Document:

EXHIBIT 4.2

 

YUME, INC.

 

 

 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Information and Other Rights
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Annual Financial Statements
    	
1
    
	
 
    	
1.2
    	
Quarterly Financial Statements
    	
2
    
	
 
    	
1.3
    	
Monthly Financial Statements
    	
2
    
	
 
    	
1.4
    	
Information Rights
    	
2
    
	
 
    	
1.5
    	
Confidentiality
    	
3
    
	
 
    	
1.6
    	
Proprietary Information Agreements
    	
3
    
	
 
    	
1.7
    	
Lock-up Agreements
    	
3
    
	
 
    	
1.8
    	
Stock Vesting
    	
3
    
	
 
    	
1.9
    	
Expenses of Attending Board Meetings
    	
4
    
	
 
    	
1.10
    	
D&O Insurance
    	
4
    
	
 
    	
1.11
    	
[Reserved]
    	
4
    
	
 
    	
1.12
    	
Termination of Covenants
    	
4
    
	
 
    	
1.13
    	
Indemnification
    	
4
    
	
 
    	
1.14
    	
Translink Observer Rights
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Registration Rights
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Certain Definitions
    	
5
    
	
 
    	
2.2
    	
Demand Registration
    	
6
    
	
 
    	
2.3
    	
Piggyback Registration
    	
8
    
	
 
    	
2.4
    	
Registration on Form S-3
    	
9
    
	
 
    	
2.5
    	
Expenses of Registration
    	
10
    
	
 
    	
2.6
    	
Registration Procedures
    	
10
    
	
 
    	
2.7
    	
Delay of Registration
    	
12
    
	
 
    	
2.8
    	
Indemnification
    	
12
    
	
 
    	
2.9
    	
Information by Holder
    	
14
    
	
 
    	
2.10
    	
Rule 144 Reporting
    	
14
    
	
 
    	
2.11
    	
Transfer of Registration Rights
    	
15
    
	
 
    	
2.12
    	
Standoff Agreement
    	
15
    
	
 
    	
2.13
    	
Limitation on Subsequent Registration Rights
    	
16
    
	
 
    	
2.14
    	
Termination of Registration Rights
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Preemptive Rights
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
General
    	
16
    
	
 
    	
3.2
    	
Right of First Refusal
    	
17
    
	
 
    	
3.3
    	
Offer After Sale to Third Parties
    	
17
    
	
 
    	
3.4
    	
Exclusion of Certain Potential Purchasers
    	
18
    
	
 
    	
3.5
    	
Expiration of Right of First Refusal
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Miscellaneous
    	
18
    
	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Additional Investors
    	
18
    
	
 
    	
4.2
    	
Waivers and Amendments
    	
18
    
	
 
    	
4.3
    	
Notices
    	
19
    

 

i

 

TABLE OF CONTENTS

(Continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.4
    	
Descriptive Headings
    	
19
    
	
 
    	
4.5
    	
Governing Law
    	
19
    
	
 
    	
4.6
    	
Counterparts
    	
19
    
	
 
    	
4.7
    	
Expenses
    	
19
    
	
 
    	
4.8
    	
Successors and Assigns
    	
19
    
	
 
    	
4.9
    	
Entire Agreement
    	
20
    
	
 
    	
4.10
    	
Separability; Severability
    	
20
    
	
 
    	
4.11
    	
Stock Splits
    	
20
    
	
 
    	
4.12
    	
Aggregation of Stock
    	
20
    
	
 
    	
4.13
    	
Right to Conduct Activities
    	
20
    
	
 
    	
4.14
    	
Waiver of Adjustment of Conversion Price
    	
20
    

 

ii

 

YUME, INC.

 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made as of October 28, 2011, by and among YuMe, Inc., a Delaware corporation (f/k/a Yume Networks, Inc.) (the “Company”) and the undersigned holders of the Company’s Preferred Stock, listed on Exhibit A hereto (each an “Investor”, and collectively, the “Investors”).  This Agreement amends, supersedes and replaces the Company’s Amended and Restated Investors’ Rights Agreement, dated September 15, 2010 (the “Prior Agreement”).

 

Recitals

 

WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of the Company’s Series A-1, Series A-2, Series B, Series C Series D and Series D-1 Preferred Stock (collectively, the “Preferred Stock”) and/or shares of Common Stock issuable upon conversion thereof and possess registration rights, information rights, rights of first offer and other rights pursuant to the Prior Agreement;

 

WHEREAS, the Existing Investors are holders of at least sixty-five percent (65%) of the outstanding Registrable Securities as of immediately before the date hereof (the “Majority Investors”), and desire to amend and restate the Prior Agreement and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Agreement;

 

WHEREAS, the Company and certain of the Investors (the “New Investors”) are entering into that certain Second Series D-1 Preferred Stock Purchase Agreement (the “Second Series D-1  Purchase Agreement”) of even date herewith;

 

WHEREAS, the New Investors desire to obtain certain rights (“Registration Rights”) regarding registration of the Company’s securities under the Securities Act of 1933, as amended (the “Securities Act”), certain preemptive rights regarding the Company’s equity offerings (“Preemptive Rights”), and certain rights to information (“Information Rights”); and

 

WHEREAS, as a condition of the initial closing of the financing provided for in the Second Series D-1 Purchase Agreement, the Company and the Investors desire to enter into this Agreement in the form set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and other consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.             Information and Other Rights.

 

1.1          Annual Financial Statements.  So long as an Investor (and its affiliates) holds at least 1,000,000 shares of the Company’s Preferred Stock (including any shares of Common Stock issued or issuable upon conversion of Preferred Stock) (such an Investor, a “Major Investor”), the Company will provide to such Major Investor as soon as practicable after the end of each fiscal year, and in any event within one hundred twenty (120) days

 

 

thereafter, an audited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of such fiscal year, and audited consolidated statements of income, stockholders’ equity and cash flows of the Company and its subsidiaries, if any, for such year, in accordance with generally accepted accounting principles (“GAAP”) and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and all certified by a nationally recognized public accounting firm.  The Company will further provide each Major Investor holding at least 1,000,000 shares of Series D Preferred (including any shares of Common Stock issued or issuable upon conversion of Series D Preferred) (such a Major Investor, a “Series D Major Investor”) with a copy of the Company’s annual operating plan no less than thirty (30) days prior to the beginning of the fiscal year.

 

1.2          Quarterly Financial Statements.  The Company shall provide each Major Investor as soon as practicable after the end of each quarter, and in any event within forty five (45) days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarter, consolidated statements of income, and a consolidated statement of cash flow of the Company and its subsidiaries for such period and for the current fiscal year to date, and setting forth in each case in comparative form the figures for corresponding periods in the previous fiscal year, and setting forth in comparative form the budgeted figures for such period and for the current fiscal year then reported, prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of footnotes that may be required by GAAP and provided that the foregoing shall not restrict the right of the Company to change its accounting principles consistent with GAAP, if the Board of Directors of the Company (the “Board of Directors”) determines that it is in the best interest of the Company to do so), subject to changes resulting from year-end audit adjustments, all in reasonable detail and signed by the principal financial or accounting officer of the Company.

 

1.3          Monthly Financial Statements.  The Company shall provide each Series D Major Investor as soon as practicable after the end of each month, and in any event within thirty (30) days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such month, consolidated statements of income, and a consolidated statement of cash flow of the Company and its subsidiaries for such period and for the current fiscal year to date, and setting forth in each case in comparative form the figures for corresponding periods in the previous fiscal year, and setting forth in comparative form the budgeted figures for such period and for the current fiscal year then reported, prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of footnotes that may be required by GAAP and provided that the foregoing shall not restrict the right of the Company to change its accounting principles consistent with GAAP, if the Board of Directors determines that it is in the best interest of the Company to do so), subject to changes resulting from year-end audit adjustments, all in reasonable detail and signed by the principal financial or accounting officer of the Company.

 

1.4          Information Rights.  The Company will afford to each Series D Major Investor and to such Series D Major Investor’s accountants and counsel, reasonable access during normal business hours to all of the Company’s respective properties, books and records.  Each Series D Major Investor shall have such other access to management and information as is reasonably necessary for it to comply with applicable laws and regulations and reporting obligations.  The Company shall not be required to disclose details of contracts with or work

 

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performed for specific customers and other business partners where to do so would violate confidentiality obligations to those parties.

 

1.5          Confidentiality.  Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Section 1 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 Section 1.5 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 partner or member of such Investor that is a venture capital fund in the ordinary course of business, but only if such Investor informs such person that such information is confidential and directs such person to maintain the confidentiality of such information; or (iii) as may otherwise be required by law if the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.  Notwithstanding anything herein to the contrary, this Section 1.5 shall not apply to Intel Capital Corporation, whose confidentiality obligations with respect to any confidential information obtained from the Company pursuant to the terms of this Section 1 shall be governed by the terms and conditions of that certain Corporate Non-Disclosure Agreement, as amended and/or supplemented, by and between Intel Corporation and its majority owned worldwide subsidiaries and the Company, dated April 23, 2010.

 

1.6          Proprietary Information Agreements.  The Company agrees to require each employee of the Company to execute a standard At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement and each consultant and advisor of the Company to execute an agreement that provides for confidential treatment of the Company’s proprietary information and the assignment of inventions developed during such individual’s relationship with the Company, as a condition of employment or consulting relationship or continued employment or consulting relationship, as the case may be, unless otherwise approved by the Board of Directors.

 

1.7          Lock-up Agreements.  The Company hereby covenants that each future holder of securities acquired by original issuance from the Company shall be bound by a lock-up agreement similar to the lock-up of the holders of Registrable Securities set forth in Section 2.12 of this agreement.

 

1.8          Stock Vesting.  Unless otherwise approved by the Board of Directors, including a majority of the directors elected solely by the holders of Preferred Stock (the “Preferred Directors”), (i) all stock and options granted to employees, directors, consultants and other service providers shall vest at the rate of (A) 1/4 on the first anniversary of the earlier of the applicable vesting commencement date and the date of grant and (B) 1/48th per month of employment or service, as the case may be, thereafter; (ii) all unvested restricted stock and similar equity grants (to the extent exercised) shall be purchasable by the Company upon the

 

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termination of the services of any employee or consultant at a price per share no greater than cost; (iii) no stock option, restricted stock and similar equity grant issued to officers and consultant shall be transferable (except for transfers for estate planning purposes) until such stock option, restricted stock and similar equity grant is fully vested; (iv) all shares of common stock (including securities convertible into common stock) shall be subject to a 180-day lockup period in connection with the Company’s initial public offering; and (v) the number of shares reserved for issuance under the Company’s 2004 Stock Option Plan or similar plans shall not be increased.  The Company shall retain a right of first refusal on all transfers of common stock until the Company’s initial public offering.

 

1.9          Expenses of Attending Board Meetings.  The parties hereto agree that the reasonable out of pocket expenses (including airfare) incurred by each non-employee member of the Board of Directors in connection with each such director’s attendance of meetings of the Board of Directors, and of any committee thereof, or in representing the Company, shall be paid by the Company in accordance with the Company’s standard travel policy.

 

1.10        D&O Insurance.  To the extent that coverage is available on commercially reasonable terms, as determined by the Board of Directors, the Company shall use its best efforts to maintain directors and officers liability insurance in the minimum amount of $1,000,000.

 

1.11        [Reserved].

 

1.12        Termination of Covenants.  The rights set forth in this Section 1 shall terminate and be of no further force or effect upon the closing of a initial firm commitment underwritten public offering pursuant to an effective registration statement filed under the Securities Act, covering the offer and sale of the Corporation’s Common Stock, provided that the aggregate gross proceeds to the Company (before underwriting commissions and fees) are not less than $35,000,000 or on the date the Company otherwise becomes subject to the reporting requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whichever first occurs.

 

1.13        Indemnification.  Without limiting any other provision of this Agreement or any agreement executed in connection herewith, the Company agrees to defend, indemnify and hold each director and officer (“Indemnified Parties”) harmless from and against any and all out-of-pocket damages, liabilities, losses, taxes, fines, penalties, reasonable costs and expenses (including, without limitation, reasonable, documented fees of a single counsel) arising out of or related to their provision of services to the Company (the “Losses”), as the same are incurred, of any kind or nature whatsoever (including all amounts paid in investigation, defense or settlement of the foregoing to the full extent of the law), provided, however, that the Company will not be liable to the extent that such Losses arise from and are based on conduct by the Indemnified Parties which constitutes fraud, willful misconduct, breach of fiduciary duty or actions taken other than with the good faith belief that such actions were fair as to the Company and its stockholders.  Such indemnification shall be kept in place for so long as any representatives of the Investors serve on the Company’s Board of Directors.

 

1.14        Translink Observer Rights. So long as TransLink Capital Partners II, L.P. (“Translink”) holds at least a majority of the shares of Series D-1 Preferred Stock acquired by it

 

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pursuant to the Second Series D-1 Purchase Agreement, the Company will offer to Translink, an invitation to Translink’s authorized representative to attend all meetings of its Board of Directors in a non-voting observer capacity, and in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors; provided, however, that Translink and such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided, and not to use any such information except solely to monitor its investment in the Company; and, provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if the Company believes that access to such information or attendance at such meeting would (i) upon advice of counsel reasonably be expected to adversely affect the attorney-client privilege between the Company and its counsel, (ii) result in disclosure of trade secrets to such representative, (iii) breach any confidentiality obligation of the Company to a third party or (iv) result in any actual or potential conflict of interest for Translink or its representative.

 

2.             Registration Rights.

 

2.1          Certain Definitions.  As used in this Agreement, the following terms shall have the following respective meanings:

 

(a)           “Commission” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

 

(b)           “Holder” shall mean the Investors holding Registrable Securities or securities convertible or exercisable into Registrable Securities and any person holding such securities to whom the rights under this Section 2 have been transferred in accordance with Section 2.11 hereof.

 

(c)           “Initiating Holders” shall mean any Holder or Holders who in the aggregate hold not less than thirty percent (30%) of the outstanding Registrable Securities.

 

(d)           “Participating Holders” shall mean any Holder or Holders who propose to distribute their securities through a registration pursuant to this Section 2.

 

(e)           “Preferred Stock Purchase Agreement” shall mean the Second Series D-1 Purchase Agreement, the Series D-1 Purchase Agreement dated as of September 15, 2010, the Series D Preferred Stock Purchase Agreement dated as of February 12, 2010, the Series C Preferred Stock Purchase Agreement dated as of June 3, 2009, the Series B Preferred Stock Purchase Agreement dated as of September 28, 2007 and the Series A-1 and Series A-2 Preferred Stock Purchase Agreement dated as of July 7, 2006.

 

(f)            The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

 

(g)           “Registrable Securities” means (i) any shares of Common Stock issued or issuable upon conversion of Preferred Stock issued by the Company pursuant to a Preferred Stock Purchase Agreement or upon exercise of a warrant for Preferred Stock and

 

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(ii) any shares of Common Stock of the Company issued or issuable in respect of the Preferred Stock or other securities issuable pursuant to the conversion of the Preferred Stock or upon any stock split, stock dividend, recapitalization, or similar event, excluding, however, any Registrable Securities (A) which have previously been registered or which have been sold to the public either pursuant to a registration statement or Rule 144, (B) which have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned, (C) held by a Holder (together with its affiliates) if, as reflected on the Company’s list of shareholders, such Holder (together with its affiliates) holds less than 1% of the Company’s outstanding Common Stock (treating all shares of Preferred Stock on an as converted basis) or (D) held by a Holder (together with its affiliates) if the Company has completed an initial underwritten public offering of its securities pursuant to an effective registration statement filed under the Securities Act that results in the conversion of all of the Company’s Preferred Stock into Common Stock and all shares of Common Stock of the Company issuable or issued upon conversion of the securities held by and issuable to such Holder (and its affiliates) may be sold pursuant to Rule 144 during a ninety (90) day period.

 

(h)           “Registration Expenses” shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including the reasonable fees of one special counsel to the selling stockholders (but excluding Selling Expenses).

 

(i)            “Restricted Securities” shall mean the securities of the Company required to bear a legend indicating that transfer is restricted in the absence of registration.

 

(j)            “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

(k)           “Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes, if any, applicable to the securities registered by the Holders.

 

2.2          Demand Registration.

 

(a)           Request for Registration.  In case the Company shall receive from Initiating Holders a written request signed by such Initiating Holders that the Company effect any registration with respect to all or part of the Registrable Securities (such request shall state the number of shares of Registrable Securities to be disposed of) with an expected aggregate offering price to the public of at least $50,000,000, the Company will: (1) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and, (2) as soon as practicable, file and use its best efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky and other state securities laws, and appropriate compliance with the Securities Act) and to permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after receipt of such written notice from the Company is

 

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mailed or delivered; provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.2(a):

 

(i)                                     In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(ii)                                  Prior to the earlier of (x) one hundred eight (180) days after the effective date of the Company’s first registered public offering of its securities or (y) three years after the date of the sale of Series D-1 Preferred Stock under the Second Series D-1 Purchase Agreement;

 

(iii)                               During the period starting with the Company’s delivery of notice to the holders of the Registrable Securities within thirty (30) days of any registration request of its intent to file a registration statement for such initial public offering within ninety (90) days, prior to the Company’s good faith estimate of the date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company subject to Section 2.3 below (other than a registration of securities in a Rule 145 transaction, with respect to an employee benefit plan or with respect to the Company’s first registered public offering of its stock), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

 

(iv)                              After the Company has effected two (2) registrations pursuant to this Section 2.2(a), which registrations have been declared or ordered effective;

 

(v)                                 If the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company’s obligation to use its best efforts to register, qualify or comply under this Section 2.2 shall be deferred for a period not to exceed one hundred twenty (120) days from the date of receipt of written request from the Initiating Holders; provided, however, that the Company shall not exercise such right more than once in any twelve-month period.

 

(b)                                 Underwriting.  If a registration pursuant to this Section 2.2 is for a registered public offering involving an underwriting, the Company shall so advise the Holders as part of the notice given pursuant to Section 2.2(a).  In such event, the right of any Holder to registration pursuant to this Section 2.2 shall be conditioned upon such Holder’s participation in the underwriting arrangements required by this Section 2.2, and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein.

 

The Company shall, together with all Participating Holders, enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by a majority of the Participating Holders and reasonably acceptable to the

 

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Company.  Notwithstanding any other provision of this Section 2.2, if the managing underwriter advises the Company in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders of Registrable Securities and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement or in such other manner as shall be agreed to by the Company and Holders of a majority of the Registrable Securities proposed to be included in such registration; provided, however, that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced unless all other securities, including securities for the Company’s account (i.e., primary shares), are first entirely excluded from the underwriting.  No Registrable Securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration.  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.

 

If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders.  The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration, and such Registrable Securities shall not be transferred in a public distribution prior to ninety (90) days after the effective date of such registration, or such other shorter period of time as the underwriters may require.  If shares are withdrawn from registration, the Company shall offer to all persons retaining the right to include securities in the registration the right to include additional securities in the registration, with such shares being allocated among all such Participating Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Participating Holders at the time of filing the registration statement.

 

2.3                               Piggyback Registration.

 

(a)                                 Notice of Registration.  If at any time or from time to time the Company shall determine to register any of its securities, either for its own account (a “Company Registration”), for the account of a security holder or holders or pursuant to a request made by Initiating Holders pursuant to Section 2.2(a) (a “Demand Registration”), other than a registration relating solely to employee benefit plans, a registration relating solely to a Commission Rule 145 transaction, or a registration pursuant to Section 2.2 hereof, the Company will (i) promptly give to each Holder written notice thereof, and (ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within fifteen (15) days after receipt of such written notice from the Company, by any Holder.

 

(b)                                 Underwriting.  If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 2.3(a).  In such event the right of any Holder to registration pursuant to Section 2.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein.  All Holders proposing to distribute their securities

 

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through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company.  Notwithstanding any other provision of this Section 2.3, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities and other securities to be distributed through such underwriting; provided, however, that, in no event shall any Registrable Securities be so limited unless all other securities of the Company (other than shares held by the Initiating Holders, in the case of a Demand Registration, and other than shares for the Company’s account (i.e., primary shares), in the case of a Company Registration) are excluded in full from such offering; provided, further, that in no event shall the number of Registrable Securities included in such registration be reduced to less than twenty-five percent (25%) of the total number of securities to be included in such registration except in connection with the Company’s initial public offering, in which case all Registrable Securities may be excluded in full.  The Company shall so advise all Holders distributing their securities through such underwriting of such limitation (or exclusion, if applicable) and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated (if applicable) among all such Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement.  To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or holder to the nearest one hundred (100) shares.

 

If any Participating Holder disapproves of the terms of any such underwriting, such Participating Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter.  Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to ninety (90) days after the effective date of the registration statement relating thereto, or such other shorter period of time as the underwriters may require.  If shares are withdrawn from registration, the Company shall offer to all persons retaining the right to include securities in the registration the right to include additional securities in the registration, with such shares being allocated among all such Participating Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Participating Holders at the time of filing the registration statement.

 

(c)                                  Right to Terminate Registration.  The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.  The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.5 hereof.

 

2.4                               Registration on Form S-3.

 

(a)                                 Request for Registration.  Following the Company’s initial public offering, the Company shall use its commercially reasonable efforts to become eligible to register offerings of securities on Commission Form S-3 or its successor form (the “Form S-3”).  After the Company has qualified for the use of Form S-3, initiating Holders shall have the right to request registration on Form S-3 (which request shall be in writing and shall be delivered after

 

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the date that is 60 days before the Company qualifies to use Form S-3 and shall state the number of shares of Registrable Securities to be registered and the intended method of disposition of shares by such Initiating Holders).  The Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.4(a):

 

(i)                                     unless the Initiating Holders requesting registration propose to dispose of Registrable Securities having an anticipated aggregate price to the public (before deduction of underwriting discounts and expenses of sale) of at least $5,000,000;

 

(ii)                                  during the period starting with the date sixty (60) days prior to the Company’s estimated date of filing of, and ending on the date six months immediately following the effective date of, any registration statement pertaining to securities of the Company subject to Section 2.3 (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

 

(iii)                               more than twice in any twelve-month period; or

 

(iv)                              if the Company shall furnish to such Initiating Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be detrimental to the Company or its shareholders for registration statements to be filed in the near future, then the Company’s obligation to use its commercially reasonable efforts to file a registration statement shall be deferred for a period not to exceed one hundred twenty (120) days from the receipt of the request to file such registration by such Initiating Holder or Initiating Holders; provided, however, that the Company shall not exercise such right more than once in any twelve-month period.

 

2.5                               Expenses of Registration.  All Registration Expenses incurred in connection with registrations pursuant to Sections 2.2, 2.3 and 2.4 shall be borne by the Company (including the expense of one special counsel of the Participating Holders not to exceed $50,000).  All Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the holders of securities included in such registration pro rata with the Company and among each other on the basis of the number of shares so registered.

 

2.6                               Registration Procedures.  In the case of each registration, qualification or compliance effected by the Company pursuant to this Section 2, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof.  At its expense the Company will:

 

(a)                                 Prepare and file with the Commission a registration statement with respect to such securities and use its commercially reasonable efforts to cause such registration statement to become and remain effective until the distribution described in the Registration Statement has been completed (up to a maximum of one hundred twenty (120) days); provided, however, that in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that if Rule 415, or any successor rule under the Securities Act, permits an

 

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offering on a continuous or delayed basis, and provided  further that if applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (i) includes any prospectus required by Section 10(a)(3) of the Securities Act or (ii) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (i) and (ii) above shall be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement;

 

(b)                                 Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

 

(c)                                  Furnish to the Participating Holders and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as they may reasonably request in order to facilitate the public offering of such 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 Participating Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, 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 managing underwriter of such offering.  Each Participating Holder shall also enter into and perform its obligations under such an agreement.

 

(f)                                   Notify each Participating Holder at any time when a prospectus relating thereto is required to be delivered under the Securities Act or upon the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

 

(g)                                  Cause all securities covered by such registration statement to be listed on a national exchange or trading system and on each securities exchange or authorized for quotation on each automated quotation system on which similar securities issued by the Company are then listed or authorized for quotation.

 

(h)                                 Provide a transfer agent and registrar for all Registrable Securities covered by such registration statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

 

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(i)                                     Furnish, at the request of any Participating Holder, on the date that the securities are delivered to the underwriters for sale in connection with a registration being sold through underwriters, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Participating Holders and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.

 

2.7                               Delay of Registration.  No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration 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 each Participating Holder, each of its officers, directors, partners and legal counsel, and each person controlling such Participating Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Section 2, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions, proceedings, or settlements in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance; (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; or, (iii) any violation by the Company of the Securities Act or any rule or regulation promulgated under the Securities Act applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Participating Holder, each of its officers, directors, partners, and legal counsel and each person controlling such Participating Holder, each such underwriter and each person who controls any such underwriter any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability, or action arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder, any of such Holder’s officers, directors, partners, legal counsel or accountants, any person controlling such Holder, such underwriter or any person who controls any such underwriter and stated to be specifically for use therein; and provided, further that, the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).

 

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(b)                                 To the extent permitted by law, each Participating Holder will, if Registrable Securities held by such Participating Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, officers, and legal counsel, each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other Participating Holder, each of its officers, directors, partners and legal counsel and each person controlling such Participating Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will pay the Company, such other Participating Holders, such directors, officers, persons, underwriters or control persons any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages, or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided that in no event shall any indemnity under this Section 2.8 exceed an amount equal to the proceeds, net of underwriting discounts and commissions, to each such Holder of Registrable Securities sold as contemplated herein, except in the case of fraud or willful misconduct by such Holder.

 

(c)                                  Each party entitled to indemnification under this Section 2.8 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense; and provided  further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2.8, to the extent such failure is not prejudicial.  No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.  Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.

 

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(d)                                 If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations.  The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.  No person or entity will be required under this Section 2.8(d) to contribute any amount in excess of the net proceeds from the offering received by such person or entity, except in the case of fraud or willful misconduct by such person or entity.  No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

 

(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.

 

2.9                               Information by Holder.  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 Participating Holder that such Participating 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 shall be required to effect the registration of such Holder’s Registrable Securities.

 

2.10                        Rule 144 Reporting.  With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to:

 

(a)                                 Make and keep public information available, as those terms are defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act;

 

(b)                                 File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements);

 

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(c)                                  So long as an Investor owns any Restricted Securities, furnish upon request, (i) a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company and (iii) such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as an Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing an Investor to sell any such securities without registration.

 

2.11                        Transfer of Registration Rights.  The rights to cause the Company to register securities granted Holders under Sections 2.2, 2.3 and 2.4 may be assigned (i) to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by a Holder of not less than 50,000 shares (or any lesser amount if all of such Holder’s Registrable Securities are transferred or assigned to a transferee) of Registrable Securities, or (ii) to any transferee or assignee who is a constituent partner or affiliate or former partner or affiliate of a Holder or the estate of such constituent partner or affiliate, or (iii) to any transferee or assignee who is a family member of the Holder or a trust for the benefit of the Holder or any family member of the Holder, provided that, with respect to each such transfer or assignment, the Company be given prior written notice of the transfer, the transferee or assignee agrees in writing to be bound to all provisions contained in this Section 2 as if such transferee were a Holder hereunder and that such transfer otherwise be effected in accordance with applicable securities laws.

 

2.12                        Standoff Agreement.  Each Holder agrees in connection with the Company’s initial public offering of the Company’s securities, upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities however or whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed an initial period of 180 days, along with any extensions required by the rules of the Financial Industry Regulatory Authority) from the effective date of such registration as may be requested by the underwriters (the “Standoff Period”), provided that each officer, director and 1% stockholder of the Company shall agree to execute a similar document.  Any discretionary releases from such Standoff Period shall be allocated among the Holders on a pro-rata basis. To enforce the covenants set forth in this Section 2.12, and until the expiration of Standoff Period, each certificate held by a Holder representing Registrable Securities shall bear the following legend:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “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 ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY

 

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REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE 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 INVESTOR RIGHTS AGREEMENT, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.”

 

2.13                        Limitation on Subsequent Registration Rights.  After the date of this Agreement, the Company shall not, without the prior written consent of the record or beneficial holders of at least 65% of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights senior to or on par with those granted to the Holders hereunder.

 

2.14                        Termination of Registration Rights.  The rights granted under this Section 2 shall terminate on the fifth year anniversary of the consummation of the initial underwritten public offering of the Company’s securities pursuant to an effective registration statement filed under the Securities Act that results in the conversion of all of the Company’s Preferred Stock into Common Stock.

 

3.                                      Preemptive Rights.

 

3.1                               General.  Except for (i) shares of Common Stock issued upon conversion of the Preferred Stock, (ii) securities issued pursuant to a public offering pursuant to an effective registration statement under the Securities Act that results in the conversion of all of the then-outstanding Preferred Stock into Common Stock, (iii) securities issued pursuant to the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets, or other reorganization, or to a joint venture agreement, as approved by the Board of Directors (including a majority of the Preferred Directors then in office), (iv) securities issued in connection with any stock split or stock dividend of the Company, recapitalizations or the like, (v) securities issued to employees, officers, or directors of, or consultants to the Company pursuant to stock grants, option plans, purchase plans or other employee stock incentive programs or arrangements that are approved by the Company’s Board of Directors (including a majority of the Preferred Directors then in office), or upon exercise of options or warrants granted to such parties pursuant to any such plan or arrangement, (vi) shares of Common Stock (or options and warrants with respect thereto) issued or issuable to banks, equipment lessors or other financial institutions pursuant to a debt financing or commercial leasing transaction approved by the Board of Directors (including a majority of the Preferred Directors then in office), (vii) securities issued pursuant to options, warrants, notes or other rights to acquire securities of the Company outstanding as of the date of this Agreement (viii) Common Stock (or options and warrants with respect thereto) issued or deemed issued to customers, vendors, strategic partners or similar third parties in transactions approved by the Board of Directors (including a majority of the Preferred Directors then in office), and (ix) shares of Common Stock issued in connection with the Ramankutty Issuance (as defined below), the Company will not,

 

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nor will it permit any subsidiary to, authorize or issue any shares of stock of the Company of any class and will not authorize, issue or grant any options, warrants, conversion rights or other rights to purchase or acquire any shares of stock of the Company of any class without offering the Major Investors the right of first refusal described below; provided, however, that the Major Investors agree to waive such right of first refusal in connection with the Company’s sale and issuance of up to 13,701,758 shares of Series D-1 Preferred Stock pursuant to a Second Series D-1 Preferred Stock Purchase Agreement of even date herewith.

 

3.2                               Right of First Refusal.  Each Major Investor shall have a right of first refusal to purchase an amount of securities of the Company of any class or kind which the Company proposes to sell (other than the issuance of shares contemplated by Section 3.1 above) (“Preemptive Securities”) sufficient to maintain such Major Investor’s proportionate beneficial ownership interest in the Company (as defined below).  If the Company wishes to make any such sale of Preemptive Securities, it shall give the Major Investors written notice of the proposed sale.  The notice shall set forth (i) the Company’s bona fide intention to offer Preemptive Securities and (ii) the material terms and conditions of the proposed sale (including the number of shares to be offered and the price, if any, for which the Company proposes to offer such shares), and shall constitute an offer to sell Preemptive Securities to the Investors on such terms and conditions.  Any Major Investor may accept such offer by delivering a written notice of acceptance (an “Acceptance Notice”) to the Company within fifteen (15) days after receipt of the Company’s notice of the proposed sale.  Any Major Investor exercising its right of first refusal shall be entitled to participate in the purchase of Preemptive Securities on a pro rata basis to the extent necessary to maintain such Major Investor’s proportionate beneficial ownership interest in the Company (such Major Investor’s “Pro Rata Portion”).  For purposes hereof, a Major Investor’s Pro Rata Portion shall be determined by multiplying the number of Preemptive Securities by a fraction, (X) the numerator of which shall be the number of shares of Common Stock issued or issuable upon conversion or exercise of all of the convertible or exercisable securities of the Company held by such Major Investor (the “FD-MI Shares”) and (Y) the denominator of which shall be the number of shares of Common Stock outstanding (including all shares of Common Stock issued or issuable upon conversion or exercise of all of the convertible or exercisable securities of the Company outstanding).  The Company shall, in writing, inform each Investor which elects to purchase its Pro Rata Portion of Preemptive Securities of any other Major Investor’s failure to do so (the “Unclaimed Shares”), in which case the Investors previously electing to purchase shares of Preemptive Securities (“PS Investors”) shall have the right to purchase a portion of such Unclaimed Shares on a pro rata basis based on the ratio of the number of FD-MI Shares that a PS Investor holds to the aggregate number of FD-MI Shares held by all PS Investors.  If the Company does not enter into an agreement for the sale of such shares within the 60-day period following the deadline for delivery of the Acceptance Notice, the right provided hereunder shall be deemed to be revived and all future shares of Preemptive Securities shall not be offered unless first reoffered to the Major Investors in accordance with this Section 3.  A Major Investor shall, subject to securities laws, be entitled to apportion the right of first refusal hereby granted among itself and its partners and affiliates in such proportions it deems appropriate.

 

3.3                               Offer After Sale to Third Parties.  In lieu of delivering to the Major Investors written notice of a proposed sale of Preemptive Securities pursuant to Section 3.2, the Company may elect first to sell Preemptive Securities to third parties and then to offer to Major

 

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Investors the opportunity to purchase their Pro Rata Portions of the Preemptive Securities.  (The Pro Rata Portions shall be calculated giving effect to all sales of the Preemptive Securities, including sales to the Major Investors.)  Such offer shall remain in effect for fifteen (15) days after notice to the Investors, and if accepted, the closing of the sale of Preemptive Securities shall occur within ten days after the date of the Acceptance Notice.

 

3.4                               Exclusion of Certain Potential Purchasers.  The right of first refusal granted under this Agreement shall not be applicable with respect to any Major Investor, or partner or affiliate thereof, for an issuance of Preemptive Securities, if (i) at the time of such Preemptive Securities issuance, such Major Investor, or partner or affiliate thereof, is not an accredited investor, and (ii) such Preemptive Securities issuance is otherwise being offered only to accredited investors.

 

3.5                               Expiration of Right of First Refusal.  The right of first refusal granted under this Agreement shall expire when a sale of securities pursuant to a registration statement filed by the Company under the Securities Act in connection with a firm commitment underwritten public offering of its securities that results in the conversion of all of the Company’s Preferred Stock into Common Stock is consummated.

 

4.                                      Miscellaneous.

 

4.1                               Additional Investors.  Additional Investors will be added to this Agreement upon their purchase of Series D-1 Preferred; such Investors may become party to this Agreement, upon execution and delivery to the Company of signature pages hereto.

 

4.2                               Waivers and Amendments.  With the written consent of the record or beneficial holders of at least 65% of the Registrable Securities, the rights of the Company and obligations of the Company and the holders of Registrable Securities under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), and with the same consent, the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary or new agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement; provided, however, that, subject to Section 2.13, no such consent shall be required for the purpose of adding to this Agreement an Investor pursuant to Section 4.1, a financial institution or venture lender which has loaned funds to the Company, or an equipment or real property lessor; provided  further, however, that no amendment of this Agreement shall materially and adversely affect the rights of a party in a manner that, by its express terms, discriminates against such party vis-à-vis other parties in the same class without such party’s written consent.  Upon the effectuation of each such waiver, consent, agreement of amendment or modification, the Company shall promptly give written notice thereof to the record holders of the Registrable Securities who have not previously consented thereto in writing.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities, each future holder of all such Registrable Securities, and the Company.  The Prior Agreement is hereby amended and superseded in its entirety and restated herein.  Such amendment and restatement is effective upon execution and delivery of this Agreement by the parties required pursuant to Section 4.2 of the Prior Agreement.  Upon such execution, all provisions of, rights granted and covenants made in 

 

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the Prior Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect.

 

4.3                               Notices.  All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, e-mailed, mailed, or delivered to each party as follows: (i) if to a Holder, at such Holder’s address, facsimile number or e-mail address set forth in the Company’s records, or at such other address, facsimile number or e-mail address as such Holder shall have furnished the Company in writing, or (ii) if to the Company, at 1204 Middlefield Road, Redwood City, CA 94063, Attn: President, or at such other address or facsimile number as the Company shall have furnished to the Voting Parties in writing, with a copy (which copy shall not constitute notice) to Cynthia C. Hess, Fenwick & West LLP, 801 California Street, Mountain View, CA 94041.  All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by facsimile (with receipt of appropriate confirmation) or e-mail, (iv) one business day after being deposited with an overnight courier service of recognized standing, (v) four days after being deposited in the U.S. mail, first class with postage prepaid, (vi) upon sending when sent by e-mail, or (vii) upon receipt of confirmation of delivery when sent by facsimile.  With respect to any notice given by the Company under any provision of the California General Corporation Law, if applicable, or the Company’s charter or bylaws, each Investor agrees that such notice may be given by facsimile or by electronic mail.  In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.

 

4.4                               Descriptive Headings.  The descriptive headings herein have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provisions hereof.

 

4.5                               Governing Law.  This Agreement shall be governed by and interpreted under the laws of California as applied to agreements among California residents, made and to be performed entirely within the State of California.

 

4.6                               Counterparts.  This Agreement may be executed in one or more counterparts, including those transmitted via facsimile or electronic mail, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument, but only one of which need be produced.

 

4.7                               Expenses.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, 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.

 

4.8                               Successors and Assigns.  Except as otherwise expressly provided in this Agreement, this Agreement shall benefit and bind the successors, assigns, heirs, executors and administrators of the parties to this Agreement.

 

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4.9                               Entire Agreement.  This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter of this Agreement.

 

4.10                        Separability; Severability.  Unless expressly provided in this Agreement, the rights of each Investor under this Agreement are several rights, not rights jointly held with any other Investors.  Any invalidity, illegality or limitation on the enforceability of this Agreement with respect to any Investor shall not affect the validity, legality or enforceability of this Agreement with respect to the other Investors.  If any provision of this Agreement is judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired.

 

4.11                        Stock Splits.  All references to numbers of shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization of shares by the Company occurring after the date of this Agreement.

 

4.12                        Aggregation of Stock.  All shares of Preferred 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.

 

4.13                        Right to Conduct Activities.  The Company and each Investor hereby acknowledge that some or all of the Investors are professional investment funds, and as such invest in numerous portfolio companies, some of which may be competitive with the Company’s business.  No Investor shall be liable to the Company or to any other Investor for any claim arising out of, or based upon, (i) the investment by Investor in any entity competitive to the Company, or (ii) actions taken by any partner, officer, or other representative of any Investor to assist any such competitive company, whether or not such action was taken as a board member of such competitive company, or otherwise, and whether or not such action has a detrimental effect on the Company; provided however that the foregoing does not diminish or modify the confidentiality obligations of the Investors hereunder.

 

4.14                        Waiver of Adjustment of Conversion Price.  Pursuant to Article V, Section 5(i) (Waiver of Adjustment of Conversion Price) of the Restated Certificate of Incorporation of the Company, as amended (the “Restated Certificate”), the Investors hereunder, constituting the holders of a majority of the outstanding shares of each series of the Company’s Preferred Stock, hereby waive on their own behalf and on behalf of all holders of each series of the Company’s Preferred Stock, any downward adjustment of the Conversion Price (as defined in the Restated Certificate) of any series of Preferred Stock (including but not limited to any downward adjustment of the Conversion Price of the Series D-1 Preferred Stock pursuant to Section 7.9 of the Series D-1 Preferred Stock Purchase Agreement between the Company and the parties named therein dated September 15, 2010), upon the issuance of 375,000 shares of Company’s Common Stock to Jayan Ramankutty and/or his affiliated trust (the “Ramankutty Issuance”) in connection with the settlement of the arbitration proceeding between Company and Mr. Ramankutty, provided however, that the foregoing waiver shall not apply with respect to the adjustment to the Conversion Price of the Series D Preferred Stock (as defined in the Restated Certificate) as a result of the Ramankutty Issuance pursuant to Section 7.9 of the Series 

 

20

 

D Preferred Stock Purchase Agreement between the Company and the parties named therein dated February 12, 2010.

 

(The remainder of this page is left intentionally blank)

 

21

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

	
 
    	
THE   COMPANY:
    
	
 
    	
 
    
	
 
    	
YUME,   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jayant Kadambi
    
	
 
    	
 
    	
Jayant   Kadambi
    
	
 
    	
 
    	
Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Company   Address:
    
	
 
    	
1204   Middlefield Road
    
	
 
    	
Redwood   City, CA 94063
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TRANSLINK CAPITAL PARTNERS II, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jay H. Eum
    
	
 
    	
Name: Jay H. Eum
    
	
 
    	
Title: Managing Director
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SVIC   NO. 6 NEW TECHNOLOGY BUSINESS INVESTMENT L.L.P.
    
	
 
    	
 
    
	
 
    	
By:   Samsung Venture Investment Corporation, 
    
	
 
    	
its   partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Myung Ku Kang
    
	
 
    	
Name:   Myung Ku Kang
    
	
 
    	
Title:   Chief Finance Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SVIC   NO. 18 NEW TECHNOLOGY BUSINESS INVESTMENT L.L.P.
    
	
 
    	
 
    
	
 
    	
By:   Samsung Venture Investment Corporation,
    
	
 
    	
its   partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Myung Ku Kang
    
	
 
    	
Name:   Myung Ku Kang
    
	
 
    	
Title:   Chief Finance Officer
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INTEL   CAPITAL CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jose M. Blanc
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Jose   M. Blanc
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MENLO   VENTURES X, L.P.
    
	
 
    	
MENLO   ENTREPRENEURS FUND X, L.P.
    
	
 
    	
MMEF   X, L.P.
    
	
 
    	
By:
    	
MV   MANAGEMENT X, L.L.C.
    
	
 
    	
 
    	
Their   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Shawn Carolan
    
	
 
    	
 
    	
Managing   Member
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DAG   Ventures III-QP, L.P.
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
Young   Chung, Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DAG   Ventures III, L.P.
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
Young   Chung, Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DAG   Ventures GP Fund III, LLC
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   Managing Member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
Young   Chung, Managing Director
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ACCEL   IX L.P.
    
	
 
    	
By:   Accel IX Associates L.L.C.
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Richard Zamboldi
    
	
 
    	
 
    	
Attorney   in Fact
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ACCEL   IX STRATEGIC PARTNERS L.P.
    
	
 
    	
By:   Accel IX Associates L.L.C.
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Richard Zamboldi
    
	
 
    	
 
    	
Attorney   in Fact
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ACCEL   INVESTORS 2006 L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Richard Zamboldi
    
	
 
    	
 
    	
Attorney   in Fact
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES II, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates II, LLC, a Delaware limited liability company and   general partner of Khosla Ventures II, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Member
    
	
 
    	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES III, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates III, LLC, a Delaware limited liability company and   general partner of Khosla Ventures III, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Member
    
	
 
    	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES SEED, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates Seed, LLC, a Delaware limited liability company   and general partner of Khosla Ventures Seed, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Member
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

	
 
    	
“INVESTORS”
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KHOSLA VENTURES SEED SIDE FUND, LP
    
	
 
    	
 
    	
By:   Khosla Ventures Seed Side Fund Associates, LLC, a Delaware limited liability   company and general partner of Khosla Ventures Seed Side Fund, LP
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
Member
    
					

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
WestSummit   Global Technology Fund, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond Yang
    
	
 
    	
Name:
    	
Raymond   Yang
    
	
 
    	
Title:
    	
Founding   Partner & Managing Director
    
				

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Glynn   Partners II, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
Glynn   Management II, LLC, its General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   John W. Glynn
    
	
 
    	
 
    	
Managing   Director
    
				

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement on the date first set forth above.

 

 

	
 
    	
“INVESTORS”
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TRANSLINK CAPITAL PARTNERS II, AFFILIATES FUND, L.P.,
    
	
 
    	
a Cayman Islands exempted limited partnership
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jay Eum
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Jay   Eum
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
228   Hamilton Avenue, Suite 210
    
	
 
    	
Palo   Alto, CA 94301
    
	
 
    	
 
    
	
 
    	
Phone:   (650) 330-7353
    
	
 
    	
Fax:   (650) 330-7351
    

 

[Signature Page to YuMe, Inc. Amended and Restated Investors’ Rights Agreement]

 

 

EXHIBIT A

 

SCHEDULE OF INVESTORS

 

Series A Investors

 

Accel Investors 2006 L.L.C.

 

Accel IX L.P.

 

Accel IX Strategic Partners L.P.

 

Vijaya K. Ananda

 

Deepak Bhagat

 

BV Capital Fund II, L.P.

 

BV Capital Fund II-A, L.P.

 

BV Capital GmbH & Co. Beteiligungs KG No. 1

 

DAG Ventures GP Fund III LLC

 

DAG Ventures III – QP, L.P.

 

DAG Ventures III, L.P.

 

Yogesh Dandekar

 

Ram Duraiswamy

 

Ray H. Engstrom

 

Kali S. Eswaran

 

Kamal Gunsagar

 

Jayant Kadambi

 

Khosla Ventures II, LP

 

Khosla Ventures III, LP

 

Alexander Kinnier

 

Kubera

 

Madhavan Living Trust

 

 

Series A Investors – con’t.

 

Mike Maples

 

Michael Danaher and Carol Danaher, TTEES of the Danaher Family Trust, dtd 6/29/04

 

Mugdha Patil and Shirish Gadre

 

Nina G. Kulick, as Custodian for Maya G. Kulick under CUTMA Until Age 25

 

Jim Pitkow

 

Raghuveer and Rashida Mendu

 

Thiru N. Rajagopal

 

Ramankutty Investment Trust

 

Ramankatty Living Trust

 

Rao Trust

 

Ronald Conway IRA Charles Schwab & Co., Inc. Custodian

 

Amit I. Saheba

 

Ashit I. Saheba

 

Samir Kaul, Trustee of the Kaul Family Trust Dated July 20, 2009

 

Ayyappan Sankaran

 

Aadik Shekar

 

Sunil and Meena Vora

 

The Board of Trustees of the Leland Stanford Junior University (SEVF II)

 

Fouad Tamer

 

Sundar Thenpattinam

 

Tomar Family Trust dated 11/30/00

 

Kimberly Totah

 

Dung Trung Tran

 

US Firangi Trust

 

 

Series A Investors – con’t.

 

Vishwas R. and Arati V. Godbole

 

VK Services, LLC

 

David Weiden

 

Wolfram/Zebrowski Family Trust

 

WS Investment Company, LLC (2006A)

 

WS Investment Company, LLC (2006C)

 

Glynn Partners II, L.P.

 

Series B Investors

 

Accel Investors 2006 L.L.C.

 

Accel IX L.P.

 

Accel IX Strategic Partners L.P.

 

BV Capital Fund II, L.P.

 

BV Capital Fund II-A, L.P.

 

BV Capital GmbH & Co. Beteiligungs KG No. 1

 

DAG Ventures GP Fund III LLC

 

DAG Ventures III – QP, L.P.

 

DAG Ventures III, L.P.

 

Khosla Ventures II, LP

 

Alexander Kinnier

 

Samir Kaul, Trustee of the Kaul Family Trust Dated July 20, 2009

 

Aadik Shekar

 

Fouad Tamer

 

Kimberly Totah

 

VK Services, LLC

 

 

Series B Investors – con’t.

 

David Weiden

 

WS Investment Company, LLC (2007A)

 

WS Investment Company, LLC (2007D)

 

Series C Investors

 

Accel Investors 2006 L.L.C.

 

Accel IX L.P.

 

Accel IX Strategic Partners L.P.

 

Vijaya K. Ananda

 

BV Capital Fund II, L.P.

 

BV Capital Fund II-A, L.P.

 

BV Capital GmbH & Co. Beteiligungs KG No. 1

 

DAG Ventures GP Fund III LLC

 

DAG Ventures III – QP, L.P.

 

DAG Ventures III, L.P.

 

Felicis Ventures LLC

 

Khosla Ventures Seed Side Fund, LP

 

Khosla Ventures Seed, LP

 

Gretchen McCoy

 

Michael Danaher and Carol Danaher, TTEES of the Danaher Family Trust, dtd 6/29/04

 

Murali Dharan and Viju Juwa

 

Thiru N. Rajagopal

 

Rao Trust

 

Ashit I. Saheba

 

Sunil and Meena Vora

 

 

Series C Investors – con’t.

 

The Board of Trustees of the Leland Stanford Junior University (SEVF II)

 

Sundar Thenpattinam

 

Wolfram/Zebrowski Family Trust

 

WS Investment Company, LLC (2009A)

 

WS Investment Company, LLC (2009C)

 

Series D Investors

 

Accel Investors 2006 L.L.C.

 

Accel IX L.P.

 

Accel IX Strategic Partners L.P.

 

Khosla Ventures III, LP

 

Menlo Entrepreneurs Fund X, L.P.

 

Menlo Ventures X, L.P.

 

MMEF X, L.P.

 

Series D-1 Investors

 

Intel Capital Corporation

 

TransLink Capital Partners II, L.P.

 

TransLink Capital Partners II Affiliates Fund L.P.

 

SVIC No. 6 New Technology Business Investment L.L.P.

 

SVIC No. 18 New Technology Business Investment L.L.P.

 

WestSummit Global Technology Fund, L.P.

 

 

AMENDMENT AGREEMENT

 

THIS AMENDMENT AGREEMENT (this “Amendment Agreement”) is made and entered into as of April 2, 2012 by and among YuMe, Inc., a Delaware corporation (the “Company”), the holders of the Company’s Preferred Stock, par value $0.001 per share (the “Preferred Stock”), listed on the signature pages hereto (the “Preferred Holders”), and certain holders of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), listed on the signature pages hereto (the “Common Holders” and collectively with the Preferred Holders, the “Holders”).

 

RECITALS

 

WHEREAS, the Company and the Holders are parties, as applicable, to the Amended and Restated Investors’ Rights Agreement (the “Rights Agreement”), the Amended and Restated Right of First Refusal and Co-Sale Agreement (the “Co-Sale Agreement”), the Amended and Restated Drag-Along Agreement (the “Drag-Along Agreement”) and the Amended and Restated Voting Agreement (the “Voting Agreement,” and together with the Rights Agreement, the Co-Sale Agreement and the Drag Along Agreement, the “Ancillary Agreements”), each dated as of October 28, 2011;

 

WHEREAS, the undersigned Holders desire to amend certain provisions of the Ancillary Agreements to make certain changes to the Preferred Stock voting thresholds thereunder, as set forth in more detail below;

 

WHEREAS, (i) the Rights Agreement may be amended by the written consent of Company and the record or beneficial holders of at least 65% of the Registrable Securities (as defined therein); (ii) the Co-Sale Agreement may be amended by a written instrument executed by the Company, Key Stockholders (as defined therein) holding at least a majority of the outstanding Shares (as defined therein) then-held by all of the Key Stockholders (as defined therein), and Investors (as defined therein) holding at least 65% of the aggregate number of shares of Common Stock issuable or issued upon conversion of the Preferred Shares (as defined therein) then-held by the Investors (as defined therein), (iii) the Voting Agreement may be amended by a written instrument referencing the Voting Agreement and signed by the Company, a majority-in-interest of Common Stock held by the Founders (as defined therein) and the Investors (as defined therein) holding at least 65% of the Common Stock issuable or issued upon conversion of the Preferred Stock; and (iv) the Drag-Along Agreement may be amended by a written instrument executed by the Company, the holders of at least 65% of the Preferred Stock then outstanding (such percentage to be determined on an as-converted basis), and the holders of a majority of the Company’s Common Stock then outstanding; and

 

WHEREAS, the undersigned include the Company, the holders of a sufficient number of shares of Company’s Preferred Stock and Company’s Common Stock required to amend each of the Ancillary Agreements.

 

 

NOW, THEREFORE, in consideration of the foregoing recitals and for other consideration, the adequacy and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                                      AMENDMENT OF RIGHTS AGREEMENT

 

1.1                               Addition of Section 1.15.      A new Section 1.15 is hereby added to the Rights Agreement to read as follows:

 

“1.15                  WestSummit Observer Rights. So long as WestSummit Global Technology Fund, L.P. (“WestSummit”) holds at least a majority of the shares of Series D-1 Preferred Stock acquired by it pursuant to the Second Series D-1 Purchase Agreement, the Company will offer to WestSummit an invitation to WestSummit’s authorized representative to attend all meetings of its Board of Directors in a non-voting observer capacity, and in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors; provided, however, that WestSummit and such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided, and not to use any such information except solely to monitor its investment in the Company; and, provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if the Company believes that access to such information or attendance at such meeting would (i) upon advice of counsel reasonably be expected to adversely affect the attorney-client privilege between the Company and its counsel, (ii) result in disclosure of trade secrets to such representative, (iii) breach any confidentiality obligation of the Company to a third party or (iv) result in any actual or potential conflict of interest for WestSummit or its representative.”

 

1.2                               Amendment of Section 2.13.  Section 2.13 of the Rights Agreement is hereby amended to read in its entirety as follows:

 

“2.13                  Limitation on Subsequent Registration Rights.  After the date of this Agreement, the Company shall not, without the prior written consent of the record or beneficial holders of at least 60% of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights senior to or on par with those granted to the Holders hereunder.”

 

1.3                               Amendment of Section 3.1.  The phrase “provided, however, that the Major Investors agree to waive such right of first refusal in connection with the Company’s sale and issuance of up to 13,701,758 shares of Series D-1 Preferred Stock pursuant to a Second Series D-1 Preferred Stock Purchase Agreement of even date herewith” appearing in the last sentence of Section 3.1 of the Rights Agreement is hereby amended to read in its entirety as follows:

 

“provided, however, that the Major Investors agree to waive such right of first refusal in connection with the Company’s sale and issuance of up to 22,075,053

 

2

 

shares of Series D-1 Preferred Stock pursuant to a Second Series D-1 Preferred Stock Purchase Agreement of even date herewith.”

 

1.4                               Amendment of Section 4.2.  The first sentence of Section 4.2 of the Rights Agreement is hereby amended to read in its entirety as follows:

 

“With the written consent of the record or beneficial holders of at least 60% of the Registrable Securities, the rights of the Company and obligations of the Company and the holders of Registrable Securities under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), and with the same consent, the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary or new agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement; provided, however, that, subject to Section 2.13, no such consent shall be required for the purpose of adding to this Agreement an Investor pursuant to Section 4.1, a financial institution or venture lender which has loaned funds to the Company, or an equipment or real property lessor; provided  further, however, that no amendment of this Agreement shall materially and adversely affect the rights of a party in a manner that, by its express terms, discriminates against such party vis-à-vis other parties in the same class without such party’s written consent.”

 

2.                                      AMENDMENT OF CO-SALE AGREEMENT.

 

2.1                               Amendment of Section 6.2.  The first sentence of Section 6.2 of the Rights Agreement is hereby amended to read in its entirety as follows:

 

“Any amendment or modification of this Agreement shall be effective only if evidenced by a written instrument executed by (a) the Company, (b) Key Stockholders holding at least a majority of the outstanding Shares then-held by all of the Key Stockholders, and (c) Investors holding at least 60% of the aggregate number of shares of Common Stock issuable or issued upon conversion of the Preferred Shares then-held by the Investors; provided, however, that no amendment of this Agreement shall materially and adversely affect the rights of a party in a manner that, by its express terms, discriminates against such party vis-à-vis other parties in the same class (i.e., Key Stockholders or Investors, as the case may be) without such party’s written consent.”

 

3.                                      AMENDMENT OF VOTING AGREEMENT.

 

3.1                               Amendment of Section 4.  The first sentence of  Section 4 of the Voting Agreement is hereby amended to read in its entirety as follows:

 

“This Agreement shall terminate upon the earlier of (i) the conversion of all outstanding shares of the Company’s Preferred Stock into Common Stock; (ii) solely as to the provisions herein for the Series A Designees, when fewer than 1,000,000 shares, in the aggregate, of Series A Preferred (as adjusted for any

 

3

 

stock dividends, combinations or splits with respect to such shares) are outstanding; (iii) solely as to the provisions herein for the Series D Designee, when fewer than 1,000,000 shares, in the aggregate, of Series D Preferred (as adjusted for any stock dividends, combinations or splits with respect to such shares) are outstanding; (v) the closing of a Change of Control Transaction; or (vi) the agreement of a majority-in-interest of Common Stock held by the Founders and Investors holding at least 60% of the Common Stock issuable or issued upon conversion of the Preferred Stock.”

 

3.2                               Amendment of Section 7(j).  The phrase “at least 65% of the Common Stock issuable” appearing in the first and fourth sentence of Section 7(j) of the Voting Agreement is hereby amended to read in its entirety as follows: “at least 60% of the Common Stock issuable.”

 

4.                                      AMENDMENT OF DRAG-ALONG AGREEMENT

 

4.1                               Amendment of Section 1.  The phrase “the holders of at least 65% of the Preferred Stock then outstanding (such percentage to be determined on an as-converted basis)” appearing in the first sentence of Section 1 of the Drag-Along Agreement is hereby amended to read in its entirety as follows: “the holders of at least 60% of the Preferred Stock then outstanding (such percentage to be determined on an as-converted basis.”

 

4.2                               Amendment of Section 9.  The second sentence of Section 9 of the Drag-Along Agreement is hereby amended to read in its entirety as follows:

 

“Any amendment of this Agreement, or any waiver of any provision of this Agreement, shall be effective only if evidenced by a written instrument executed by (i) the Company, (ii) the holders of at least 60% of the Preferred Stock then outstanding (such percentage to be determined on an as-converted basis), and (iii) the holders of a majority of the Company’s Common Stock then outstanding; provided, however, that any amendment or waiver of Section 2 herein shall require the consent of Intel Capital Corporation.”

 

5.                                      GENERAL PROVISIONS.

 

5.1                               Full Force and Effect.  Except as expressly modified by this Amendment Agreement, the terms of each of the Ancillary Agreements shall remain in full force and effect.

 

5.2                               Counterparts.  This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

5.3                               Facsimile Signatures.  This Amendment Agreement may be executed and delivered by facsimile and upon such delivery the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

 

5.4                               Effectiveness.  The provisions of this Amendment Agreement shall be effective as to all parties to the Ancillary Agreements upon the execution hereof by sufficient parties to amend the Ancillary Agreements.

 

4

 

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

 

5.6                               Severability.  If one or more provisions of this Amendment Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Amendment Agreement, and the balance of the Amendment Agreement shall be interpreted as if such provision were so excluded, and shall be enforceable in accordance with its terms.

 

5.7                               Further Assurances.  The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Amendment Agreement.

 

5.8                               Governing Law.  This Amendment Agreement will be governed by and construed in accordance with the laws of the State of California, regardless of the laws that might otherwise govern under applicable principles of conflicts of law.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

5

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
YUME, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jayant Kadambi
    
	
 
    	
Jayant   Kadambi, CEO
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
MENLO VENTURES X, L.P.
    
	
 
    	
MENLO ENTREPRENEURS FUND X, L.P.
    
	
 
    	
MMEF   X, L.P.
    
	
 
    	
By:
    	
MV MANAGEMENT X, L.L.C.
    
	
 
    	
 
    	
Their   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Shawn Carolan
    
	
 
    	
 
    	
    Managing   Member
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
ACCEL   IX L.P.
    
	
 
    	
By:   Accel IX Associates L.L.C.
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Richard Zamboldi
    
	
 
    	
 
    	
 Attorney   in Fact
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ACCEL   IX STRATEGIC PARTNERS L.P.
    
	
 
    	
By:   Accel IX Associates L.L.C.
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Richard Zamboldi
    
	
 
    	
 
    	
 Attorney   in Fact
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ACCEL   INVESTORS 2006 L.L.C.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Richard Zamboldi
    
	
 
    	
 
    	
 Attorney   in Fact
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
KHOSLA   VENTURES II, LP
    
	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates II, LLC, a Delaware limited liability company and   general partner of Khosla Ventures II, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES III, LP
    
	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates III, LLC, a Delaware limited liability company and   general partner of Khosla Ventures III, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES SEED, LP
    
	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates Seed, LLC, a Delaware limited liability company   and general partner of Khosla Ventures Seed, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Member
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
KHOSLA VENTURES SEED SIDE FUND, LP
    
	
 
    	
 
    	
By:   Khosla Ventures Seed Side Fund Associates, LLC, a Delaware limited liability   company and general partner of Khosla Ventures Seed Side Fund, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Member
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
DAG   VENTURES III-QP, L.P.
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
Young   Chung, Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DAG   VENTURES III, L.P.
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
Young   Chung, Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DAG   VENTURES GP FUND III, LLC
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   Managing Member
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
Young   Chung, Managing Director
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
JAYANT   KADAMBI
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jayant Kadambi
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AYYAPPAN   SANKARAN
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Ayyappan Sankaran
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
TRANSLINK CAPITAL PARTNERS II, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jay H. Eum
    
	
 
    	
Name: Jay H. Eum
    
	
 
    	
Title: Managing Director
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

	
 
    	
SVIC   NO. 6 NEW TECHNOLOGY BUSINESS INVESTMENT L.L.P.
    
	
 
    	
 
    
	
 
    	
By:   Samsung Venture Investment Corporation,
    
	
 
    	
its   partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Il Seok Yoon
    
	
 
    	
Name:   Il Seok Yoon
    
	
 
    	
Title:   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SVIC   NO. 18 NEW TECHNOLOGY BUSINESS INVESTMENT L.L.P.
    
	
 
    	
 
    
	
 
    	
By:   Samsung Venture Investment Corporation,
    
	
 
    	
its   partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Il Seok Yoon
    
	
 
    	
Name:   Il Seok Yoon
    
	
 
    	
Title:   Vice President
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

	
 
    	
WestSummit   Global Technology Fund, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond Yang
    
	
 
    	
Name:
    	
Raymond   Yang
    
	
 
    	
Title:
    	
Founding   Partner & Managing Director
    

 

SIGNATURE PAGE TO AMENDMENT AGREEMENT

FOR YUME, INC.

 

 

OMNIBUS AMENDMENT AGREEMENT

 

THIS OMNIBUS AMENDMENT AGREEMENT (this “Amendment Agreement”) is made and entered into as of December 28, 2012 by and among YuMe, Inc., a Delaware corporation (the “Company”), the holders of the Company’s Preferred Stock, par value $0.001 per share (the “Preferred Stock”), listed on the signature pages hereto (the “Preferred Holders”), and certain holders of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), listed on the signature pages hereto (the “Common Holders” and collectively with the Preferred Holders, the “Holders”).

 

RECITALS

 

WHEREAS, the Company and the Holders are parties, as applicable, to the Amended and Restated Investors’ Rights Agreement, as amended (the “Rights Agreement”), the Amended and Restated Right of First Refusal and Co-Sale Agreement, as amended (the “Co-Sale Agreement”), the Amended and Restated Drag-Along Agreement, as amended (the “Drag-Along Agreement”) and the Amended and Restated Voting Agreement, as amended (the “Voting Agreement,” and together with the Rights Agreement, the Co-Sale Agreement and the Drag Along Agreement, the “Ancillary Agreements”), each dated as of October 28, 2011 and amended as of April 2, 2012;

 

WHEREAS, concurrently herewith the Company is entering into that certain Agreement and Plan of Merger (the “Merger Agreement”) by and among Company, Camp Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Company (“Merger Sub”), Crowd Science, Inc., a Delaware corporation (the “Seller”) and Granite Ventures II, L.P., a Delaware limited partnership, as Effective Time Holders’ Agent (“Effective Time Holders’ Agent”) pursuant to which Merger Sub will merge with and into Seller in a statutory reverse-triangular merger (the “Merger”), with the Seller to survive the Merger as a wholly-owned subsidiary of Company, on the terms and subject to the conditions set forth in the Merger Agreement;

 

WHEREAS, pursuant to the Merger Agreement, the Company will issue 2,000,000 shares of Company’s Series D-1 Preferred Stock (“Series D-1 Shares”) to certain holders (the “Noteholders”) of convertible promissory notes of Seller (“Notes”), in exchange for the cancellation and extinguishment of such Notes, in accordance with the terms of the Merger Agreement;

 

WHEREAS, the undersigned Holders desire to amend certain provisions of the Ancillary Agreements to make the Noteholders receiving the Series D-1 Shares parties thereto;

 

WHEREAS, (i) the Rights Agreement may be amended by the written consent of Company and the record or beneficial holders of at least 60% of the Registrable Securities (as defined therein); (ii) the Co-Sale Agreement may be amended by a written instrument executed by the Company, Key Stockholders (as defined therein) holding at least a majority of the outstanding Shares (as defined therein) then-held by all of the Key Stockholders (as defined therein), and Investors (as defined therein) holding at least 60% of the aggregate number of

 

 

shares of Common Stock issuable or issued upon conversion of the Preferred Shares (as defined therein) then-held by the Investors (as defined therein), (iii) the Voting Agreement may be amended by a written instrument referencing the Voting Agreement and signed by the Company, a majority-in-interest of Common Stock held by the Founders (as defined therein) and the Investors (as defined therein) holding at least 60% of the Common Stock issuable or issued upon conversion of the Preferred Stock; and (iv) the Drag-Along Agreement may be amended by a written instrument executed by the Company, the holders of at least 60% of the Preferred Stock then outstanding (such percentage to be determined on an as-converted basis), and the holders of a majority of the Company’s Common Stock then outstanding; and

 

WHEREAS, the undersigned include the Company, the holders of a sufficient number of shares of Company’s Preferred Stock and Company’s Common Stock required to amend each of the Ancillary Agreements.

 

NOW, THEREFORE, in consideration of the foregoing recitals and for other consideration, the adequacy and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1.                                      Voting Agreement.  In accordance with Section 7(j) of the Voting Agreement, the parties hereto consent to an amendment of the Voting Agreement to add each Noteholder as a party thereto.  By executing an Adoption Agreement and Stockholder Obligation Letter in substantially the form attached hereto as Exhibit 1 (the “Adoption Agreement”) each Noteholder shall be added as a party to and shall be bound by the terms and conditions of the Voting Agreement and for all purposes shall be deemed to be an “Investor” thereunder, it being understood and agreed that, upon signing the Adoption Agreement, each Noteholder shall be entitled to all the benefits of the Voting Agreement and shall be bound by all the obligations of the Voting Agreement, as if it were an original party thereto.  The list of Investors attached as Exhibit A to the Voting Agreement shall be amended to reflect the names of the Noteholders.

 

2.                                      Co-Sale Agreement.  In accordance with Section 6.2 of the Co-Sale Agreement, the parties hereto consent to an amendment of the Co-Sale Agreement to add each Noteholder as a party thereto.  By executing the Adoption Agreement each Noteholder shall be added as a party to and shall be bound by the terms and conditions of the Co-Sale Agreement and for all purposes shall be deemed to be an “Investor” thereunder, it being understood and agreed that, upon signing the Adoption Agreement, each Noteholder shall be entitled to all the benefits of the Voting Agreement and shall be bound by all the obligations of the Co-Sale Agreement, as if it were an original party thereto.  The list of Investors attached as Schedule B to the Co-Sale Agreement shall be amended to reflect the names of the Noteholders.

 

3.                                      Rights Agreement.  In accordance with Section 4.2 of the Rights Agreement, the parties hereto consent to an amendment of the Rights Agreement to add each Noteholder as a party thereto.  By executing the Adoption Agreement each Noteholder shall be added as a party to and shall be bound by the terms and conditions of the Rights Agreement and for all purposes shall be deemed to be an “Investor” thereunder and the Series D-1 Shares issued to each Noteholder shall be deemed to be Registrable Securities as defined in the Rights Agreement

 

2

 

(notwithstanding anything in the Rights Agreement to the contrary), it being understood and agreed that, upon signing the Adoption Agreement, each Noteholder shall be entitled to all the benefits of the Rights Agreement and shall be bound by all the obligations of the Rights Agreement, as if it were an original party thereto.  The list of Investors attached as Exhibit A to the Rights Agreement shall be amended to reflect the names of the Noteholders.

 

4.                                      Drag-Along Agreement.  In accordance with Section 9 of the Drag-Along Agreement, the parties hereto consent to an amendment of the Drag-Along Agreement to add each Noteholder as a party thereto.  By executing the Adoption Agreement each Noteholder shall be added as a party to and shall be bound by the terms and conditions of the Drag-Along Agreement and for all purposes shall be deemed to be a “Holder” thereunder, it being understood and agreed that, upon signing the Adoption Agreement, each Noteholder shall be entitled to all the benefits of the Drag-Along Agreement and shall be bound by all the obligations of the Drag-AlongAgreement, as if it were an original party thereto.  The list of Investors attached as Schedule A to the Drag-Along Agreement shall be amended to reflect the names of the Noteholders.

 

5.                                      GENERAL PROVISIONS.

 

5.1                               Full Force and Effect.  Except as expressly modified by this Amendment Agreement, the terms of each of the Ancillary Agreements shall remain in full force and effect.

 

5.2                               Counterparts.  This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

5.3                               Facsimile Signatures.  This Amendment Agreement may be executed and delivered by facsimile and upon such delivery the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

 

5.4                               Effectiveness.  The provisions of this Amendment Agreement shall be effective as to all parties to the Ancillary Agreements upon the execution hereof by sufficient parties to amend the Ancillary Agreements.

 

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

 

5.6                               Severability.  If one or more provisions of this Amendment Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Amendment Agreement, and the balance of the Amendment Agreement shall be interpreted as if such provision were so excluded, and shall be enforceable in accordance with its terms.

 

5.7                               Further Assurances.  The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Amendment Agreement.

 

3

 

5.8                               Governing Law.  This Amendment Agreement will be governed by and construed in accordance with the laws of the State of California, regardless of the laws that might otherwise govern under applicable principles of conflicts of law.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

4

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
YUME, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jayant Kadambi
    
	
 
    	
Jayant   Kadambi, CEO
    

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
 
    
	
 
    	
“HOLDER:”
    
	
 
    	
 
    
	
 
    	
MENLO VENTURES X, L.P.
    
	
 
    	
MENLO ENTREPRENEURS FUND X, L.P.
    
	
 
    	
MMEF   X, L.P.
    
	
 
    	
By:
    	
MV MANAGEMENT X, L.L.C.
    
	
 
    	
 
    	
Their   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Shawn Carolan
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Shawn   Carolan
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    
				

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
“HOLDER:”
    
	
 
    	
 
    
	
 
    	
ACCEL   IX L.P.
    
	
 
    	
 
    
	
 
    	
By:   Accel IX Associates L.L.C.
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tracy L. Sedlock
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Tracy   L. Sedlock
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Attorney-In-Fact
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ACCEL   IX STRATEGIC PARTNERS L.P.
    
	
 
    	
 
    
	
 
    	
By:   Accel IX Associates L.L.C.
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tracy L. Sedlock
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Tracy   L. Sedlock
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Attorney-In-Fact
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ACCEL   INVESTORS 2006 L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tracy L. Sedlock
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Tracy   L. Sedlock
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Attorney-In-Fact
    

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
“HOLDER:”
    
	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES II, LP
    
	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates II, LLC, a Delaware limited liability company and   general partner of Khosla Ventures II, LP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES III, LP
    
	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates III, LLC, a Delaware limited liability company and   general partner of Khosla Ventures III, LP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES SEED, LP
    
	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Associates Seed, LLC, a Delaware limited liability company   and general partner of Khosla Ventures Seed, LP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Partner
    

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
“HOLDER:”
    
	
 
    	
 
    
	
 
    	
KHOSLA   VENTURES SEED SIDE FUND, LP
    
	
 
    	
 
    
	
 
    	
By:   Khosla Ventures Seed Side Fund Associates, LLC, a Delaware limited liability   company and general partner of Khosla Ventures Seed Side Fund, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
VK   SERVICES, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
David   Weiden
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Partner
    
	
 
    	
 
    	
 
    

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
“HOLDER:”
    
	
 
    	
 
    
	
 
    	
DAG VENTURES III-QP, L.P.
    
	
 
    	
 
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Young   Chung
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DAG VENTURES III, L.P.
    
	
 
    	
 
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Young   Chung
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
DAG   VENTURES GP FUND III, LLC
    
	
 
    	
 
    
	
 
    	
By:   DAG Ventures Management III, LLC
    
	
 
    	
Its   Managing Member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Young Chung
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Young   Chung
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
“HOLDER:”
    
	
 
    	
 
    
	
 
    	
BV   CAPITAL GMBH & CO BETEILIGUNGS KG NO. 1
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
BV   Capital Management LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas Gieselmann
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Thomas   Gieselmann
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director of the General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BV   CAPITAL FUND II, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
BV   Capital GP II, LLC
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas Gieselmann
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Thomas   Gieselmann
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director of the General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BV   CAPITAL FUND II – A, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
BV   Capital GP II, LLC
    
	
 
    	
 
    	
Its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas Gieselmann
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Thomas   Gieselmann
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director of the General Partner
    

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
“HOLDERS:”
    
	
 
    	
 
    
	
 
    	
WESTSUMMIT   GLOBAL TECHNOLOGY FUND, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond Yang
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Raymond   Yang
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Partner
    

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

 

	
 
    	
“HOLDER:”
    
	
 
    	
 
    
	
 
    	
TRANSLINK CAPITAL PARTNERS II, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jay H. Eum
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Jay   H. Eum
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed as of the day and year first above written.

 

	
 
    	
“HOLDERS:”
    
	
 
    	
 
    
	
 
    	
JAYANT   KADAMBI
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jayant Kadambi
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AYYAPPAN   SANKARAN
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Ayyappan Sankaran
    

 

 

SIGNATURE PAGE TO OMNIBUS AMENDMENT AGREEMENT FOR YUME, INC.

 

 

Exhibit 1

 

Adoption Agreement and Stockholder Obligation Letter

 

 

December 28, 2012

 

YuMe, Inc.

1204 Middlefield Road

Redwood City, CA 94063

Attn: Paul Porrini, General Counsel

 

Adoption Agreement and Stockholder Obligation Letter

 

Ladies and Gentlemen:

 

Pursuant to that certain Agreement and Plan of Merger dated on or about December 28, 2012 (the “Merger  Agreement”) by and among YuMe, Inc., a Delaware corporation (“Acquiror”), Camp Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Acquiror (“Merger Sub”), Crowd Science, Inc., a Delaware corporation (“Company”) and the Effective Time Holders’ Agent (as defined in the Merger Agreement), Merger Sub will merge with and into Company in a statutory reverse-triangular merger (the “Merger”), with Company to survive the Merger a wholly-owned subsidiary of Acquiror. Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings given to such terms in the Merger Agreement. In connection with the Merger and pursuant to the terms and conditions of the Merger Agreement, Granite Ventures II, L.P. and Granite Ventures Entrepreneurs Fund II, L.P. (each individually, “Fund” and collectively, “Granite”) shall receive certain shares of Acquiror Series D-1 Preferred Stock, in a private placement effected in reliance on the exemption from the registration requirements of the Securities Act, provided by Section 4(2) of the Securities Act, and exemptions from the qualification requirements under the laws of the State of California and other applicable state law(s).  Granite acknowledges and agrees that (i) Granite is acquiring the Acquiror Series D-1 Preferred Stock subject to all of the rights, obligations, privileges and restrictions contained in the Acquiror Preferred Stock Financing Agreements, and (ii) Acquiror is relying on the truth and accuracy of the representations and warranties made by Granite in this Adoption Agreement and Stockholder Obligation Letter (the “Agreement”) in order to rely on the exemption described above. The parties to the Acquiror Preferred Stock Financing Agreements have specifically amended such agreements to allow Granite to become a party thereto by executing this Agreement.  Accordingly, the parties hereto hereby agree as follows:

 

1.                                      Adoption Agreement.  Granite agrees that Granite is acquiring the Acquiror Series D-1 Preferred Stock subject to all of the rights, obligations, privileges and restrictions contained in each of the Acquiror Preferred Stock Financing Agreements.  Granite further agrees to be bound by and subject to the terms and conditions of each of the Acquiror Preferred Stock Financing Agreements as an “Investor” thereunder, and with respect to that certain Amended and Restated Drag-Along Agreement dated October 28, 2011, as amended, as a “Holder” thereunder.

 

2.                                      Representations, Warranties of Granite.  Each Fund, severally and not jointly, represents and warrants to Acquiror as follows, each of which is true and correct as of immediately prior to the Closing:

 

2.1                               No Registration.  Such Fund understands that the Acquiror Series D-1 Preferred Stock and the shares of Acquiror Common Stock issuable upon conversion thereof (the “Conversion Shares”), 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 such Fund’s representations as expressed herein or otherwise made pursuant hereto.

 

 

2.2                               Investment Intent.  Such Fund is acquiring the Acquiror Series D-1 Preferred Stock and the Conversion Shares, for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof, and that such Fund has no present intention of selling, granting any participation in, or otherwise distributing the same.  Such Fund further represents that it does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to such person or entity or to any third person or entity with respect to any of the Acquiror Series D-1 Preferred Stock or the Conversion Shares.

 

2.3                               Investment Experience.  Such Fund has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Acquiror and acknowledges that such Fund can protect its own interests.  Such Fund has such knowledge and experience in financial and business matters so that such Fund is capable of evaluating the merits and risks of its investment in the Acquiror.

 

2.4                               Speculative Nature of Investment. Such Fund understands and acknowledges that the Acquiror has a limited financial and operating history and that an investment in the Acquiror is highly speculative and involves substantial risks.  Such Fund can bear the economic risk of such Fund’s investment and is able, without impairing such Fund’s financial condition, to hold the Acquiror Series D-1 Preferred Stock and the Conversion Shares for an indefinite period of time and to suffer a complete loss of such Fund’s investment.

 

2.5                               Access to Date. Such Fund has had an opportunity to ask questions of, and receive answers from, the officers of the Acquiror concerning the Merger Agreement, the Acquiror Preferred Stock Financing Agreements, the exhibits and schedules attached thereto and the transactions contemplated thereby, as well as the Acquiror’s business, management and financial affairs, which questions were answered to its satisfaction.  Such Fund believes that it has received all the information such Fund considers necessary or appropriate for deciding whether to acquire the Acquiror Series D-1 Preferred Stock.

 

2.6                               Accredited Investor.  Such Fund is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission under the Securities Act and shall submit to the Acquiror such further assurances of such status as may be reasonably requested by the Acquiror.

 

2.7                               Residency.  The residency of such Fund (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.

 

2.8                               Rule 144.  Such Fund acknowledges that the Acquiror Series D-1 Preferred Stock and the Conversion Shares must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available.  Such Fund is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including among other things, the existence of a public market for the shares, the availability of certain current public information about the Acquiror, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being effected through a “broker’s transaction” or in transactions directly with a “market maker” and the number of shares being sold during any three-month period not exceeding specified limitations.  Such Fund understands that the current public information referred to above is not now available and the Acquiror has no present plans to make such information available.  Such Fund acknowledges and understands that notwithstanding any obligation under that certain Amended and Restated Investors’ dated October 28, 2011, as amended (the “Rights Agreement”), the Acquiror may not be satisfying the current public information requirement of Rule 144 at the time the Fund wishes to sell the Acquiror Series

 

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D-1 Preferred Stock or the Conversion Shares, and that, in such event, the Fund may be precluded from selling such securities under Rule 144, even if the other requirements of Rule 144 have been satisfied.  Such Fund acknowledges that, in the event all of the 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 Acquiror Series D-1 Preferred Stock or the underlying shares of Common Stock.  Such Fund understands that, although Rule 144 is not exclusive, the Securities and Exchange 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.

 

2.9                               No Public Market.  Such Fund understands and acknowledges that no public market now exists for any of the securities issued by the Acquiror and that the Acquiror has made no assurances that a public market will ever exist for the Acquiror’s securities.

 

2.10                        Authorization.

 

(i)                                     Such Fund has all requisite power and authority to execute and deliver this Agreement, the Acquiror Preferred Stock Financing Agreements and any other agreements or documents to be executed by such Fund pursuant to the terms of the Merger Agreement (“Transaction Documents”), to acquire the Acquiror Series D-1 Preferred Stock hereunder and to carry out and perform its obligations under the terms of the Transaction Documents.  All action on the part of the Fund necessary for the authorization, execution, delivery and performance of the Transaction Documents, and the performance of all of the Fund’s obligations under the Transaction Documents, has been taken or will be taken before the Closing.

 

(ii)                                  The Transaction Documents, when executed and delivered by the Fund, will constitute valid and legally binding obligations of the Fund, enforceable in accordance with their terms except: (i) to the extent that the indemnification provisions contained in the Rights Agreement may be limited by applicable law and principles of public policy, (ii) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (iii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity.

 

(iii)                               No consent, approval, authorization, order, filing, registration or qualification of or with any court, governmental authority or third person is required to be obtained by the Fund in connection with the execution and delivery of the Transaction Documents by the Fund or the performance of the Fund’s obligations hereunder or thereunder.

 

2.11                        Brokers or Finders.  Such Fund has not engaged any brokers, finders or agents, and neither the Acquiror nor any other Fund has, nor will, incur, directly or indirectly, as a result of any action taken by the Fund, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Transaction Documents.

 

2.12                        Tax Advisors. Such Fund has reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences of this investment and the transactions contemplated by the Transaction Documents.  With respect to such matters, such Fund relies solely on such advisors and not on any statements or representations of the Acquiror or any of its agents, written or oral.  The Fund understands that it (and not the Acquiror) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by the Transaction Documents.

 

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2.13                        Legends.  Such Fund understands and agrees that the certificates evidencing the Acquiror Series D-1 Preferred Stock or the Conversion Shares, or any other securities issued in respect of the Acquiror Series D-1 Preferred Stock or the Conversion Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend required by the Rights Agreement or under applicable state securities laws):

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “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 ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION 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 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”

 

3.                                      Miscellaneous.

 

3.1                               Entire Agreement.  This Agreement and the documents, instruments and other agreements specifically referred to herein 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.

 

3.2                               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.

 

3.3                               Amendments and Waivers.  Any term hereof may be amended or waived only with the written consent of Acquiror and Granite.  Any amendment or waiver effected in accordance with this Section shall be binding upon Acquiror, Granite, and each of their respective successors and assigns.

 

3.4                               Notices.  Any notice required or permitted by this Agreement shall be given in accordance with the notice provisions of the Merger Agreement.

 

3.5                               Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms.

 

3.6                               Specific Performance. Granite acknowledges and agrees that any breach by Granite of this Agreement shall cause Acquiror irreparable harm which may not be adequately compensable by monetary damages.  Accordingly, in the event of a breach or threatened breach by Granite of any provision of this Agreement, Acquiror shall be entitled to seek the remedies of specific performance, injunction or other preliminary or equitable relief without having to prove irreparable harm or actual damages.  The foregoing right shall be in addition to such other rights or remedies as may be available to

 

4

 

Acquiror for any such breach or threatened breach, including but not limited to the recovery of monetary damages.

 

3.7                               Governing Law.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.

 

3.8                               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.

 

3.9                               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

 

3.10                        Further Assurances.  Granite agrees to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement, including without limitation executing signature pages to each of the Acquiror Preferred Stock Financing Agreements upon request by Acquiror.

 

3.11                        Effective Time.  This Agreement shall become effective immediately following the Closing pursuant to the terms of the Merger Agreement.

 

[Signature Page Follows]

 

5

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GRANITE VENTURES II, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Granite   Management II, LLC,
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
Granite   Ventures, LLC,
    
	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GRANITE   VENTURES ENTREPRENEURS
    
	
 
    	
FUND   II, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Granite   Management II, LLC,
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
Granite   Ventures, LLC,
    
	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
 
    
				

 

[SIGNATURE PAGE TO ADOPTION AGREEMENT AND STOCKHOLDER OBLIGATION LETTER]

 

 

	
ACKNOWLEDGED   AND AGREED:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
YUME, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Jayant   Kadambi
    	
 
    
	
 
    	
 
    	
 
    
	
Its:   
    	
Chief   Executive Officer
    	
 
    

 

[SIGNATURE PAGE TO ADOPTION AGREEMENT AND STOCKHOLDER OBLIGATION LETTER]EXHIBIT 10.3

 

YUME, INC.

 

2013 EQUITY INCENTIVE PLAN

 

As adopted July 23, 2013 (share numbers adjusted for reverse split effected July 24, 2013)

 

1.                                      PURPOSE.  The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards.  Capitalized terms not defined elsewhere in the text are defined in Section 27.

 

2.                                      SHARES SUBJECT TO THE PLAN.

 

2.1.                            Number of Shares Available.   Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is Two Million (2,000,000) Shares plus (i) any reserved shares not issued or subject to outstanding grants under the Company’s 2004 Stock Plan (the “Prior Plan”) on the Effective Date (as defined below), (ii) shares that are subject to stock options or other awards granted under the Prior Plan that cease to be subject to such stock options or other awards by forfeiture or otherwise after the Effective Date, (iii) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited, (iv) shares issued under the Prior Plan that are repurchased by the Company at the original issue price and (v) shares that are subject to stock options or other awards under the Prior Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award.

 

2.2.                            Lapsed, Returned Awards.  Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares:  (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program.  To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.  Shares used to pay the exercise price of an Award or withheld to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan.  For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.

 

2.3.                            Minimum Share Reserve.  At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.

 

2.4.                            Automatic Share Reserve Increase.  The number of Shares available for grant and issuance under the Plan shall be automatically increased January 1 of each of the calendar years 2014 through 2022, by the lesser of (i) five percent (5%) of the number of Shares issued and outstanding on each December 31 immediately prior to the date of increase or (ii) such number of Shares determined by the Board.

 

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2.5.                            Limitations.  No more than Twenty One million (21,000,000) Shares shall be issued pursuant to the exercise of ISOs.

 

2.6.                            Adjustment of Shares.  If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, including shares reserved under sub-clauses (i)-(v) of Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.5, and (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3 shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.

 

3.                                      ELIGIBILITY.  ISOs may be granted only to Employees.  All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors of the Company or any Parent or Subsidiary of the Company; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction.  No Participant will be eligible to receive more than One Million (1,000,000) Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of the Company or of a Parent or Subsidiary of the Company (including new Employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to receive up to a maximum of Two Million (2,000,000) Shares in the calendar year in which they commence their employment.

 

4.                                      ADMINISTRATION.

 

4.1.                            Committee Composition; Authority.  This Plan will be administered by the Committee or by the Board acting as the Committee.  Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors.  The Committee will have the authority to:

 

(a)                                 construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

 

(b)                                 prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

 

(c)                                  select persons to receive Awards;

 

(d)                                 determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;

 

(e)                                  determine the number of Shares or other consideration subject to Awards;

 

(f)                                   determine the Fair Market Value and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary;

 

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(g)                                 determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

 

(h)                                 grant waivers of Plan or Award conditions;

 

(i)                                    determine the vesting, exercisability and payment of Awards;

 

(j)                                    correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;

 

(k)                                 determine whether an Award has been earned;

 

(l)                                    determine the terms and conditions of any, and to institute any Exchange Program;

 

(m)                             reduce or waive any criteria with respect to Performance Factors;

 

(n)                                 adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code with respect to persons whose compensation is subject to Section 162(m) of the Code;

 

(o)                                 adopt terms and conditions, rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States;

 

(p)                                 make all other determinations necessary or advisable for the administration of this Plan; and

 

(q)                                 delegate any of the foregoing to a subcommittee consisting of one or more executive officers pursuant to a specific delegation as permitted by applicable law, including Section 157(c) of the Delaware General Corporation Law.

 

4.2.                            Committee Interpretation and Discretion.  Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan.  Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant.  The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant.

 

4.3.                            Section 162(m) of the Code and Section 16 of the Exchange Act.  When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code the Committee shall include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on the Committee) such “outside directors” shall approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) such “outside directors” then serving on the Committee shall determine and certify in writing the extent to

 

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which such Performance Factors have been timely achieved and the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act).  With respect to Participants whose compensation is subject to Section 162(m) of the Code, and provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code, the Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.

 

4.4.                            Documentation.  The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.

 

4.5.                            Foreign Award Recipients.  Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to:  (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 2.1 hereof; and (v) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals.  Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.

 

5.                                      OPTIONS.  An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable.  The Committee may grant Options to eligible Employees, Consultants and Directors of the Company or any Parent or Subsidiary of the Company and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following:

 

5.1.                            Option Grant.  Each Option granted under this Plan will identify the Option as an ISO or an NSO.  An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement.  If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each Option; and (y) select from among the Performance Factors to be used to measure the performance, if any.  Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.

 

5.2.                            Date of Grant.  The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date.  The Award Agreement will be delivered to the Participant within a reasonable time after the granting of the Option.

 

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5.3.                            Exercise Period.  Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted.  The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

 

5.4.                            Exercise Price.  The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (i) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant.  Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company.

 

5.5.                            Method of Exercise.  Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.  An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

(a)                                 Termination of Service.  If the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates no later than three (3) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond three (3) months after the date Participant’s Service terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options.

 

(b)                                 Death.  If the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the date Participant’s Service terminates (or such shorter time period not less than six (6) months or longer time period as may be determined by the Committee), but in any event no later than the expiration date of the Options.

 

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(c)                                  Disability.  If the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (with any exercise beyond (a) three (3) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options.

 

(d)                                 Cause.  If the Participant is terminated for Cause, then Participant’s Options shall expire on such Participant’s date of termination of Service, or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options.  Unless otherwise provided in the Award Agreement, Cause shall have the meaning set forth in the Plan.

 

5.6.                            Limitations on Exercise.  The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.

 

5.7.                            Limitations on ISOs.  With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NSOs. For purposes of this Section 5.7, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.  In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

 

5.8.                            Modification, Extension or Renewal.  The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted.  Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code.  Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants; provided, however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.

 

5.9.                            No Disqualification.  Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

 

6.                                      RESTRICTED STOCK AWARDS.  A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant, or Director of the Company or any Parent or Subsidiary of the Company Shares that are subject to restrictions (“Restricted Stock”).  The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan.

 

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6.1.                            Restricted Stock Purchase Agreement.  All purchases under a Restricted Stock Award will be evidenced by an Award Agreement.  Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant.  If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.

 

6.2.                            Purchase Price.  The Purchase Price for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted.  Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company.

 

6.3.                            Terms of Restricted Stock Awards.  Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law.  These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement.  Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant.  Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.

 

6.4.                            Termination of Service.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

 

7.                                      STOCK BONUS AWARDS.  A Stock Bonus Award is an award to an eligible Employee, Consultant, or Director of the Company or any Parent or Subsidiary of the Company of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent or Subsidiary.  All Stock Bonus Awards shall be made pursuant to an Award Agreement.  No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.

 

7.1.                            Terms of Stock Bonus Awards.  The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon.  These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement.  Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant.  Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.

 

7.2.                            Form of Payment to Participant.  Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.

 

7.3.                            Termination of Service.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

 

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8.                                      STOCK APPRECIATION RIGHTS.  A Stock Appreciation Right (“SAR”) is an award to an eligible Employee, Consultant, or Director of the Company or any Parent or Subsidiary of the Company that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement).  All SARs shall be made pursuant to an Award Agreement.

 

8.1.                            Terms of SARs.  The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s termination of Service on each SAR.  The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value.  A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement.  If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any.  Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.

 

8.2.                            Exercise Period and Expiration Date.  A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR.  The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted.  The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee).  Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.

 

8.3.                            Form of Settlement.  Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof.  The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code.

 

8.4.                            Termination of Service.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

 

9.                                      RESTRICTED STOCK UNITS.  A Restricted Stock Unit (“RSU”) is an award to an eligible Employee, Consultant, or Director of the Company or any Parent or Subsidiary of the Company covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock).  All RSUs shall be made pursuant to an Award Agreement.

 

9.1.                            Terms of RSUs.  The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the Participant’s termination of Service on each RSU.  An RSU may be awarded upon satisfaction of such performance

 

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goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement.  If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU.  Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.

 

9.2.                            Form and Timing of Settlement.  Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both.  The Committee may also permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.

 

9.3.                            Termination of Service.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

 

10.                               PERFORMANCE AWARDS.  A Performance Award is an award to an eligible Employee, Consultant, or Director of the Company or any Parent or Subsidiary of the Company of a cash bonus or an award of Performance Shares denominated in Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock).  Grants of Performance Awards shall be made pursuant to an Award Agreement.

 

10.1.                     Terms of Performance Shares.  The Committee will determine, and each Award Agreement shall set forth, the terms of each Performance Award including, without limitation: (a) the amount of any cash bonus, (b) the number of Shares deemed subject to an award of Performance Shares; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (d) the consideration to be distributed on settlement, and (e) the effect of the Participant’s termination of Service on each Performance Award.  In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares.  Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned.  Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria.  No Participant will be eligible to receive more than $1,000,000 in Performance Awards in any calendar year under this Plan.

 

10.2.                     Value, Earning and Timing of Performance Shares.  Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.  After the applicable Performance Period has ended, the holder of Performance Shares will be entitled to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof.

 

10.3.                     Termination of Service.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

 

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11.                               PAYMENT FOR SHARE PURCHASES.  Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):

 

(a)                                 by cancellation of indebtedness of the Company to the Participant;

 

(b)                                 by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;

 

(c)                                  by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company;

 

(d)                                 by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan;

 

(e)                                  by any combination of the foregoing; or

 

(f)                                   by any other method of payment as is permitted by applicable law.

 

12.                               GRANTS TO NON-EMPLOYEE DIRECTORS. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs.  Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board.

 

12.1.                     Eligibility.  Awards pursuant to this Section 12 shall be granted only to Non-Employee Directors.  A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.

 

12.2.                     Vesting, Exercisability and Settlement.  Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board.  With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.

 

12.3.                     Election to receive Awards in Lieu of Cash.  A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the Committee.  Such Awards shall be issued under the Plan.  An election under this Section 12.3 shall be filed with the Company on the form prescribed by the Company.

 

13.                               WITHHOLDING TAXES.

 

13.1.                     Withholding Generally.  Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company, or to the Parent or Subsidiary employing the Participant, an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award.  Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant.

 

13.2.                     Stock Withholding.  The Committee, or its delegate(s), as permitted by applicable law, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations

 

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of local law, may require or permit a Participant to satisfy such tax withholding obligation or any other tax liability legally due from the Participant, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum amount required to be withheld or (iv) withholding from the proceeds of the sale of otherwise deliverable Shares acquired pursuant to an award either through a voluntary sale or through a mandatory sale arranged by the Company. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

 

14.                               TRANSFERABILITY.

 

14.1.                     Transfer Generally.  Unless determined otherwise by the Committee or pursuant to Section 14.2, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution.  If the Committee makes an Award transferable, including, without limitation, by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards shall be exercisable: (i) during the Participant’s lifetime only by (A) the Participant, or (B) the Participant’s guardian or legal representative; (ii) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees; and (iii) in the case of all awards except ISOs, by a Permitted Transferee.

 

14.2.                     Award Transfer Program.  Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and shall have the authority to amend the terms of any Award participating, or otherwise eligible to participate in, the Award Transfer Program, including (but not limited to) the authority to (i) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (ii) amend or remove any provisions of the Award relating to the Award holder’s continued service to the Company or its Parent or any Subsidiary, (iii) amend the permissible payment methods with respect to the exercise or purchase of any such Award, (iv) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (v) make such other changes to the terms of such Award as the Committee deems necessary or appropriate in its sole discretion.

 

15.                               PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

 

15.1.                     Voting and Dividends.  No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any dividend equivalent rights permitted by an applicable Award Agreement.  After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2.

 

15.2.                     Restrictions on Shares.  At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan, for

 

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cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.

 

16.                               CERTIFICATES.  All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject.

 

17.                               ESCROW; PLEDGE OF SHARES.  To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates.  Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral.  In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve.  The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

 

18.                               REPRICING; EXCHANGE AND BUYOUT OF AWARDS.  Without prior stockholder approval, the Committee may (i) reprice Options or SARs (and where such repricing is a reduction in the Exercise Price of outstanding Options or SARs, the consent of the affected Participants is not required provided written notice is provided to them, notwithstanding any adverse tax consequences to them arising from the repricing), and (ii) with the consent of the respective Participants (unless not required pursuant to Section 5.8 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.

 

19.                               SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.  An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance.  Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.  The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, exchange control laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

 

20.                               NO OBLIGATION TO EMPLOY.  Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time.

 

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21.                               CORPORATE TRANSACTIONS.

 

21.1.                     Assumption or Replacement of Awards by Successor.  In the event that the Company is subject to a Corporate Transaction, outstanding Awards acquired under the Plan shall be subject to the agreement evidencing the Corporate Transaction, which need not treat all outstanding Awards in an identical manner.  Such agreement, without the Participant’s consent, shall provide for one or more of the following with respect to all outstanding Awards as of the effective date of such Corporate Transaction.

 

(a)                                 The continuation of an outstanding Award by the Company (if the Company is the successor entity).

 

(b)                                 The assumption of an outstanding Award by the successor or acquiring entity (if any) of such Corporate Transaction (or by its parents, if any), which assumption, will be binding on all selected Participants; provided that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code.

 

(c)                                  The substitution by the successor or acquiring entity in such Corporate Transaction (or by its parents, if any) of equivalent awards with substantially the same terms for such outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code).

 

(d)                                 The full acceleration of exercisability or vesting and accelerated expiration of an outstanding Award and lapse of the Company’s right to repurchase or re-acquire shares acquired under an Award or lapse of forfeiture rights with respect to shares acquired under an Award.

 

(e)                                  The settlement of the full value of such outstanding Award (whether or not then vested or exercisable) in cash, cash equivalents, or securities of the successor entity (or its parent, if any) with a Fair Market Value equal to the required amount, followed by the cancellation of such Awards; provided however, that such Award may be cancelled if such Award has no value, as determined by the Committee, in its discretion.  Subject to Section 409A of the Code, such payment may be made in installments and may be deferred until the date or dates the Award would have become exercisable or vested.  Such payment may be subject to vesting based on the Participant’s continued service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which the Award would have become vested or exercisable.  For purposes of this Section 21.1(e), the Fair Market value of any security shall be determined without regard to any vesting conditions that may apply to such security.

 

The Board shall have full power and authority to assign the Company’s right to repurchase or re-acquire or forfeiture rights to such successor or acquiring corporation.  In addition, in the event such successor or acquiring corporation refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period.  Awards need not be treated similarly in a Corporate Transaction.

 

21.2.                     Assumption of Awards by the Company.  The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan.  Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of

 

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this Plan to such grant.  In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code).  In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price.   Substitute Awards shall not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in a calendar year.

 

21.3.                     Non-Employee Directors’ Awards.  Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non-Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.

 

22.                               ADOPTION AND STOCKHOLDER APPROVAL.  This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.

 

23.                               TERM OF PLAN/GOVERNING LAW.  Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board.  This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of laws rules).

 

24.                               AMENDMENT OR TERMINATION OF PLAN.  The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; provided further, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted.

 

25.                               NONEXCLUSIVITY OF THE PLAN.  Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

 

26.                               INSIDER TRADING POLICY.  Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.

 

27.                               DEFINITIONS.  As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:

 

27.1.                     “Affiliate” means (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee, whether now or hereafter existing.

 

27.2.                     “Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.

 

27.3.                     “Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award and country-specific appendix thereto for grants to non-U.S. Participants, which shall be in substantially a

 

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form (which need not be the same for each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committee’s delegate(s)) has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.

 

27.4.                     “Award Transfer Program” means any program instituted by the Committee which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity approved by the Committee.

 

27.5.                     “Board” means the Board of Directors of the Company.

 

27.6.                     “Cause” means (i) Participant’s willful failure substantially to perform his or her duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) Participant’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Participant of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s willful breach of any of his or her obligations under any written agreement or covenant with the Company.  The determination as to whether a Participant is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant.  The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 20 above, and the term “Company” will be interpreted to include any Subsidiary or Parent, as appropriate. Notwithstanding the foregoing, the foregoing definition of “Cause” may, in part or in whole, be modified or replaced in each individual employment agreement or Award Agreement with any Participant, provided that such document supersedes the definition provided in this Section 27.5.

 

27.7.                     “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

27.8.                     “Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law.

 

27.9.                     “Common Stock” means the common stock of the Company.

 

27.10.              “Company” means YuMe, Inc., or any successor corporation.

 

27.11.              “Consultant” means any person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

 

27.12.              “Corporate Transaction” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; provided, however, that for purposes of this subclause (i) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will not be considered a Corporate Transaction; (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; (iv) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein

 

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the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company) or (v) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by member of the Board whose appointment or election is not endorsed by as majority of the members of the Board prior to the date of the appointment or election.  For purpose of this subclause (v), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Corporate Transaction.  For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, a transaction will not be deemed a Corporate Transaction unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time.

 

27.13.              “Director” means a member of the Board.

 

27.14.              “Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

 

27.15.              “Effective Date” means the day immediately prior to the date of the underwritten initial public offering of the Company’s Common Stock pursuant to a registration statement that is declared effective by the SEC.

 

27.16.              “Employee” means any person, including Officers and Directors, providing services as an employee to the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

 

27.17.              “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

27.18.              “Exchange Program” means a program pursuant to which (i) outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof) or (ii) the exercise price of an outstanding Award is increased or reduced.

 

27.19.              “Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.

 

27.20.              “Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

 

(a)                                 if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable;

 

(b)                                 if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable;

 

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(c)                                  in the case of an Option or SAR grant made on the Effective Date, the price per share at which shares of the Company’s Common Stock are initially offered for sale to the public by the Company’s underwriters in the initial public offering of the Company’s Common Stock pursuant to a registration statement filed with the SEC under the Securities Act; or

 

(d)                                 if none of the foregoing is applicable, by the Board or the Committee in good faith.

 

27.21.              “Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

 

27.22.              “IRS” means the United States Internal Revenue Service.

 

27.23.              “Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary.

 

27.24.              “Option” means an award of an option to purchase Shares pursuant to Section 5.

 

27.25.              “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

27.26.              “Participant” means a person who holds an Award under this Plan.

 

27.27.              “Performance Award” means cash or stock granted pursuant to Section 10 or Section 12 of the Plan.

 

27.28.              “Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied:

 

(a)                                 Profit Before Tax;

 

(b)                                 Billings;

 

(c)                                  Revenue;

 

(d)                                 Net revenue;

 

(e)                                  Earnings (which may include earnings before interest and taxes, earnings before  taxes, and net earnings);

 

(f)                                   Operating income;

 

(g)                                 Operating margin;

 

(h)                                 Operating profit;

 

(i)                                    Controllable operating profit, or net operating profit;

 

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(j)                                    Net Profit;

 

(k)                                 Gross margin;

 

(l)                                    Operating expenses or operating expenses as a percentage of revenue;

 

(m)                             Net income;

 

(n)                                 Earnings per share;

 

(o)                                 Total stockholder return;

 

(p)                                 Market share;

 

(q)                                 Return on assets or net assets;

 

(r)                                  The Company’s stock price;

 

(s)                                   Growth in stockholder value relative to a pre-determined index;

 

(t)                                    Return on equity;

 

(u)                                 Return on invested capital;

 

(v)                                 Cash Flow (including free cash flow or operating cash flows)

 

(w)                               Cash conversion cycle;

 

(x)                                 Economic value added;

 

(y)                                 Individual confidential business objectives;

 

(z)                                  Contract awards or backlog;

 

(aa)                          Overhead or other expense reduction;

 

(bb)                          Credit rating;

 

(cc)                            Strategic plan development and implementation;

 

(dd)                          Succession plan development and implementation;

 

(ee)                            Improvement in workforce diversity;

 

(ff)                              Customer indicators;

 

(gg)                          New product invention or innovation;

 

(hh)                          Attainment of research and development milestones;

 

(ii)                                Improvements in productivity;

 

(jj)                                Bookings;

 

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(kk)                          Attainment of objective operating goals and employee metrics; and

 

(ll)                                Any other metric that is capable of measurement as determined by the Committee.

 

The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant. It is within the sole discretion of the Committee to make or not make any such equitable adjustments.

 

27.29.              “Performance Period” means the period of service determined by the Committee, not to exceed five (5) years, during which years of service or performance is to be measured for the Award.

 

27.30.              “Performance Share” means an Award granted pursuant to Section 10 or Section 12 of the Plan.

 

27.31.              “Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests.

 

27.32.              “Plan” means this YuMe, Inc. 2013 Equity Incentive Plan.

 

27.33.              “Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.

 

27.34.              “Restricted Stock Award” means an award of Shares pursuant to Section 6 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option.

 

27.35.              “Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of the Plan.

 

27.36.              “SEC” means the United States Securities and Exchange Commission.

 

27.37.              “Securities Act” means the United States Securities Act of 1933, as amended.

 

27.38.              “Service” shall mean service as an Employee, Consultant, Director or Non-Employee Director, to the Company or a Parent, Subsidiary or Affiliate of the Company, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement.  An Employee will not be deemed to have ceased to provide Service in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Company; provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing.  In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement.  In the event of military leave, if required by applicable laws, vesting

 

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shall continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave.  Except as set forth in this Section 27.38, an employee shall have terminated employment as of the date he or she ceases to provide services (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment shall not be extended by any notice period or garden leave mandated by local law, provided however, that a change in status from an employee to a consultant or advisor shall not terminate the service provider’s Service, unless determined by the Committee, in its discretion.  The Committee will have sole discretion to determine whether a Participant has ceased to provide Services and the effective date on which the Participant ceased to provide Services.

 

27.39.              “Shares” means shares of the Company’s Common Stock and the common stock of any successor security.

 

27.40.              “Stock Appreciation Right” means an Award granted pursuant to Section 8 or Section 12 of the Plan.

 

27.41.              “Stock Bonus” means an Award granted pursuant to Section 7 or Section 12 of the Plan.

 

27.42.              “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

27.43.              “Treasury Regulations” means regulations promulgated by the United States Treasury Department.

 

27.44.              “Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).

 

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NOTICE OF STOCK OPTION GRANT

 

YUME, INC. 2013 EQUITY INCENTIVE PLAN

 

Unless otherwise defined herein, the terms defined in the YuMe, Inc. (the “Company”) 2013 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Stock Option Grant (the “Notice”) and the Stock Option Agreement (the “Option Agreement”). You have been granted an Option to purchase shares of Common Stock of the Company under the Plan subject to the terms and conditions of the Plan, this Notice and the Option Agreement.

 

Name:

 

Address:

 

Grant Number:

 

Date of Grant:

 

Vesting Commencement Date:

 

Exercise price per Share:

 

Total Number of Shares:

 

Type of Option:                                                                                                                            Non-Qualified Stock Option

 

          Incentive Stock Option

 

Expiration Date:                                                                                                                 , 20    ; This Option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement.

 

Vesting Schedule:                                                                                             This Option becomes exercisable with respect to the first     % of the shares subject to this Option when you complete        months of continuous Service from the Vesting Commencement Date.  Thereafter, this Option becomes exercisable with respect to an additional     % of the shares subject to this Option when you complete each month of Service.

 

By accepting this Option, you and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, the Notice and the Option Agreement.  By accepting this Option, you consent to electronic delivery as set forth in the Option Agreement.

 

	
 
    	
YUME, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

 

STOCK OPTION AGREEMENT

 

YUME, INC. 2013 EQUITY INCENTIVE PLAN

 

You have been granted an Option by YuMe, Inc. (the “Company”) under the 2013 Equity Incentive Plan (the “Plan”) to purchase Shares (the “Option”), subject to the terms and conditions of the Plan, the Notice of Stock Option Grant (the “Notice”) and this Stock Option Agreement (the “Agreement”).

 

1.                                      Grant of Option.  You have been granted an Option for the number of Shares set forth in the Notice at the exercise price per Share set forth in the Notice (the “exercise price”).  In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail.  If designated in the Notice as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code.  However, if this Option is intended to be an ISO, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonqualified Stock Option (“NSO”).

 

2.                                      Termination Period.

 

(a)                                 General Rule.  If your Service terminates for any reason except death or Disability, and other than for Cause, then this Option will expire at the close of business at Company headquarters on the date three months after your termination date.  If your Service is terminated for Cause, this Option will expire upon the date of such termination. The Company determines when your Service terminates for all purposes under this Agreement.

 

(b)                                 Death; Disability.  If you die before your Service terminates, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date of death.  If your Service terminates because of your Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after your termination date.

 

(c)                                  No Notice.  You are responsible for keeping track of these exercise periods following your termination of Service for any reason.  The Company will not provide further notice of such periods.  In no event shall this Option be exercised later than the Expiration Date set forth in the Notice.

 

3.                                      Exercise of Option.

 

(a)                                 Right to Exercise.  This Option is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice and the applicable provisions of the Plan and this Agreement.  In the event of your death, Disability, or other cessation of Service, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice and this Agreement.  This Option may not be exercised for a fraction of a Share.

 

(b)                                 Method of Exercise.  This Option is exercisable by delivery of an exercise notice in a form specified by the Company (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan.  The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company.  The Exercise Notice shall be accompanied by payment of the aggregate exercise price as to all Exercised Shares.  This Option shall be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice accompanied by the aggregate exercise price and any applicable tax withholding due upon exercise of the Option.

 

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(c)                                  Exercise by Another.  If another person wants to exercise this Option after it has been transferred to him or her, that person must prove to the Company’s satisfaction that he or she is entitled to exercise this Option.  That person must also complete the proper Exercise Notice form (as described above) and pay the exercise price (as described below) and any applicable tax withholding due upon exercise of the Option (as described below).

 

4.                                      Method of Payment.  Payment of the aggregate exercise price shall be by any of the following, or a combination thereof, at the election of you:

 

(a)                                 your personal check, wire transfer, or a cashier’s check;

 

(b)                                 certificates for shares of Company stock that you own, along with any forms needed to effect a transfer of those shares to the Company; the value of the shares, determined as of the effective date of the Option exercise, will be applied to the Option exercise price.  Instead of surrendering shares of Company stock, you may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Option shares issued to you.  However, you may not surrender, or attest to the ownership of, shares of Company stock in payment of the exercise price of your Option if your action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes;

 

(c)                                  cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all or part of the Shares covered by this Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Option exercise price and any withholding taxes.  The balance of the sale proceeds, if any, will be delivered to you.  The directions must be given by signing a special notice of exercise form provided by the Company; or

 

(d)                                 other method authorized by the Company.

 

5.                                      Non-Transferability of Option.  In general, except as provided below, only you may exercise this Option prior to your death.  You may not transfer or assign this Option, except as provided below.  For instance, you may not sell this Option or use it as security for a loan.  If you attempt to do any of these things, this Option will immediately become invalid.  You may, however, dispose of this Option in your will or in a beneficiary designation.  However, if this Option is designated as a NSO in the Notice, then the Committee (as defined in the Plan) may, in its sole discretion, allow you to transfer this Option as a gift to one or more family members.  For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in- law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest.  In addition, if this Option is designated as a NSO in the Notice, then the Committee may, in its sole discretion, allow you to transfer this Option to your spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights.  The Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement.  This Option may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of you only by you, your guardian, or legal representative, as permitted in the Plan. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of you.

 

6.                                      Term of Option.  This Option shall in any event expire on the expiration date set forth in the Notice, which date is 10 years after the grant date (five years after the grant date if this Option is designated as an ISO in the Notice and Section 5.3 of the Plan applies).

 

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7.                                      Tax Consequences.  You should consult a tax advisor for tax consequences relating to this Option in the jurisdiction in which you are subject to tax.  YOU SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

(a)                                 Exercising the Option.  You will not be allowed to exercise this Option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the Option exercise.

 

(b)                                 Notice of Disqualifying Disposition of ISO Shares.  If you sell or otherwise dispose of any of the Shares acquired pursuant to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, you shall immediately notify the Company in writing of such disposition.  You agree that he or she may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out of the current compensation paid to you.

 

8.                                      Withholding Taxes and Stock Withholding.  Regardless of any action the Company or your actual employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option grant, including the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate your liability for Tax-Related Items.

 

Prior to exercise of the Option, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer.  In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer.  With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when you exercise this Option, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Company.  The Fair Market Value of these Shares, determined as of the effective date of the Option exercise, will be applied as a credit against the withholding taxes. Finally, you shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described.  The Company may refuse to honor the exercise and refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this Section.

 

9.                                      Acknowledgement.  The Company and you agree that the Option is granted under and governed by the Notice, this Agreement and by the provisions of the Plan (incorporated herein by reference).  You: (i) acknowledge receipt of a copy of the Plan and the Plan prospectus, (ii) represent that you have carefully read and is familiar with their provisions, and (iii) hereby accept the Option subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.  You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and the Agreement.

 

10.                               Consent to Electronic Delivery of All Plan Documents and Disclosures.  By your acceptance of this Option, you consent to the electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its

 

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security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the Option. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion.  You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at legal@yume.com. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at legal@yume.com. Finally, you understand that you are not required to consent to electronic delivery.

 

11.                               Compliance with Laws and Regulations.  The Company will not permit anyone to exercise this Option if the issuance of shares at that time would violate any law or regulation, including without limitation all applicable state, federal and foreign laws and regulations and all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance.

 

12.                               Governing Law; Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.

 

13.                               No Rights as Employee, Director or Consultant.  Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate your Service, for any reason, with or without cause.

 

14.                               Adjustment.  In the event of a stock split, a stock dividend or a similar change in Company stock, the number of Shares covered by this Option and the exercise price per Share may be adjusted pursuant to the Plan.

 

15.                               Lock-Up Agreement.  In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, you hereby agree not to sell, make any short sale of, loan, grant any Option for the purchase of, or otherwise dispose of any securities of the Company however and whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public offering; provided however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section shall continue to apply until the end of the third trading day following the expiration of the fifteen (15)-day period beginning on the issuance of the

 

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earnings release or the occurrence of the material news or material event.  In no event will the restricted period extend beyond two hundred sixteen (216) days after the effective date of the registration statement.

 

This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option.  Any prior agreements, commitments or negotiations concerning this Option are superseded.  This Agreement may be amended only by another written agreement between the parties.

 

BY ACCEPTING THIS OPTION, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

 

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NOTICE OF EXERCISE

YUME, INC. 2013 EQUITY INCENTIVE PLAN

 

You must sign this Notice on Page 2 before submitting it to the Company.

 

OPTIONEE INFORMATION:

 

	
Name:
    	
 
    	
Social   Security Number:
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
Employee   Number:
    
	
 
    	
 
    	
 
    

 

OPTION INFORMATION:

 

	
Date   of Grant:                                    ,   20
    	
 
    	
Type   of Stock Option:
    
	
 
    	
 
    	
 
    
	
Option   Price per Share: $
    	
 
    	
o   Non-qualified (NSO)
    
	
 
    	
 
    	
 
    
	
Total   number of shares of Common Stock of YuMe, Inc. (the “Company”) covered   by the option:
    	
 
    	
o Incentive   (ISO)
    

 

EXERCISE INFORMATION:

 

Number of shares of Common Stock of the Company for which the option is being exercised now:

                                       .  (These shares are referred to below as the “Purchased Shares.”)

 

Total Option Price for the Purchased Shares: $                        

 

Form of payment enclosed [check all that apply]:

 

o                  Check for $                        , payable to “YuMe, Inc.”

 

o                  Broker assisted cashless exercise.  [Requires broker form.]

 

o                  Attestation Form covering                                  shares of Common Stock of the Company.  These shares will be valued as of the date this notice is received by the Company.  

 

	
Name(s) in   which the Purchased Shares should be registered :
    

 

	
o             In my name only
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
o            In the names of my spouse   and myself as community property
    	
 
    	
My   spouse’s name (if applicable):
    

 

 

	
o            In the names of my spouse   and myself as community property with the right of survivorship
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
o            In the names of my spouse   and myself as joint tenants with the right of survivorship
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
o            In the name of an eligible   revocable trust [requires Stock Transfer Agreement]
    	
 
    	
Full   legal name of revocable trust:
    
	
 
    	
 
    	
 
    
	
The   certificate for the Purchased Shares should be sent to the following address:
    	
 
    	
 
    

 

REPRESENTATIONS AND ACKNOWLEDGMENTS OF THE OPTIONEE:

 

1.              I acknowledge that I am acquiring the Purchased Shares subject to all terms of the Notice of Stock Option Grant and Stock Option Agreement.

 

2.              I UNDERSTAND THAT I MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF MY PURCHASE OR DISPOSITION OF THE PURCHASED SHARES.  I REPRESENT:  (i) THAT I HAVE CONSULTED WITH A TAX ADVISER APPROPRIATELY QUALIFIED IN THE COUNTRY OR COUNTRIES IN WHICH I RESIDE OR AM SUBJECT TO TAXATION IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE PURCHASED SHARES AND (ii) THAT I AM NOT RELYING ON THE COMPANY OR MY EMPLOYER FOR ANY TAX ADVICE.

 

3.              I acknowledge that my exercise of the Option is expressly conditioned on my paying or making adequate arrangements satisfactory to the Company and/or the Employer to satisfy all tax withholding and other obligations of the Company and/or the Employer, as set forth in Section 8 of the Stock Option Agreement.  In the case of a Non-qualified option, I understand that I must recognize ordinary income equal to the spread between the fair market value of the Purchased Shares on the date of exercise and the exercise price. In the case of an incentive stock option, I understand that I may be subject to alternative minimum tax under applicable tax law. I further understand that I am required to pay withholding taxes at the time of exercising a Non-qualified option.

 

4.              I acknowledge that I have received a copy of the Plan Prospectus describing the Company’s 2013 Equity Incentive Plan and the tax consequences of exercise.  I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring the Purchased Shares at this time.

 

5.              I understand that all sales of Purchased Shares are subject to compliance with the Company’s policy on securities trades.

 

	
SIGNATURE:
    	
DATE:
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
			

 

2

 

NOTICE OF RESTRICTED STOCK UNIT AWARD

 

YUME, INC.

2013 EQUITY INCENTIVE PLAN

GRANT NUMBER:

 

Unless otherwise defined herein, the terms defined in the YuMe, Inc. (the “Company”) 2013 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Restricted Stock Unit Award (the “Notice”) and the attached Award Agreement (Restricted Stock Unit Agreement) (hereinafter “RSU Agreement”).

 

	
Name:
    	
 
    
	
 
    	
 
    
	
Address:
    	
 
    

 

You (“you”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan subject to the terms and conditions of the Plan, this Notice and the attached RSU Agreement.

 

Number of RSUs:

 

Date of Grant:

 

Vesting Commencement Date:

 

Expiration Date:                                                                                                                   The date on which settlement of all RSUs granted hereunder occurs.  This RSU expires earlier if your Service terminates earlier, as described in the RSU Agreement.

 

Vesting Schedule:                                                                                                               Subject to the limitations set forth in this Notice, the Plan and the RSU Agreement, 25% of the total number of RSUs will vest on the 12 month anniversary of the Vesting Commencement Date and 3/48th of the total number of RSUs will vest on the same day of each third month thereafter so long as your Service continues.

 

You acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing Service as an Employee, Director or Consultant of the Company.  By accepting this RSU, you consent to electronic delivery as set forth in the RSU Agreement.

 

	
PARTICIPANT
    	
YUME, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature:
    	
 
    	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Print   Name:
    	
 
    	
 
    	
Its:
    	
 
    

 

 

RESTRICTED STOCK UNIT AGREEMENT

 

YUME, INC.

2013 EQUITY INCENTIVE PLAN

 

You have been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions and conditions of the Plan, the Notice of Restricted Stock Unit Award (the “Notice”) and this Agreement.

 

1.                                      Settlement.  Settlement of RSUs shall be made within 30 days following the applicable date of vesting under the vesting schedule set forth in the Notice.  Settlement of RSUs shall be in Shares.  Settlement means the delivery of the Shares vested under an RSU. No fractional RSUs or rights for fractional Shares shall be created pursuant to this Agreement.

 

2.                                      No Stockholder Rights.  Unless and until such time as Shares are issued in settlement of vested RSUs, you shall have no ownership of the Shares allocated to the RSUs and shall have no right dividends or to vote such Shares.

 

3.                                      Dividend Equivalents.  Dividends, if any (whether in cash or Shares), shall not be credited to you.

 

4.                                      No Transfer.  RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.

 

5.                                      Termination.  If your Service terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights you have to such RSUs shall immediately terminate.  In case of any dispute as to whether your termination of Service has occurred, the Committee shall have sole discretion to determine whether such termination has occurred and the effective date of such termination.

 

6.                                      Tax Consequences.  You acknowledge that there will be tax consequences upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and you should consult a tax adviser regarding your tax obligations prior to such settlement or disposition in the jurisdiction where you are subject to tax.

 

7.                                      Withholding Taxes and Stock Withholding.  Regardless of any action the Company or your actual employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the award, including the settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the award or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items.  You acknowledge that if you are subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

Prior to the settlement of your RSUs, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer.  In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer.  With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when your RSUs are settled, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf and you hereby authorize

 

1

 

such sales by this authorization), (c) your payment of a cash amount, or (d) any other arrangement approved by the Company; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided however, that if you are a Section 16 officer of the Company under the Exchange Act, then the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish the method of withholding from alternatives (a)-(d) above, and the Committee shall establish the method prior to the Tax-Related Items withholding event.  The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes.  You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described.  Finally, you acknowledge that the Company has no obligation to deliver Shares to you until you have satisfied the obligations in connection with the Tax-Related Items as described in this Section.

 

8.                                      Acknowledgement.  The Company and you agree that the RSUs are granted under and governed by the Notice, this Agreement and the provisions of the Plan.  You: (i) acknowledge receipt of a copy of the Plan prospectus, (ii) represent that you have carefully read and are familiar with their provisions, and (iii) hereby accept the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Notice.

 

9.                                      Entire Agreement; Enforcement of Rights.  This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement.  The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

 

10.                               Compliance with Laws and Regulations.  The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

 

11.                               Governing Law; Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.  For purposes of litigating any dispute that may arise directly or indirectly from the Plan, the Notice and this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States for the Northern District of California and no other courts.

 

11.                               No Rights as Employee, Director or Consultant.  Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate your Service, for any reason, with or without cause.

 

12.                               Consent to Electronic Delivery of All Plan Documents and Disclosures.  By acceptance of this RSU, you consent to the electronic delivery of the Notice, this RSU Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation,

 

2

 

annual reports and proxy statements) or other communications or information related to the RSU. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at legal@yume.com.  You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at legal@yume.com. Finally, you understand that you are not required to consent to electronic delivery.

 

13.                               Code Section 409A.  For purposes of Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A”), to the extent any payments provided under this Agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the six-month period measured from your separation from service from the Company or (ii) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral.  To the extent any payment under this Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A.  

 

BY ACCEPTING THIS RSU, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

 

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