December 23, 2011

 

This letter agreement is executed and delivered in connection with that certain
Convertible Note Financing Binding Term Sheet, dated December 23, 2011 (the
“Term Sheet”), by and between NeuMedia, Inc., a Delaware corporation (“Issuer”),
and Adage Capital Management L.P. (“Investor”), pursuant to which, among other
things, Issuer has agreed to provide certain registration and participation
rights in accordance with the terms and conditions set forth herein. Capitalized
terms used but not otherwise defined herein shall have their respective meanings
set forth in the Term Sheet.

 

The undersigned hereby agree as follows:

 

1.Within one hundred twenty (120) calendar days after the date the Note is
converted, Issuer shall use its best efforts to file, or cause to be filed, one
Registration Statement (the “Investor Registration Statement”) on Form S-3, or
if Issuer is not then eligible to use Form S-3 in connection with such
transaction, on Form S-1 (or a similar form that may be promulgated in the
future), covering all of the shares of Common Stock underlying the Note and the
Warrant. After the Investor Registration Statement has been filed, Issuer shall
use its best efforts to cause the Investor Registration Statement to become
effective as soon as possible thereafter. Notwithstanding the foregoing, Issuer
shall be permitted to postpone the filing of any Investor Registration Statement
pursuant to this Section 1 if Issuer furnishes to Investor a certificate signed
by the Chief Executive Officer of Issuer stating that in the good faith judgment
of the Board of Directors, it would be materially detrimental to Issuer or its
stockholders for the Investor Registration Statement to be filed and/or effected
at such time; provided, that Issuer shall use its best efforts to file and make
effective the Investor Registration Statement promptly thereafter.

 

2.For a period of two (2) years following the effectiveness of the Investor
Registration Statement, in the event Issuer proposes to issue any equity
securities, Issuer shall give Investor written notice of its intention,
describing such equity securities, the price of such equity securities, the
number of equity securities to be offered, and the terms and conditions upon
which Issuer proposes to issue the same. Subject to applicable securities laws,
Investor shall have ten (10) calendar days from the giving of such notice, to
participate in such offering, on a pro rata basis in accordance with Investor’s
equity ownership interest in Issuer at such time on a fully-diluted basis
assuming conversion of the Note and the Warrant, upon the terms and conditions
specified in the notice, by giving written notice to Issuer and stating therein
the quantity of equity securities Investor desires to purchase. Notwithstanding
the foregoing, Issuer shall not be required to provide such notice and Investor
shall not have the right to participate with respect to an offering consisting
of the following securities: (a) securities issued or to be issued after the
date hereof to employees, officers or directors of, or consultants or advisors
to, Issuer or any subsidiary approved by the Board of Directors; (b) securities
issued or issuable pursuant to any rights or agreements, options, warrants or
convertible securities outstanding as of the date of this letter agreement; (c)
securities issued for consideration other than cash pursuant to a merger,
consolidation, acquisition, strategic alliance or other business combination
approved by the Board of Directors, (d) securities issued in connection with any
stock split, stock dividend or recapitalization by Issuer; (e) securities issued
pursuant to any equipment loan or leasing arrangement, real property leasing
arrangement, or debt financing from a bank or similar financial or lending
institution approved by the Board of Directors, (f) securities issued in
connection with strategic transactions involving Issuer and other entities,
including, without limitation (i) joint ventures, manufacturing, marketing or
distribution arrangements, or (ii) technology transfer or development
arrangements; provided that (1) the issuance of such securities has been
approved the Board of Directors, and (2) such transaction is not primarily for
equity financing purposes (as determined in the sole, good faith discretion of
the Board of Directors); and (g) securities issued by Issuer pursuant to the
terms of the Term Sheet.

 

 

 

 

3.Each party to this letter agreement agrees to perform any further acts and to
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this letter agreement.    

4.This letter agreement shall be binding on the parties hereto and their
respective successors and assigns. This letter agreement will be governed by and
construed in accordance with the laws of the State of California. Any disputes
arising out of or relating to this letter agreement shall be heard exclusively
in state or federal courts located in California, each party waiving any and all
objections to such venue. This letter agreement and the Term Sheet sets forth
the entire understanding of the parties with respect to the subject matter
hereof. This letter agreement shall not be amended, or any provision hereof
waived, except in a writing signed by each party hereto. This letter agreement
may be executed in any number of original, facsimile or other electronic
counterparts.

 

In Witness Whereof, the parties hereto have executed this letter agreement as of
the date first above written.

 

Issuer:   Investor:       NEUMEDIA, INC.   ADAGE CAPITAL MANAGEMENT L.P.      
By:     By:   Name:     Name:   Title:     Title:  

  

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