendments. The provisions of this Note may not be waived, altered, amended or repealed, in whole or in part, except with the written consent of the Maker and the Holder.

O. Applicable Law. This Note shall be governed by the laws of the State of Delaware, and the laws of such state (other than conflicts of laws principles) shall govern the construction, validity, enforcement and interpretation hereof, except to the extent federal laws otherwise govern the validity, construction, enforcement and interpretation hereof.

P. Attorneys’ Fees. In the event that any dispute among the parties to this Note should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Note, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

Q. Payment of Collection, Enforcement and Other Costs. If (a) this Note is placed in the hands of an attorney or other agent for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Maker or other proceedings affecting Maker’s creditors' rights and involving a claim under this Note, then the Maker shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, financial advisory fees and attorneys’ fees and disbursements.

R. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

[Signature page follows]

IN WITNESS WHEREOF, Maker has caused this Note to be duly executed as of the Issuance Date set forth above.

Maker:

Carol Brault

[Signature page to Secured Full Recourse Promissory Note]

Schedule A

Schedule BGrant Date	Award type	Vesting start date	Options granted		Total vested as of 4/29/2021		Strike Price
05/13/2019	ISO	02/26/2018		64,500		20,156	$	0.50
06/21/2019	ISO	04/01/2019		197,574		156,412	$	0.16
04/28/20	ISO	01/01/2020		264,300		123,150	$	0.16

[Signature page to Secured Full Recourse Promissory Note]

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

Create E-mail Alert Related Categories

SEC Filings

Sign up for StreetInsider Free!

Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!

Form 1-K Winc, Inc. For: Dec 31

You May Also Be Interested In

Create E-mail Alert Related Categories

Sign up for StreetInsider Free!

Free News Feed