Board Observer Agreement

Company: [Company Name] · Observer/Investor: [Name/Fund] · Date: [Date]

1. Grant of Observer Rights

Company grants [Observer Name], as designated by [Investor Fund Name], the right to attend all meetings of the Board of Directors as a non-voting observer, for so long as [Investor] holds at least [%] of Company's outstanding equity, or until this Agreement is terminated.

2. Notice and Materials

Company will provide Observer with the same notice of meetings and the same board materials (agendas, financial reports, board packets) provided to voting directors, at the same time.

3. No Voting or Fiduciary Rights

Observer has no right to vote on any matter before the Board and has no fiduciary duties to Company or its shareholders in their capacity as Observer.

4. Right to Exclude

The Board may exclude Observer from a specific meeting or portion of a meeting, and withhold specific materials, if the Board reasonably determines that Observer's presence would result in loss of attorney-client privilege, present a conflict of interest (e.g. Observer's fund is evaluating a competing investment), or that the discussion involves matters directly adverse to Investor's interests.

5. Confidentiality

Observer will keep confidential all non-public information learned through attending board meetings or reviewing board materials, consistent with the confidentiality terms of Investor's underlying investment agreement.

6. Termination

This observer right terminates automatically if Investor's ownership falls below the threshold in Section 1, or upon [Company's IPO/acquisition/other specified event].

Company: ______________________ Date: ____________ Observer: ______________________ Date: ____________

*Board observer rights are common for investors who want visibility into a company without taking on the fiduciary duties (and potential liability) of an actual board seat — Section 4's exclusion right is standard and protects the company's ability to have frank, privileged discussions the observer's fund shouldn't necessarily see.*