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the third anniversary of the vesting commencement date of the Subsequent RSUs. This grant, and thevesting of the Subsequent RSUs, will also be subject to the terms and conditions of the Plan andKeynote’s restricted stock unit agreement, a copy of which you will be required to sign as acondition of receiving the Subsequent RSU grant.Keynote is an employer at-will. Keynote may terminate your employment at anytime and for anyreason whatsoever, with or without Cause (as defined below). However, if Keynote terminates youremployment without Cause prior to a Change of Control (as defined below), Keynote will (i) provideyou with three (3) months notice or (ii) subject to your delivery to Keynote of a signed generalrelease in a form acceptable to Keynote (the “***Release***”), and satisfy all conditions stated in theRelease to make the Release effective, provide you with (a) a lump sum payment equal to three (3)months’ salary on the first customary payroll date on or following the thirty-first (31st) dayfollowing your termination of employment and (b) Keynote-provided benefits for you and youreligible dependents for three (3) months. Similarly, as an employee of Keynote, you may terminateemployment at any time, provided that if such termination is without Good Reason, you will give theCompany at least three (3) months notice.However, if prior to the 3rd Anniversary, you terminate your employment for any reason other thanGood Reason (as defined below), then within fifteen (15) days of such termination date, and at theCompany’s discretion, you agree to pay Keynote the amount received by you in connection with thesettlement of any and all installments of the Initial RSUs (based on the full amount received byyou, reduced by the value of shares utilized by the Company to cover withholding or otherwise paidby you for federal, state and local income tax obligations) (the “***Clawback Amount***”).Notwithstanding the preceding two paragraphs, in the event of a Change of Control of Keynote, andeither (i) your employment is terminated by Keynote (or its successor) without Cause, or (ii) youterminate your own employment for Good Reason, in either case, in connection with or within twelve(12) months following such Change of Control, then subject to your delivery of a Release to theCompany, and satisfy all conditions stated in the Release to make the Release effective, then youwill be entitled to receive the following: **•** Fifty percent (50%) of your then annual base salary, payable in a lump-sum payment onthe first customary payroll date on or following the sixty-first (61st) day following yourtermination of employment;  **•** Fifty percent (50%) of the MBO Bonus you received for the prior fiscal year, payable ina lump-sum payment on the first customary payroll date on or following the sixty-first(61st) day following your termination of employment, provided that if such terminationoccurs during your first year of employment, such amount shall be 50% of the MBO Bonusopportunity set forth in this offer letter; and  **•** 100% acceleration of the Initial RSUs and Subsequent RSUs.If such Change of Control of Keynote is scheduled to occur prior to occurrence of the grant of theSubsequent RSUs, Keynote will cause the Subsequent RSUs to be granted to you prior to theoccurrence of such Change of Control. In addition, if in connection with a Change of Control ofKeynote, the successor Company does not assume, convert, replace or exchange the Initial RSUsand/or Subsequent RSUs for RSUs to acquire stock of the successor Company, then the Initial
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RSUs and Subsequent RSUs will vest in full immediately prior to the closing of such Change ofControl. Finally, if a Change of Control occurs and you terminate your employment for Good Reason,both prior to the 3rd Anniversary, then you will have no obligation to pay the Companythe Clawback Amount.For purposes of this offer letter, “***Cause***” means (a) willfully engaging in gross misconduct that ismaterially and demonstrably injurious to the Company; (b) willful and continued failure tosubstantially perform your duties with the Company (other than incapacity due to physical or mentalillness), provided that such failure continues after the Company’s Board has provided you with awritten demand for substantial performance, setting forth in detail the specific respects in whichit believes you have willfully and not substantially performed your duties thereof and a reasonableopportunity (to be not less than thirty (30) days) to cure the same.For purposes of this offer letter, “***Good Reason***” means a termination of your employment withinsixty (60) days following any one of the following events: (x) a ten percent (10%) or morereduction in your annual base salary that is not part of a general salary reduction plan applicableto all officers of the Company or any successor Company; (y) a change in your position or status toa position that is not at the level of Chief Financial Officer of the Company or any successorCompany; or (z) relocating your principal place of business in excess of fifty (50) miles from thecurrent location of such principal place of business; provided, however, that in each case you musthave given written notice to the Company identifying the specific circumstances you believeconstitute the grounds for your termination for Good Reason and such circumstances constituting thegrounds for your termination for Good Reason have not been corrected within thirty (30) days ofsuch written notice.For purposes of this offer letter, a “***Change of Control***” means (1) a merger or consolidation inwhich the Company is not the surviving corporation (other than a merger or consolidation with awholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or othertransaction in which there is no substantial change in the stockholders of the Company or theirrelative stock holdings), (2) a merger in which the Company is the surviving corporation but afterwhich the stockholders of the Company immediately prior to such merger (other than any stockholderthat merges, or which owns or controls another corporation that merges, with the Company in suchmerger) cease to own their shares or other equity interest in the Company, (3) the sale ofsubstantially all of the assets of the Company, or (4) the acquisition, sale, or transfer of morethan 50% of the outstanding shares of the Company by tender offer or similar transaction.To the extent (i) any payments to which you become entitled under this offer letter in connectionwith your termination of employment with the Company constitute deferred compensation subject toSection 409A of the Code and (ii) you are deemed at the time of such termination of employment tobe a “specified” employee under Section 409A of the Code, then such payment or payments shall notbe made or commence until the earlier of (i) the expiration of the six (6)-month period measuredfrom the date of your “*separation from service*” (as such term is at the time defined in TreasuryRegulations under Section 409A of the Code) with the Company; or (ii) the date of your deathfollowing such separation from service; provided, however, that such deferral shall only beeffected to the extent required to avoid adverse tax treatment to you, including (withoutlimitation) the additional twenty percent (20%) tax for which you would otherwise be liable underSection 409A(a)(1)(B) of the Code in the absence of such deferral.
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Upon the expiration of the applicable deferral period, any payments which would have otherwise beenmade during that period (whether in a single sum or in installments) in the absence of thisparagraph shall be paid to you or your beneficiary in one lump sum.For purposes of this offer letter, with respect to any payment that is subject to (and not exemptfrom) Section 409A of the Code, termination of your employment shall be a “separation from service”within the meaning of Section 409A of the Code, and Section 1.409A-1(h) of the regulationsthereunder.Keynote benefits include life insurance, medical, dental, and vision coverage, a 401(k) plan, andthree (3) weeks minimum combined vacation/sick leave in addition to paid Keynote holidays. You willreceive an additional day of vacation/sick leave upon each anniversary of employment with Keynote(e.g. after three (3) years of service, you will accrue eighteen (18) days of vacation/sick leaveeach year). Some of the benefit plans may require co-payment by you. Keynote may modify yourcompensation and benefits from time to time, as it deems necessary.As a Keynote employee, you will be expected to abide by Keynote rules and regulations. You willspecifically be required to sign an acknowledgement that you have read and understand the Keynoterules of conduct as set forth in the Keynote Employee Handbook that Keynote will distribute to you.You will be expected to sign and comply with an agreement that requires, among other provisions,the non-disclosure of proprietary information and the assignment of patent rights to any inventionmade during your employment at Keynote as well as Keynote’s code of business conduct and ethics.This offer is subject to your submission of an I-9 form and satisfactory documentation respectingyour identification and right to work in the United States no later than three (3) days after youremployment begins. This offer is also contingent upon the successful completion of our employmentscreening and attainment of satisfactory references.We would look forward to your starting work with us July 1, 2010. If you wish to accept employmentat Keynote under the terms set forth above, please sign and date this letter, and return to HumanResources by May 24, 2010. You may also reply to this letter by faxing your signed offer letter tothe Human Resources Department (650) 240-1863 or (650) 403-5512.We look forward to your favorable reply and to a productive and exciting working relationship.Welcome to Keynote!Sincerely,/s/ UMANG GUPTAUmang Gupta