Document:

exv10w19

 

EXHIBIT 10.19

EXECUTION COPY

LOAN AND SECURITY AGREEMENT

    This LOAN AND SECURITY AGREEMENT, dated as of May 2, 2006 (this “Loan Agreement”), is entered
by and among GLU MOBILE INC., a California corporation (“Borrower”), PINNACLE VENTURES, L.L.C. as
agent (“Agent”) for the lenders identified on Schedule 1 hereto (such lenders, together with their
respective successors and assigns are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), and the Lenders. Capitalized terms used and not otherwise defined
in this Loan Agreement shall have the respective meanings given to such terms in Article 10.

     In consideration of the covenants, conditions and agreements set forth herein and intending to
be legally bound, the parties agree as follows:

Article 1. THE LOANS.

Section 1.01 Commitment. Subject to the terms and conditions of this Loan Agreement,
Lenders agree to advance to Borrower (the “Advance”) no later than May 8, 2006 (the date of such
Advance, the “Funding Date”), a single term loan in an aggregate principal amount of Twelve Million
Dollars ($12,000,000). Borrower may prepay the Advance in accordance with Section 1.02(d).

Section 1.02 Interest and Payments.

	 	(a)	 	Interest. Borrower shall pay interest in advance on the unpaid principal amount
of the Advance from the Funding Date until such Advance is paid in full, at a per annum rate
of interest equal to the Prime Rate determined as of the Funding Date plus three hundred
twenty-five (325) basis points, based upon a year of 360 days and actual days elapsed. If
Borrower pays interest on such Advance which is determined to be in excess of the then legal
maximum rate, then that portion of each interest payment representing an amount in excess of
the then legal maximum rate shall be deemed a payment of principal and applied against the
principal of the Advance.

	 	(b)	 	Payments of Principal and Interest. For the Advance, Borrower shall make equal
payments of interest only (payable in advance) on the first Business Day of each month (each
a “Payment Date”) commencing on the first Payment Date occurring on or after the Funding
Date through December 31, 2006. Thereafter, Borrower shall make thirty (30) equal payments
of principal and interest (payable in advance) on the first Business Day of each month (each
a “Payment Date”) until the Advance is paid in full. The amount of each such payment shall
be sufficient to fully amortize the principal and interest due on the Advance over such
thirty (30) month period.

	 	(c)	 	Interim Interest Payment. For the Advance, unless the Funding Date is a Payment
Date, Borrower shall make an advance payment of interest at the otherwise applicable rate
referred to in Section 1.02(a) on the Funding Date for the period from the Funding Date to
the first Payment Date.

	 	(d)	 	Prepayment. Upon five (5) Business Days’ prior written notice to Agent, Borrower
may, at its option, at any time, prepay all or part, in minimum amounts of $500,000, of the
Advance, in an amount equal to the outstanding principal amount being prepaid, plus accrued
and unpaid interest thereon through and including the date of such prepayment, plus any
other amounts then due to Lenders provided, that if any part of the Advance is prepaid
within 18 months of the Funding Date, there will be a 3% premium on the principal amount
being prepaid, payable in conjunction with such prepayment. No premium shall be payable,
however, with prepayments made: (i) in connection with issuance of shares of stock that are
publicly traded on a national market or exchange, (ii) in connection with a Change of
Control or (iii) more than 18 months after the funding the Advance.

 

 

Section 1.03 Use of Proceeds; the Advances and the Notes; Disbursement.

	 	(a)	 	Use of Proceeds. The proceeds of the Advances shall be used for general
corporate purposes.

	 	(b)	 	The Advances and the Notes. The obligation of Borrower to repay the aggregate
unpaid principal amount of and interest on the Advance shall be evidenced by a Note setting
forth the principal amount of such Advance and the payments due. Agent shall keep a record
of the payments made under the Note on its books which records shall be prima facie evidence
of the amounts paid under the Note absent manifest error. Any failure by Agent to obtain or
retain such Note shall not limit or otherwise affect the obligations of Borrower to pay
amounts due hereunder with respect to the Advance.

	 	(c)	 	Disbursement. Subject to the satisfaction of the conditions set forth in this
Loan Agreement, each Lender shall disburse its pro rata portion of each Advance to the
account of Borrower as specified in Section 9.06 on the Funding Date.

Section 1.04 Other Payment Terms.

	 	(a)	 	Place and Manner. All regularly scheduled payments due to the Lenders shall be
effected by wire transfer to Borrower’s account specified in 9.06(b). Borrower shall make
all other payments due to the Lenders in lawful money of the United States, in immediately
available funds, at the address for payments specified in Section 9.06.

	 	(b)	 	Date. Whenever any payment due hereunder shall fall due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall be included in the computation of interest or fees, as the case may
be.

	 	(c)	 	Default Rate. If any amounts required to be paid by Borrower under this Loan
Agreement or the other Transaction Documents (including principal or interest payable on the
Advance, any fees or other amounts) remain unpaid after such amounts are due, Borrower shall
pay interest on the aggregate, outstanding principal balance hereunder from the date due
until such past due amounts are paid in full, at a per annum rate equal to the Default Rate.
All computations of such interest shall be based on a year of 360 days and actual days
elapsed.

	 	(d)	 	Commitment Fee. Agent has received a commitment fee from Borrower in the amount
of $25,000 (the “Commitment Fee”). The Commitment Fee is fully earned and will be retained
by Agent.

	 	(e)	 	Legal and Due Diligence Costs. Borrower shall reimburse Lender for Lender’s
reasonable costs and expenses, up to $5,000, including reasonable legal fees incurred in
preparing and negotiating the Transaction Documents and travel expenses incurred in
performing due diligence.

Article 2. CREATION OF SECURITY INTEREST.

Section 2.01 Grant of Security Interest. Borrower grants and pledges to Agent on behalf of
all Lenders a continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure prompt payment of any and all Obligations and in order to
secure prompt performance by Borrower of each of its covenants and duties under the Transaction
Documents. Such security interest constitutes a valid, first priority security interest in the
presently existing Collateral, and will constitute a valid, first priority security interest in
Collateral acquired after the date hereof. Notwithstanding termination of this Loan Agreement,
Agent’s Lien on the Collateral shall remain in effect for so long as any Obligations are
outstanding.

Section 2.02 Liabilities Unconditional. Borrower is and shall remain absolutely and
unconditionally liable for the performance of its obligations under the Transaction Documents,
including without limitation any

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deficiency by reason of the failure of the Collateral to satisfy all amounts due to Agent or the
Lenders under any Transaction Document.

Section 2.03 Subordination of Accounts Receivable. Agent agrees to subordinate its lien,
on behalf of all Lenders, on accounts receivable in connection with an A/R Line, and agrees to, on
Borrower’s request, use its best efforts to negotiate and enter into a customary and reasonable
intercreditor agreement with the provider of such A/R Line.

Article 3. CLOSING.

Section 3.01 Conditions Precedent. The obligation of Lenders to fund an Advance shall be
subject to the following conditions precedent:

	 	(a)	 	Conditions to Closing. Agent shall have received in connection with the Closing
in form and substance satisfactory to Agent:

	 	(i)	 	This Loan Agreement, duly executed by Borrower;
	 
	 	(ii)	 	Copies, certified by the Secretary or Assistant Secretary of Borrower, of: (A)
the Articles of Incorporation and Bylaws of Borrower (as amended to the date of this
Loan Agreement), (B) the resolutions adopted by Borrower’s board of directors
authorizing the transaction and the documents being executed in connection therewith,
and (C) the incumbency of the officers executing this Loan Agreement and the other
Transaction Documents on behalf of Borrower.
	 
	 	(iii)	 	Good Standing Certificate(s) (including tax status if available) with respect
to Borrower from Borrower’s state of incorporation and principal place of business, if
different, (each) as of a date acceptable to Agent.
	 
	 	(iv)	 	Evidence of the insurance coverage required by Section 5.05 of this Loan
Agreement.
	 
	 	(v)	 	All necessary consents of shareholders and other third parties with respect to
the subject matter of the Loan Agreement and the other documents being executed in
connection therewith.
	 
	 	(vi)	 	A Warrant Purchase Agreement in the form provided by Agent and agreed to by
Borrower, duly executed by Borrower.
	 
	 	(vii)	 	The Warrants to be issued to the designees of the Lenders in forms provided by
Agent and agreed to by Borrower, duly executed by Borrower.
	 
	 	(viii)	 	A Management Rights Agreement in the form provided by Agent and agreed to by
Borrower, duly executed by Borrower.
	 
	 	(ix)	 	Agreements sufficient to perfect a security interest in Borrower’s deposit
accounts and securities accounts executed by each applicable bank or other financial
institution, in forms reasonably acceptable to Agent.
	 
	 	(x)	 	All other documents as Agent shall have reasonably requested.
	 
	 	(xi)	 	A legal opinion of counsel to Borrower covering the matters set forth in
Exhibit C hereto in form and substance reasonably satisfactory to Agent.

	 	(b)	 	Conditions to Funding of Each Advance. Prior to the funding of each Advance, the
following conditions with respect to such Advance shall have been satisfied by Borrower or
waived by Agent:

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	 	(i)	 	Borrower shall have executed and delivered a Note in the form of Exhibit A
prepared by Agent setting forth the terms of the Advance.
	 
	 	(ii)	 	No Event of Default or Default shall have occurred and be continuing.
	 
	 	(iii)	 	In Agent’s reasonable discretion, no event or condition shall exist that has
had or could be reasonably expected to have a Material Adverse Effect.
	 
	 	(iv)	 	The representations and warranties contained in this Loan Agreement and the
other Transaction Documents to which Borrower is a party shall be true and correct in
all material respects as if made on the date of funding of the Advance and the items
listed on any schedule shall be reasonably acceptable to Agent, except to the extent
such representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct in all material respects as of such earlier date.
	 
	 	(v)	 	Each of the Transaction Documents shall be in full force and effect.
	 
	 	(vi)	 	Borrower shall have provided to Agent such documents, instruments and
agreements, including financing statements or amendments to financing statements, as
Agent shall reasonably request to evidence the perfection and priority of the security
interests granted to Agent.

Article 4. REPRESENTATIONS AND WARRANTIES OF BORROWER.

Borrower represents and warrants to Agent that:

Section 4.01 Due Incorporation, Qualification, etc. Each of Borrower and its Subsidiaries
(i) is a corporation duly organized, validly existing and in good standing under the laws of its
state of incorporation; (ii) has the power and authority to own, lease and operate its properties
and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business
and in good standing as a foreign corporation in each jurisdiction where the failure to be so
qualified or licensed could reasonably be expected to have a Material Adverse Effect.

Section 4.02 Authority. The execution, delivery and performance by Borrower of each
Transaction Document to be executed by Borrower and the consummation of the transactions
contemplated thereby (i) are within the power of Borrower and (ii) have been duly authorized by all
necessary actions on the part of Borrower.

Section 4.03 Enforceability. Each Transaction Document executed, or to be executed, by
Borrower has been, or will be, duly executed and delivered by Borrower and constitutes, or will
constitute, a legal, valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as limited by bankruptcy, insolvency or other similar laws of
general application relating to or affecting the enforcement of creditors’ rights generally and
general principles of equity.

Section 4.04 Non-Contravention. The execution and delivery by Borrower of the Transaction
Documents executed by Borrower and the performance and consummation of the transactions
contemplated thereby do not and will not (i) violate any Requirement of Law applicable to Borrower;
(ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other
Person to accelerate (whether after the giving of notice or lapse of time or both), any material
Contractual Obligation of Borrower; or (iii) result in the creation or imposition of any Lien upon
any property, asset or revenue of Borrower (except such Liens as may be created in favor of Agent
pursuant to this Loan Agreement or the other Transaction Documents).

Section 4.05 Approvals. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority or other Person (including, without
limitation, the shareholders of any

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Person) is required in connection with the execution and delivery of the Transaction Documents
executed by Borrower and the performance and consummation of the transactions contemplated thereby.

Section 4.06 No Violation or Default. None of Borrower or Borrower’s Subsidiaries is in
violation of or in default with respect to (i) any Requirement of Law; or (ii) any Contractual
Obligation (nor is there any waiver in effect which, if not in effect, would result in such a
violation or default), where, in each case, such violation or default, individually, or together
with all such violations or defaults, could reasonably be expected to have a Material Adverse
Effect. Without limiting the generality of the foregoing, neither Borrower nor Borrower’s
Subsidiaries (A) has violated any Environmental Laws, (B) has any liability under any Environmental
Laws or (C) has received notice or other communication of an investigation or is under
investigation by any Governmental Authority having authority to enforce Environmental Laws, where
such violation, liability or investigation could reasonably be expected to have a Material Adverse
Effect. No Event of Default or Default has occurred and is continuing.

Section 4.07 Litigation. Except as described on Schedule 2, no actions (including, without
limitation, derivative actions), suits, proceedings or investigations are pending or, to the
knowledge of Borrower, threatened against Borrower or Borrower’s Subsidiaries at law or in equity
in any court or before any other Governmental Authority which if adversely determined (i) could
reasonably be expected (alone or in the aggregate) to have a Material Adverse Effect or (ii) seeks
to enjoin, either directly or indirectly, the execution, delivery or performance by Borrower of the
Transaction Documents or the transactions contemplated thereby.

Section 4.08 Title. Borrower has good and marketable title to all Collateral, free and
clear of all Liens, other than Permitted Liens. Borrower has no other deposit accounts or
securities accounts, other than the deposit accounts and securities accounts described in
Schedule 2, which, subject to Section 5.19, may be updated from time to time with ten (10)
business days’ advance notice to Agent. Except as described in Schedule 2, the Collateral
is not in the possession of any third party bailee (such as at a warehouse). All Inventory is in
all material respects of good and marketable quality, free from material defects.

Section 4.09 Financial Statements. The Financial Statements of Borrower which have been
delivered to Agent (i) are in accordance with the books and records of Borrower and its
Subsidiaries, which have been maintained in accordance with good business practice; (ii) have been
prepared in conformity with generally accepted accounting principles; and (iii) fairly present in
all material respects the consolidated financial position of Borrower as of the dates presented
therein and the results of operations, changes in financial positions or cash flows, as the case
may be, for the periods presented therein. As of the date of Closing, none of Borrower or any of
Borrower’s Subsidiaries has any contingent obligations, liability for taxes or other outstanding
obligations which are material in the aggregate, except as disclosed in the most recent audited
Financial Statements (including the notes thereto) furnished by Borrower to Agent prior to the date
hereof or on Schedule 2.

Section 4.10 Taxes. Each of Borrower and its Subsidiaries has filed or caused to be filed
all tax returns that are required to be filed by it except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 2,
Borrower and Borrower’s Subsidiaries have paid, or made provision for the payment of, all Taxes
which have or may have become due pursuant to said returns or otherwise, except such Taxes, if any,
which are being contested in good faith and as to which adequate reserves (determined in accordance
with generally accepted accounting principles) have been provided or which would not reasonably be
expected to have a Material Adverse Effect if unpaid.

Section 4.11 Catastrophic Events; Labor Disputes. Neither Borrower nor Borrower’s
Subsidiaries and none of their properties is or has been affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or
other casualty that would reasonably be expected to have a Material Adverse Effect. There are no
disputes presently subject to grievance procedure, arbitration or litigation under any of the
collective bargaining agreements, employment contracts or employee welfare or incentive plans to
which Borrower or Borrower’s Subsidiaries is a party, and there are no strikes, lockouts, work
stoppages or slowdowns, or, to the best knowledge of Borrower, jurisdictional disputes or

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organizing activity occurring or threatened which would reasonably be expected to have a Material
Adverse Effect.

Section 4.12 No Material Adverse Effect. No event has occurred (which is continuing) and
no condition exists which would reasonably be expected to have a Material Adverse Effect.

Section 4.13 First Priority. Assuming the timely effecting of appropriate actions such as
entry into deposit account control agreements and filing of financing statements covering the
Collateral, the security interest granted hereby constitutes a first priority security interest in
and Lien on all of the Collateral, subject only to Permitted Liens.

Section 4.14 Principal Place of Business. Borrower is incorporated in the jurisdiction
stated in the first sentence of this Loan Agreement, and the office where Borrower will keep all
records and files regarding the Collateral is set forth in Section 9.07. Except as disclosed on
Schedule 2, Borrower has not done business under any name other than that specified on the
signature page hereof. All Borrower’s Inventory and Equipment is located only at the locations set
forth in Section 9.07 or on Schedule 2 or at such other locations as are permitted under
Section 5.12.

Section 4.15 Intellectual Property. Borrower is the sole owner of Borrower’s Intellectual
Property, except for non-exclusive licenses granted by Borrower to its customers in the ordinary
course of business. No part of Borrower’s Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of Borrower’s
Intellectual Property violates the rights of any third party. Borrower does not own any Patents,
Trademarks, Copyrights or Mask Works registered in, or the subject of pending applications in, the
Patent and Trademark Office or the Copyright Office or any similar offices or agencies in any other
country or any political subdivision thereof, other than those described on Schedule 3 hereto.

Section 4.16 Investments. Borrower does not own any Investments in any Person, except for
Permitted Investments.

Article 5. COVENANTS OF BORROWER.

While any Obligations or unfunded Commitments remain outstanding:

Section 5.01 Financial Statements. Borrower shall provide to Agent the financial
statements specified in this Section 5.01, prepared in accordance with generally accepted
accounting principles, consistently applied (except, in the case of unaudited financial statements,
for the absence of footnotes and normal year-end adjustments); provided, however,
that after the effective date of the initial registration statement covering a public offering of
Borrower’s securities, Borrower shall only be required to deliver those financial statements
required to be filed by the Securities and Exchange Commission, to be provided as soon as
practicable and no less frequently than quarterly.

	 	(a)	 	As soon as practicable (and in any event within forty-five (45) days after the end of
each month), an unaudited balance sheet as of the end of such month and unaudited statements
of income or loss, retained earnings or deficit, cash flows and capital structure of
Borrower for such month, certified by Borrower’s Chief Executive Officer or Chief Financial
Officer to fairly present in all material respects the data reflected therein.

	 	(b)	 	As soon as practicable (and in any event within one hundred eighty (180) days after the
end of each fiscal year), audited balance sheets as of the end of such year (consolidated if
applicable), and related statements of income or loss, retained earnings or deficit, cash
flows and capital structure of Borrower for such year, setting forth in comparative form the
corresponding figures for the preceding fiscal year, and accompanied by an audit report and
unqualified opinion of the independent certified public accountants of recognized national
standing selected by Borrower.

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Section 5.02 Other Information. Borrower shall provide to Agent: (a) copies of all board
notices, minutes and consents delivered to its board of directors in connection with board meetings
or otherwise promptly after their delivery to the board of directors, (b) notice of all actions,
suits and proceedings before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which suits or proceedings if decided adversely to
Borrower could reasonably be expected to result in monetary costs to, or damages payable by, to
Borrower of One Hundred Thousand Dollars ($100,000) or more promptly after any officer of Borrower
becomes aware thereof, (c) notice of any Default, Event of Default, Event of Loss, or any matter
which has resulted or may result in a Material Adverse Effect promptly after any officer of
Borrower becomes aware thereof, and (d) any additional information (including but not limited to
tax returns, income statements, balance sheets, and names of principal creditors) as Agent shall
reasonably request which is necessary to evaluate Borrower’s continuing financial obligations
promptly after Agent’s request therefor.

Section 5.03 Corporate Identity. Borrower shall notify Agent in writing twenty (20) days
prior to any change in Borrower’s principal place of business or chief executive office and any
change of Borrower’s name, organizational identification number or corporate structure.

Section 5.04 Payments by Wire Transfer; Authorization for Automated Clearinghouse Funds
Transfer. Borrower shall make all payments due Lenders by wire transfer in immediately
available funds in accordance with the instructions set forth in Section 9.06(b); provided that
upon the occurrence of an Event of Default under Section 7.01(a), or, if earlier, at Borrower’s
option, Borrower shall authorize Agent to initiate debit entries to Borrower’s account specified in
Section 9.06(a) (“Borrower’s Primary Operating Account”) through Automated Clearinghouse (“ACH”)
transfers, in order to satisfy regularly scheduled payments of principal, interest and fees; at
which time Borrower agrees to (i) provide Agent at least thirty (30) days notice of any change in
Borrower’s Primary Operating Account; and (ii) grant Agent any additional authorizations necessary
to begin ACH debits from a new account which becomes Borrower’s Primary Operating Account.

Section 5.05 Insurance. Borrower shall, at its own expense, maintain the following types
of insurance, with companies with an A-5 Best rating or better, in amounts acceptable to Agent:

	 	(a)	 	Special Perils Property Insurance. “Special Perils” insurance against loss or
damage to the Collateral. The deductible shall not exceed $25,000. The policy shall name
Agent as loss payee with respect to the Collateral, shall not be invalidated by any action
of or breach of warranty by Borrower of any provision thereof and shall waive subrogation
against Agent.

	 	(b)	 	General Liability Insurance. Commercial general liability insurance (including
contractual liability, products liability and completed operations coverages) reasonably
satisfactory to Agent. The limit of liability shall be at least $2,000,000 per occurrence.
The policy shall be without deductible, except for products liability coverage which may
have a deductible up to $25,000. The policy(ies) shall name Agent as additional insured in
the full amount of Borrower’s liability coverage limits (or the coverage limits of any
successor to Borrower or such successor’s parent which is providing coverage), be primary
and without contribution as respects any insurance carried by Agent and contain cross
liability and severability of interest clauses.

All policies of insurance shall provide that Agent shall be given thirty (30) days notice of
cancellation of coverage. On or prior to the first Funding Date and prior to each policy renewal,
Borrower shall furnish to Agent, certificates of insurance or other evidence satisfactory to Agent
that insurance complying with all of the above requirements is in effect.

Section 5.06 Taxes and Other Liabilities. Borrower shall pay all Indebtedness when due;
pay all Taxes and other governmental or regulator assessments before delinquency or before any
penalty attaches thereto, except as may be contested in good faith by the appropriate procedures
and for which Borrower shall maintain appropriate reserves; and timely file all required tax
returns.

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Section 5.07 Title. Borrower shall promptly notify Agent in writing of any event which
materially affects the value of the Collateral, the ability of Borrower or Agent to dispose of the
Collateral, or the rights or remedies of Agent in relation thereto, including, but not limited to,
the levy of any legal process against the Collateral. Upon request by Agent, Borrower shall
deliver to Agent any and all evidence of ownership of, and certificates of title to, any and all of
the Equipment.

Section 5.08 Further Identification of Collateral. Borrower shall promptly advise Agent of
any material change in the composition of the Collateral, and shall furnish to Agent from time to
time such statements and schedules further identifying and describing the Collateral. Borrower
shall provide Agent with ten (10) days prior written notice of any filing by Borrower of an
application for registration of any Copyrights. Borrower shall also furnish to Agent from time to
time such statements and schedules further identifying and describing the Collateral, including but
not limited to listing any applications, registrations or other ownership rights that Borrower has
made, filed or acquired in respect of any Patents, Copyrights, Trademarks or Mask Works, and such
other reports in connection with the Collateral as Agent may reasonably request, all in reasonable
detail.

Section 5.09 Good Repair. Borrower shall keep and maintain all Collateral in good
operating condition and repair, subject to ordinary wear and tear, make all necessary repairs
thereto and replacement of parts thereof so that the value and operating efficiency thereof shall
at all times be maintained and preserved in all material respects; and Borrower shall keep books
and records with respect to the Collateral, including maintenance records, which are complete and
accurate in all material respects.

Section 5.10 Loss; Damage; Destruction and Seizure.

	 	(a)	 	If while payment Obligations are outstanding any item of Collateral is lost, stolen,
destroyed, damaged beyond repair or seized by a Governmental Authority (an “Event of Loss”),
then, at Borrower’s option, either (i) Agent shall receive from the proceeds of insurance
maintained pursuant to Section 5.06, from any award paid by the seizing Governmental
Authority or, to the extent not received from the proceeds of insurance or award or both,
from Borrower, on or before the next scheduled Payment Date succeeding such Event of Loss,
an amount equal to the replacement value of the item of Collateral subject to the Event of
Loss which shall be held as additional Collateral for the Advance, or (ii) if no Event of
Default has occurred and is continuing, Borrower may use any such proceeds to purchase an
item of Collateral to replace the item of Collateral which was subject to the Event of Loss
and such replacement Collateral shall become part of the Collateral. On the date of receipt
by Agent of the amount specified hereinabove with respect to each such item of Collateral
subject to an Event of Loss, the provisions of this Loan Agreement shall terminate as to
such Collateral. If an Event of Default has occurred and is continuing or if Borrower
elects option (a) above, any proceeds of insurance maintained by Borrower with respect to
the Collateral pursuant to Section 5.05 and received by Borrower shall be paid to Agent
promptly upon their receipt by Borrower. If any proceeds of insurance or awards received by
Agent from Governmental Authorities are in excess of the amount owed under this Section
5.11(a), Agent shall promptly remit to Borrower the amount in excess of the amount to be
held by Agent.

	 	(b)	 	So long as no Event of Default has occurred and is continuing, any proceeds of insurance
maintained pursuant to Section 5.06 received by Agent or Borrower with respect to an item of
Collateral the repair of which is practicable shall, at the election of Borrower, be applied
either to the repair or replacement of such Collateral or, upon Agent’s receipt of evidence
of the repair or replacement of the Collateral reasonably satisfactory to Agent, to the
reimbursement of Borrower for the cost of such repair or replacement. All replacement parts
and equipment acquired by Borrower in replacement of Collateral pursuant to this Section
5.11 shall immediately become part of the Collateral upon acquisition by Borrower. Borrower
shall take such actions and provide such documentation as may be reasonably requested by
Agent to protect and preserve Agent’s first priority security interest and otherwise to
avoid any impairment of Agent’s rights under the Transaction Documents, in connection with
such repair or replacement.

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Section 5.11 Collateral Control. Borrower shall not (i) terminate, waive or release any
material right with respect to any Collateral, or (ii) remove any tangible items of Collateral from
Borrower’s facility located at the address specified in Section 9.07, the locations specified on
Schedule 2, or such other address agreed to in writing by Lender.

Section 5.12 Liens; No Disposition of Collateral. Borrower shall not (i) in any way
hypothecate or create or permit to exist any Lien with respect to any of its or its Subsidiaries’
property, except for Permitted Liens, (ii) permit the inclusion in any contract to which it or a
Subsidiary becomes a party of any provisions that could restrict or invalidate the creation of a
security interest in any of Borrower’s or such Subsidiary’s property, or (iii) sell, transfer,
assign, pledge, collaterally assign, exchange, or otherwise dispose of (collectively, a
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or
property, other than Transfers: (A) of Inventory in the ordinary course of business, (B) of
non-exclusive licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business, (C) of worn-out or obsolete Equipment, or (D)
other than pursuant to clause (ix) of Permitted Investments as defined in Section 10 herein, by
Borrower to its Subsidiaries in an aggregate amount not to exceed $2,000,000 on an annual basis.

Section 5.13 Mergers and Acquisitions. Without the prior written consent of Agent,
Borrower shall not be acquired by any “person” (as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934), whether by merger or consolidation, or through a transaction
or series of transactions pursuant to which the holders of Borrower’s voting Equity Securities
immediately prior to such transaction or series of transactions do not continue to hold at least
50% of the voting power of Borrower or any resulting Person (or the Parent of such Person, if
applicable) after such transaction or transactions, or through the sale of all or substantially all
of its assets (each, a “Change of Control”), unless (i) the Obligations are prepaid no later than
the closing of the Change of Control or (ii)(A) the Obligations are assumed or guarantied by a
Person which is the ultimate parent entity (the “Acquirer”) of the acquiring Person and (B) the
Acquirer is a creditworthy entity (as determined by Agent in its sole and reasonable discretion).

Section 5.14 Distributions. Prior to the effective date of the initial registration
statement covering a public offering of Borrower’s securities, without the prior written consent of
Agent, Borrower shall not (i) pay any dividends or make any distributions on its Equity Securities;
(ii) purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Securities
(other than repurchases pursuant to the terms of employee stock purchase plans, employee restricted
stock agreements or similar arrangements in an aggregate amount not to exceed $200,000 in any
calendar year); (iii) return any capital to any holder of its Equity Securities as such; (iv) make
any distribution of assets, Equity Securities, obligations or securities to any holder of its
Equity Securities as such; or (v) set apart any sum for any such purpose; provided,
however, Borrower may declare dividends payable solely in common stock.

Section 5.15 Indebtedness. Borrower shall not, and shall not permit its Subsidiaries to,
create, incur, assume or suffer to exist any Indebtedness, other than Permitted Indebtedness.

Section 5.16 Investments. Borrower shall not, and shall not permit its Subsidiaries to,
directly or indirectly acquire or own, or make any Investment in or to any Person other than
Permitted Investments; or suffer or permit any Subsidiary to be a party to, or be bound by, an
agreement that restricts such Subsidiary from paying dividends or otherwise distributing property
to Borrower.

Section 5.17 Transactions with Affiliates. Borrower shall not, and shall not permit its
Subsidiaries to, directly or indirectly enter into or permit to exist any material transaction with
any Affiliate, except for transactions that are in the ordinary course of such Person’s business,
upon fair and reasonable terms that are no less favorable to Borrower, or such Subsidiary, than
would be obtained in an arms’ length transaction with a non-affiliated Person; provided that the
foregoing restriction shall not apply to (i) any transaction between Borrower and any of its
Subsidiaries or between any Subsidiaries that is not otherwise prohibited by this Loan Agreement,
(ii) reasonable and customary fees paid to members of the board of directors of Borrower and its
Subsidiaries, (iii) compensation arrangements and benefit plans for officers and other

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employees of Borrower and its Subsidiaries entered into or maintained in the ordinary course of
business and (iv) sales of Subordinated Debt or Equity Securities.

Section 5.18 Indebtedness Payments. Borrower shall not (i) prepay, redeem, purchase,
defease or otherwise satisfy in any manner prior to the scheduled repayment thereof any
Indebtedness for borrowed money (other than amounts due or permitted to be prepaid under this Loan
Agreement) or any lease obligations, (ii) amend, modify or otherwise change the terms of any
Indebtedness (other than the Advances) or lease obligations so as to accelerate the scheduled
repayment thereof or (iii) repay any Indebtedness to officers, directors or shareholders.

Section 5.19 Accounts. Borrower shall not, and shall not permit its Subsidiaries to,
maintain any deposit accounts or securities accounts except accounts with respect to which Agent
has obtained an agreement with the bank or other financial institution sufficient to perfect a
security interest in such deposit accounts or securities accounts.

Article 6. PRESERVATION OF COLLATERAL BY AGENT.

     Should Borrower fail or refuse to make any payment, perform or observe any other covenant,
condition or obligation, or take any other action which Borrower is obligated under any Transaction
Document to make, perform, observe, take or do at the time or in the manner provided in any
Transaction Document, then at Agent ‘s sole and absolute discretion, without notice to or demand
upon Borrower and without releasing Borrower from any obligation, covenant or condition in any
Transaction Document, Agent may make, perform, observe, take or do the same in such manner and to
such extent as Agent may deem necessary to protect its security interest in or the value of the
Collateral. In furtherance of the foregoing rights, Borrower does hereby irrevocably appoint Agent
(which appointment is coupled with an interest), the true and lawful attorney-in-fact of Borrower
with full power of substitution, for it and in its name (i) to perform (but Agent shall not be
obligated to and shall incur no liability to Borrower or any third party for failure to perform)
any act which Borrower is obligated by this Loan Agreement to perform, (ii) to ask, demand,
collect, receive, receipt for, sue for, compound and give acquittance for any and all rents,
issues, profits, avails, distributions, income, payment draws and other sums in which a security
interest is granted under Section 2.01 with full power to settle, adjust or compromise any claim
thereunder as fully as if Agent were Borrower itself, (iii) to receive payment of and to endorse
the name of Borrower to any items of Collateral (including checks, drafts and other orders for the
payment of money) that come into Agent’s possession or under Agent ‘s control, (iv) to make all
demands, consents and waivers, or take any other action with respect to, the Collateral, (v) in
Agent ‘s discretion, to file any claim or take any other action or institute proceedings, either in
its own name or in the name of Borrower or otherwise, which Agent may reasonably deem necessary or
appropriate to protect and preserve the right, title and interest of Agent in and to the
Collateral, and (vi) to otherwise act with respect thereto as though Agent were the outright owner
of the Collateral; provided, however, that the power of attorney herein granted
shall be exercisable only upon the occurrence and during the continuation of an Event of Default
unless in Agent ‘s reasonable opinion immediate action is necessary to preserve or protect the
Collateral. Borrower agrees to reimburse Agent upon demand for all reasonable costs and expenses,
including attorneys’ fees and expenses, which Agent may incur while acting as Borrower’s attorney
in fact or otherwise under this Article 6, all of which costs and expenses are included within the
Obligations.

Article 7. EVENTS OF DEFAULT.

Section 7.01 Events of Default. The occurrence of any of the following shall constitute an
"Event of Default” under the Transaction Documents:

	 	(a)	 	Failure to Pay. Borrower shall fail to pay when due any principal, interest or
other payment required under the terms of this Loan Agreement or any other Transaction
Document on the date due and such payment shall not have been made within three (3) Business
Days of the due date (or in the event that payments are being made through ACH, within three
(3) Business Days of the receipt of

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	 	 	 	Agent’s written notice that payment was not made when due); provided however in the event
that Borrower has paid all amounts when due in the twelve (12) months preceding such failure
to pay, such three (3) Business Day period shall be extended to ten (10) Business Days; or

	 	(b)	 	Insurance. Borrower or any of its Subsidiaries shall fail to observe or perform
any covenant set forth in Section 5.05 and such failure shall continue for a period of five
(5) Business Days after written notice thereof is given to Borrower by Agent; or

	 	(c)	 	Breaches of Other Covenants. Borrower or any of its Subsidiaries shall fail to
perform or observe (i) any of the terms, covenants or agreements contained in Sections 5.03,
5.06, or 5.10 through 5.19 hereof or (ii) any other term, covenant, or agreement contained
in any Transaction Document (other than the other Events of Default specified in this
Article 7) and such failure remains unremedied for the earlier of twenty (20) days from (x)
the date on which the Agent has given the Borrower written notice of such failure and (y)
the date on which any officer of the Borrower became aware; or

	 	(d)	 	Representations and Warranties. Any representation, warranty, or certificate
made or furnished by or on behalf of Borrower to Agent in writing in connection with this
Loan Agreement or any of the other Transaction Documents, or as an inducement to Agent or
Lenders to enter into the Transaction Documents, shall be false, incorrect or misleading in
any material respect when made or furnished, or any other statement (financial or otherwise)
made or furnished by or on behalf of Borrower to Agent in writing in connection with this
Loan Agreement or any of the other Transaction Documents, or as an inducement to Agent or
Lenders to enter into the Transaction Documents, shall be false, incorrect, incomplete or
misleading in any material respect when made or furnished; or

	 	(e)	 	Other Payment Obligations. Borrower or any of its Subsidiaries shall fail to
make any payment when due under the terms of any Indebtedness to be paid by such Person
(excluding this Loan Agreement and the other Transaction Documents but including any other
Indebtedness of Borrower or any of its Subsidiaries to Agent or any Lender) and such failure
shall continue beyond any period of grace provided with respect thereto, or shall default in
the observance or performance of any other agreement, term or condition contained in any
such Indebtedness, and the effect of such failure or default is to cause, or permit the
holder or holders thereof to cause Indebtedness in an aggregate amount of Two Hundred Fifty
Thousand Dollars ($250,000) or more to become due prior to its stated date of maturity; or

	 	(f)	 	Voluntary Bankruptcy or Insolvency Proceedings. Borrower or any of its
Subsidiaries shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its property, (ii) be
unable, or admit in writing its inability, to pay its debts generally as they mature, (iii)
make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved
or liquidated in full or in part, (v) become insolvent (as such term may be defined or
interpreted under any applicable statute), or (vi) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its property by
any official in an involuntary case or other proceeding commenced against it,; or

	 	(g)	 	Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of Borrower or any of its
Subsidiaries or of all or a substantial part of the property thereof, or an involuntary case
or other proceedings seeking liquidation, reorganization or other relief with respect to
Borrower or any of its Subsidiaries or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an order for relief
entered or such proceeding shall not be dismissed or discharged within sixty (60) days of
commencement; or

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	 	(h)	 	Judgments. A final judgment or order for the payment of money in excess of Two
Hundred Fifty Thousand Dollars ($250,000) shall be rendered against Borrower or any of its
Subsidiaries and the same shall remain undischarged for a period of thirty (30) days, or
sixty (60) days if Borrower is pursuing an appeal in good faith, during which execution
shall not be effectively stayed, or any judgment, writ, assessment, warrant of attachment,
or execution or similar process shall be issued or levied against a substantial part of the
property of Borrower or any of its Subsidiaries and such judgment, writ, or similar process
shall not be released, stayed, vacated or otherwise dismissed within thirty (30) days after
issue or levy, or sixty (60) days if Borrower is pursuing an appeal in good faith; or

	 	(i)	 	Transaction Documents. Any Transaction Document or any material term thereof
shall cease to be, or be asserted by Borrower not to be, a legal, valid and binding
obligation of Borrower enforceable in accordance with its terms or if the Liens of Agent in
the Collateral shall cease to be or shall not be valid, first priority perfected Liens
(excepting Permitted Liens) or Borrower shall assert that such Liens are not valid, first
priority and perfected Liens (excepting Permitted Liens).

Article 8. AGENT’S RIGHTS AND REMEDIES

Section 8.01 Rights of Agent upon Default. Upon the occurrence and during the existence of
any Event of Default (other than an Event of Default referred to in Sections 7.01(f) and 7.01(g))
and at any time thereafter during the continuance of such Event of Default, Agent may, by written
notice to Borrower, declare all outstanding Obligations, including, without limitation, the
non-cancelable obligation to make each payment scheduled to be made under Sections 1.02(b), 1.02(c)
and 1.02(d), payable by Borrower hereunder to be immediately due and payable without presentment,
demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding. Upon the occurrence or existence
of any Event of Default described in Sections 7.01(f) and 7.01(g), immediately and without notice,
all outstanding Obligations, including, without limitation, the non-cancelable obligation to make
each payment scheduled to be made under Sections 1.02(b), 1.02(c) and 1.02(d), payable by Borrower
hereunder shall automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding.

Section 8.02 Rights Regarding Collateral. Borrower agrees that when any Event of Default
has occurred and is continuing, Lenders or Agent, on behalf of Lenders, shall have the rights,
options, duties and remedies of a secured party as permitted by law and, in addition to and without
limiting the foregoing, Lenders or Agent may, at the election of Lenders, exercise any one or more
or all, and in any order, of the remedies herein set forth, including the following: (i) Agent or
Lenders, personally or by agents or attorneys, shall have the right (subject to compliance with any
applicable mandatory legal requirements) to require Borrower to assemble the Collateral and make it
available to Agent at a place to be designated by Agent in California or to take immediate
possession of the Collateral, or any portion thereof, and for that purpose may pursue the same
wherever it may be found, and may enter any premises of Borrower, with or without notice, demand,
process of law or legal procedure, to the extent permitted by applicable law, and search for, take
possession of, remove, keep and store the same, or use and operate or lease the same until sold;
(ii) Agent or Lenders may, if at the time such action may be lawful and always subject to
compliance with any mandatory legal requirements, either with or without taking possession and
either before or after taking possession, without instituting any legal proceedings whatsoever,
having first given notice of such sale by registered or certified mail to Borrower once at least
ten (10) days prior to the date of such sale, and having first given any other notice which may be
required by law, sell and dispose of the Collateral, or any part thereof, at a private sale or at
public auction, to the highest bidder, in one lot as an entirety or in separate lots, and either
for cash or on credit and on such terms as Lenders may determine, and at any place (whether or not
it be the location of the Collateral or any part thereof) designated in the notice referred to
above. Agent and its agents and any purchasers at or after foreclosure are hereby granted a
non-exclusive, irrevocable, perpetual, fully paid, royalty-free license or other right, solely
pursuant to the provisions of this Section 8.02, to use, without charge, Borrower’s intellectual
property that remains embedded or contained in the Collateral, including without limitation,
labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks,

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service marks, and advertising matter, or any property of a similar nature, now or at any time
hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any
rights; provided, however, such license shall only be exercisable in connection
with the disposition of Collateral upon Agent’s or Lenders’ exercise of their remedies hereunder.
To the extent permitted by applicable law, any such sale or sales may be adjourned from time to
time by announcement at the time and place appointed for such sale or sales, or for any such
adjourned sale or sales, without further published notice, and Borrower, Agent, Lenders, or the
holder or holders of the Note, or of any interest therein, may bid and become the purchaser at any
such sale; and (iii) Agent or Lenders may proceed to protect and enforce this Loan Agreement and
the other Transaction Documents by suit or suits or proceedings in equity, at law or in bankruptcy,
and whether for the specific performance of any covenant or agreement herein contained or in
execution or aid of any power herein granted; or for foreclosure hereunder, or for the appointment
of a receiver or receivers for any real property security or any part thereof, or for the recovery
of judgment for the Obligations or for the enforcement of any other proper, legal or equitable
remedy available under applicable law. With respect to any of Borrower’s owned premises, Borrower
hereby grants Agent a license to enter into possession of such premises and to occupy the same,
without charge, for up to one hundred twenty (120) days in order to exercise any of Agent’s or
Lenders’ rights or remedies provided herein, at law, in equity, or otherwise.

Section 8.03 Forbearance of Rights Regarding Intellectual Property Collateral. Agent
agrees to forbear from exercising any rights or remedies provided for under Section 8.02 solely
with respect to the Intellectual Property for a period commencing on the date that Agent gives
borrower notice of the occurrence of an Event of Default (other than any Event of Default described
in Sections 7.01(f) and 7.01(g)) and ending on the earliest to occur of (i) 180 days after the date
of the occurrence of such Event of Default, (ii) the date on which a third party exercises or
claims any right or remedy with respect to any Indebtedness, (iii) the date of the occurrence of
any Event of Default described in Sections 7.01(f) and 7.01(g), and (iv) the date of any Transfer
of Intellectual Property not otherwise permitted hereunder, it being understood that non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in
the ordinary course of business as determined prior to such Event of Default shall continue to be
permitted (such period, the “Forbearance Period”). During such Forbearance Period, Borrower and
its investors may seek a purchaser of Intellectual Property, and Agent shall consent to any sale
arranged by Borrower so long as (and such consent may be contingent upon) (i) the proceeds to be
received from such sale are in excess of the outstanding Obligations as of the date of such sale
and (ii) the outstanding Obligations as of the date of such sale shall be paid directly to Agent
from the proceeds of such sale.

Section 8.04 Agent’s Liability for Collateral. So long as Agent complies with its
obligations, if any, under the Code, neither Agent nor Lenders shall in any way or manner be liable
or responsible for: (i) the safekeeping of the Collateral; (ii) any loss or damage thereto
occurring or arising in any manner of fashion from any cause other than Agent’s or such Lender’s
gross negligence or willful misconduct; (iii) any diminution in the value thereof; or (iv) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever.
All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

Section 8.05 Application of Collateral Proceeds. The proceeds and/or avails of the
Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well
as any other amounts of any kind held by Agent at the time of, or received by Agent after, the
occurrence of an Event of Default hereunder) shall be paid to and applied as follows: (i) First, to
the payment of reasonable costs and expenses, including all amounts expended to preserve the value
of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other
rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable
legal expenses and attorneys’ fees, incurred or made hereunder by Agent or Lenders; (ii) Second, to
the payment to Lenders pro rata in accordance with the Advance Percentages of the amounts then
owing or unpaid on the Notes, including each payment scheduled to be made under Sections 1.02(b),
1.02(c) and 1.02(d) of this Loan Agreement; (iii) Third, to the payment of other amounts then
payable to Agent or Lenders under any of the Transaction Documents; and (iv) Fourth, to the payment
of the surplus, if any, to Borrower, its successors and assigns, or to whomsoever may be lawfully
entitled to receive the same. In the event that, notwithstanding the foregoing, proceeds and/or
avails of the Collateral, shall be received by a

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Lender in excess of its ratable share, then the portion of such payment or distribution in excess
of such Lender’s ratable share shall be received by such Lender in trust for and shall be promptly
paid over to the other Lenders ratably for application to the payments of amounts due to the other
Lenders.

Section 8.06 Reinstatement of Rights. If Agent shall have proceeded to enforce any right
under this Loan Agreement or any other Transaction Document by foreclosure, sale, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Agent shall be restored to its former position and its rights hereunder
with respect to the property subject to the security interest created under this Loan Agreement
shall be reinstated.

     Agency for Perfection. Each Lender hereby appoints Agent and each other Lender as
agent and bailee for the purpose of perfecting the security interests in and liens upon the
Collateral in assets which, in accordance with the California Uniform Commercial Code, can be
perfected only by possession or control (or where the security interest of a secured party with
possession or control has priority over the security interest of another secured party) and Agent
and each Lender hereby acknowledges that it holds possession or control of any such Collateral for
the benefit of the Agent as secured party. Should any Lender obtain possession or control of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon the Agent’s request
therefor shall deliver possession or control of such Collateral to the Agent or in accordance with
the Agent’s instructions. Borrower by its execution and delivery of this Loan Agreement hereby
consents to the foregoing.

Article 9. MISCELLANEOUS.

Section 9.01 Modifications, Amendments or Waivers. The provisions of any Transaction
Document may be modified, amended or waived only by a written instrument signed by the parties
thereto.

Section 9.02 No Implied Waivers; Cumulative Remedies; Writing Required. No delay or
failure of Agent or any Lender in exercising any right, power or remedy hereunder shall affect or
operate as a waiver thereof; nor shall any single or partial exercise thereof or any abandonment or
discontinuance of steps to enforce such a right, power or remedy preclude any further exercise
thereof or of any other right, power or remedy. The rights and remedies hereunder of Agent and the
Lenders are cumulative and not exclusive of any rights or remedies which they would otherwise have.
Any waiver, permit, consent or approval of any kind or character on the part of Agent or any
Lender of any breach or default under this Loan Agreement or any such waiver of any provision or
condition of this Loan Agreement must be in writing and shall be effective only in the specified
instance and to the extent specifically set forth in such writing.

Section 9.03 Reimbursement. Borrower shall reimburse Agent and the Lenders for all costs
and expenses, including without limitation, reasonable attorneys’ fees and disbursements expended
or incurred in any arbitration, mediation, judicial reference, legal action or otherwise in
connection with (i) the amendment and enforcement of the Transaction Documents, including without
limitation during any workout, attempted workout and/or in connection with the rendering of legal
advice as to Agent’s or Lenders’ rights, remedies and obligations under the Transaction Documents,
(ii) collecting any sum which becomes due Agent or Lender under any Transaction Document, (iii) any
proceeding for declaratory relief, any counterclaim to any proceeding, or any appeal, or (v) the
protection, preservation or enforcement of any rights of Agent or Lender. For the purpose of this
section, attorneys’ fees shall include, without limitation, fees incurred in connection with the
following: (1) contempt proceedings; (2) discovery, (3) any motion, proceeding or other activity of
any kind in connection with an insolvency proceeding; (4) garnishment, levy, and debtor and third
party examinations; and (5) post-judgment motions and proceedings of any kind, including without
limitation, any activity taken to collect or enforce any judgment. All of the foregoing costs and
expenses shall be payable by Borrower upon demand by Agent, and if not paid within thirty (30) days
of presentation of invoices shall bear interest at the highest applicable Default Rate.

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Section 9.04 Indemnification. Borrower agrees upon demand to pay or reimburse Agent and
the Lenders for all liabilities, obligations and out-of-pocket expenses, including reasonable fees
and expenses of counsel for Agent and the Lenders, from time to time arising in connection with the
enforcement or collection of sums due under the Transaction Documents. Borrower shall indemnify,
reimburse and hold Agent and the Lenders and their permitted assigns, each of Agent’s, Lenders’ or
their permitted assigns’ partners, and each of their respective successors, assigns, agents,
officers, directors, shareholders, servants, agents and employees harmless from and against all
liabilities, losses, damages, actions, suits, demands, claims of any kind and nature (including
claims relating to environmental discharge, cleanup or compliance), all costs and expenses
whatsoever to the extent they may be incurred or suffered by such indemnified party in connection
therewith (including reasonable attorneys’ fees and expenses), fines, penalties (and other charges
of applicable governmental authorities), licensing fees relating to any item of Collateral, damage
to or loss of use of property (including consequential or special damages to third parties or
damages to Borrower’s property), or bodily injury to or death of any person (including any agent or
employee of Borrower) (each, a “Claim”), directly or indirectly relating to or arising out of the
use of the proceeds of the Advance, including acquisition, use, ownership, operation, possession,
control, storage, return or condition of any item of Equipment constituting Collateral (regardless
of whether such item of Equipment is at the time in the possession of Borrower), the falsity of any
representation or warranty of Borrower or Borrower’s failure to comply with the terms of this Loan
Agreement or any other Transaction Document. The foregoing indemnity shall cover, without
limitation, (i) any Claim in connection with a design or other defect (latent or patent) in any
item of Equipment constituting Collateral, (ii) any Claim for infringement of any patent,
copyright, trademark or other intellectual property right, (iii) any Claim resulting from the
presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release of
any Hazardous Materials from any item of Equipment financed by an Advance or constituting
Collateral, including any Claims asserted or arising under any Environmental Law, or (iv) any Claim
for negligence or strict or absolute liability in tort; provided, however, that
Borrower shall not indemnify Agent or any Lender for any liability incurred by such Person as a
direct and sole result of that Person’s gross negligence or willful misconduct. Such indemnities
shall continue in full force and effect, notwithstanding the expiration or termination of this Loan
Agreement. Upon Agent’s written demand, Borrower shall assume and diligently conduct, at its sole
cost and expense, the entire defense of Agent or any Lender and its permitted assigns, each of
Agent’s, Lenders’ or their permitted assigns’ partners, and each of their respective successors,
assigns, agents, officers, directors, shareholders, servants, agents and employees against any
indemnified Claim described in this Section 9.04. Borrower shall not settle or compromise any
Claim against or involving Agent or any Lender without first obtaining such Person’s written
consent thereto, which consent shall not be unreasonably withheld. The obligations in this Section
9.04 shall survive payment of all other Obligations until all applicable statute of limitation
periods with respect to actions that may be brought against Agent or Lenders have run. All amounts
owing under this Section 9.04 shall be paid within thirty (30) days after written demand.

Section 9.05 Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN
THIS LOAN AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM AGENT OR ANY
LENDER UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES.

Section 9.06 Disbursements and Payments.

	 	(a)	 	Disbursements. Lenders shall disburse each Advance to Borrower according to the
following account and wire transfer instructions:

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	Credit:

	 	Glu Mobile Inc.
	Bank Name:

	 	Silicon Valley Bank
	Bank Address:

	 	Attn: Carmen Ghasserani
	 

	 	2400 Geng Road, Suite 200 
	 

	 	Palo Alto, CA 94303
	Account Number:

	 	3300421466 
	ABA Routing Number:

	 	121140399 
	Reference:

	 	Pinnacle Advance

	 	(b)	 	Payments. All payments to Agent permitted under Section 5.04 hereof to be made
via wire transfer shall be made as follows:

	 	 	 
	Wire Transfer Payment
	 	 
	Credit:

	 	Pinnacle Ventures L.L.C.
	Bank Name:

	 	Wells Fargo Bank
	Bank Address:

	 	400 Hamilton Avenue, Palo Alto, CA 94302 
	Account Number:

	 	4121157903 
	ABA Routing Number:

	 	121000248 
	Reference:

	 	Glu Mobile Inc.

	 	(c)	 	ACH Payments. All regularly scheduled payments due to Agent required under
Section 5.04 hereof to be made via ACH shall be effected by automatic debit of the
appropriate funds from Borrower’s primary operating account set forth below:

	 	 	 
	Credit:

	 	Glu Mobile Inc.
	Bank Name:

	 	Silicon Valley Bank
	Bank Address:

	 	Attn: Carmen Ghasserani
	 

	 	2400 Geng Road, Suite 200 
	 

	 	Palo Alto, CA 94303
	Account Number:

	 	3300421466 
	ABA Routing Number:

	 	121140399 

Section 9.07 Notices. All notices and other communications given to or made upon any party
hereto in connection with this Loan Agreement shall be in writing and (except for financial
statements and other informational documents which may be sent by email) shall be delivered by
certified mail, postage prepaid, return receipt requested, by a nationally recognized overnight
courier, or by prepaid facsimile or personally delivered to the respective parties, as follows:

	 	 	 
	Borrower:

	 	GLU MOBILE INC.
	 

	 	1800 Gateway Drive, Suite 200
	 

	 	San Mateo, CA 94404
	 

	 	Telephone: (650) 571-1550
	 

	 	Telecopier: (650) 571.5698
	 

	 	Attention: Rocky Pimentel

-16-

 

	 	 	 
	Agent:

	 	PINNACLE VENTURES, L.L.C.
	 

	 	130 Lytton Avenue, Suite 220
	 

	 	Palo Alto, CA 94301
	 

	 	Telephone: (650) 926-7800
	 

	 	Telecopier: (650) 926-7801
	 

	 	Email: rsavoie@pinnacleven.com
	 

	 	Attention: Chief Financial Officer

or in accordance with any subsequent written direction from either party to the other. All such
notices and other communications shall, except as otherwise expressly herein provided, be effective
when received; or in the case of delivery by messenger or overnight delivery service, when left at
the appropriate address.

Section 9.08 Lenders and Allocations of Advances. Notwithstanding anything herein to the
contrary, each Lender severally commits to make such Lender’s Advance Percentage of each Advance.
No Lender shall have liability for the commitment to make Advances of any other Lender. Borrower
agrees that by notice to Borrower, Agent may reallocate the Advance Percentages among the Lenders
or among the Lenders and other investment funds affiliated with Agent. Whether or not specified in
any provision of this Loan Agreement, all references to Agent in this Loan Agreement shall mean
Agent for the benefit of the Lenders unless the context otherwise requires.

Section 9.09 Severability. If any provision of any Transaction Document is held invalid or
unenforceable to any extent or in any application, the remainder of such Transaction Document and
all other Transaction Documents, or the application of such provision to different Persons or
circumstances or in different jurisdictions, shall not be affected thereby.

Section 9.10 Reliance by Agent and the Lenders. All covenants, agreements, representations
and warranties made herein by Borrower shall be deemed to be material to and have been relied upon
by Agent and the Lenders, notwithstanding investigation by Agent.

Section 9.11 No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Loan
Agreement or any of the other Transaction Documents shall be payable without notice or demand and
shall be payable without set-off or reduction of any manner whatsoever.

Section 9.12 Survival. All representations, warranties, covenants and agreements of
Borrower contained herein or made in writing in connection herewith shall survive the execution and
delivery of the Transaction Documents, the making of Advances hereunder, the granting of security
and the issuance of the Notes.

Section 9.13 Confidentiality. Agent and the Lenders agree to hold non-public information
received in confidence and shall not disclose such information to third parties except to their
employees, members, partners or the partners of its affiliated investment funds, their lenders, and
professional advisors to the foregoing, including attorneys and accountants, and others under a
similar duty of confidentiality, in each case with a need to know, and as Agent may deem necessary
in its reasonable judgment to satisfy its legal obligations or to enforce Agent’s or Lenders’
rights under any Transaction Document. Borrower acknowledges that Lenders may issue press
releases, advertisements, and other promotional materials, either in print or on Lenders’
website(s), describing any successful outcome of services provided on Borrower’s behalf, subject to
Borrower’s approval, not to be unreasonably withheld. Borrower agrees that Lenders shall have the
right to identify Borrower by name and use Borrower’s corporate logo in those materials, solely for
marketing purposes.

Section 9.14 Choice of Law and Venue; Jury Trial Waiver. THIS LOAN AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. BORROWER, AGENT AND THE LENDERS HEREBY SUBMIT TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE NORTHERN DISTRICT OF
CALIFORNIA. BORROWER, AGENT

-17-

 

AND THE LENDERS HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF ANY OF THE TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS.

Section 9.15 Successors and Assigns. This Loan Agreement and the other Transaction
Documents shall be binding upon and inure to the benefit of Agent and the Lenders, all future
holders of the Note, Borrower and their respective successors and permitted assigns, except that
Borrower may not assign or transfer its rights hereunder or thereunder or any interest herein or
therein without the prior written consent of Agent. Agent or Lenders may assign all or any portion
of their rights hereunder and under the Note to any of its affiliated investment funds or to any
one or more financial institutions or funds or an agent or trustee for such financial institutions
or funds (an “Assignee”) and may sell to any of its affiliated investment funds or to any one or
more financial institutions or funds or an agent or trustee for such financial institutions or
funds (a “Participant”) participation interests in Agent’s or Lenders’ rights hereunder and under
the Note. Agent and the Lenders may disclose the Transaction Documents and any other financial or
other information relating to Borrower or any Subsidiary to any potential Assignee or Participant,
provided that such Participant agrees to protect the confidentiality of such documents and
information using the same measures that it uses to protect its own confidential information.

Section 9.16 Counterparts. This Loan Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such counterparts shall together constitute
one and the same instrument.

Section 9.17 Further Assurances. Borrower will, at its own expense, from time to time do,
execute, acknowledge and deliver all and every further acts, deeds, conveyances, transfers and
assurances, and all financing and continuation statements and similar notices, reasonably necessary
or proper for the perfection of the security interest being herein provided for in the Collateral,
whether now owned or hereafter acquired.

Section 9.18 Entire Agreement. This Loan Agreement and each of the other Transaction
Documents, taken together, constitute and contain the entire agreement of Borrower, Agent and the
Lenders and supersede any and all prior agreements, negotiations, correspondence, understandings
and communications among the parties, whether written or oral, respecting the subject matter
hereof.

Article 10. DEFINITIONS.

     All terms defined in the Code shall have the respective meanings specified in the Code. In
addition, for purposes of this Loan Agreement the following capitalized terms shall have the
meanings set forth below:

     “A/R Line” shall mean a formula-based working capital line of credit with a bank or other
institutional lender in which the amount of the Indebtedness does not exceed the amount of
Borrower’s accounts receivables shown on its balance sheet in accordance with generally accepted
accounting principles.

     ”Advance” shall have the meaning set forth in Section 1.01 of this Loan Agreement.

     “Advance Percentage” shall mean, with respect to a Lender, the percentage of the Advance
specified opposite such Lender’s name on Schedule 1 hereto.

     ”Affiliate” shall mean any Person that owns or controls directly or indirectly ten percent
(10%) or more of the stock of another entity, any Person that controls or is controlled by or is
under common control with such Persons or any Affiliate of such Persons and each of such Person’s
officers, directors, members, joint venturers or partners. When used with respect to a Lender,
Affiliate shall also include any Affiliate of Agent.

-18-

 

     ”Borrower’s Books” shall mean all of Borrower’s books and records including without
limitation: ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business
operations or financial condition; and all computer programs, or tape files, and the equipment,
containing such information.

     ”Borrower’s Primary Operating Account” shall have the meaning set forth in Section 5.05 of
this Loan Agreement.

     ”Business Day” shall mean any day on which commercial banks are not authorized or required to
close in San Francisco, California.

     ”Change of Control” shall have the meaning set forth in Section 5.13 of this Loan Agreement.

     ”Closing” shall mean the date, time and place as the parties may agree for the execution of
this Loan Agreement.

     “Code” shall mean the Uniform Commercial Code as in effect from time to time in the state of
California.

     ”Collateral” shall mean property described on Exhibit B attached hereto.

     ”Commitment” shall have the meaning set forth in Section 1.01 of this Loan Agreement.

     ”Contractual Obligation” of any Person shall mean, any indenture, note, security, deed of
trust, mortgage, security agreement, lease, guaranty, instrument, contract, agreement or other form
of obligation or undertaking to which such Person is a party or by which such Person or any of its
property is bound.

     ”Copyrights” shall mean any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative work thereof, whether
published or unpublished and whether or not the same also constitutes a trade secret, now or
hereafter existing, created, acquired or held.

     ”Default” shall mean any event or circumstance not yet constituting an Event of Default but
which, with the giving of any notice or the lapse of any period of time or both, would become an
Event of Default.

     ”Default Rate” shall mean, as of any date of determination, an interest rate per annum equal
to five percent (5%) in excess of the rate per annum otherwise applicable on such date.

     ”Environmental Laws” shall mean all Requirements of Law relating to the protection of human
health or the environment, including, without limitation, (i) all Requirements of Law, pertaining
to reporting, licensing, permitting, investigation, and remediation of emissions, discharges,
releases, or threatened releases of hazardous materials, chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials or wastes whether solid, liquid, or
gaseous in nature, into the air, surface water, groundwater, or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of
chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials, or
wastes, whether solid, liquid, or gaseous in nature; and (ii) all Requirements of Law pertaining to
the protection of the health and safety of employees or the public.

     ”Equipment” shall mean all present and future machinery, equipment, tenant improvements,
furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

     ”Equity Securities” of any Person shall mean (i) all common stock, preferred stock,
participations, shares, partnership interests, membership interests or other equity interests in
and of such Person (regardless of how designated and whether or not voting or non-voting) and (ii)
all warrants, options and other rights to acquire any of the foregoing.

-19-

 

     ”Event of Default” shall have the meaning set forth in Article 7 of this Loan Agreement.

     ”Event of Loss” shall have the meaning set forth in Section 5.11(a) of this Loan Agreement.

     ”Financial Statements” shall mean, with respect to any accounting period for any Person,
statements of operations, retained earnings and cash flow of such Person for such period, and
balance sheets of such Person as of the end of such period, setting forth in each case in
comparative form figures for the corresponding period in the preceding fiscal year if such period
is less than a full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding fiscal year, all prepared in reasonable detail and in accordance with generally
accepted accounting principles, except in the case of unaudited Financial Statements, for the
absence of footnotes and normal year-end adjustments. Unless otherwise indicated, each reference
to Financial Statements of any Person shall be deemed to refer to Financial Statements prepared on
a consolidated basis.

     ”Funding Date” shall have the meaning set forth in Section 1.01 of this Loan Agreement.

     ”Governmental Authority” shall mean any domestic or foreign national, state or local
government, any political subdivision thereof, any department, agency, authority or bureau of any
of the foregoing, or any other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

     ”Governmental Rule” shall mean any law, rule, regulation, ordinance, order, code
interpretation, judgment, decree, directive, guidelines, policy or similar form of decision of any
Governmental Authority.

     ”Indebtedness” of any Person shall mean and include the aggregate amount of, without
duplication (i) all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or services (other than accounts payable
incurred in the ordinary course of business determined in accordance with generally accepted
accounting principles), (iv) all obligations under capital leases of such Person, (v) all
obligations or liabilities of others secured by a lien on any asset of such Person, whether or not
such obligation or liability is assumed, (vi) all guaranties of such Person of the obligations of
another Person, (vii) all obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if the rights and
remedies of the seller or lender under such agreement upon an event of default are limited to
repossession or sale of such property), (viii) net exposure under any interest rate swap, currency
swap, forward, cap, floor or other similar contract that is not entered to in connection with a
bona fide hedging operation that provides offsetting benefits to such Person, which agreements
shall be marked to market on a current basis, and (ix) all reimbursement and other payment
obligations, contingent or otherwise, in respect of letters of credit.

     ”Intellectual Property” shall mean the following intellectual property rights owned by
Borrower: (i) Copyrights, Trademarks, Patents, and Mask Works; (ii) any and all trade secrets, and
any and all intellectual property rights in computer software and computer software products now or
hereafter existing, created, acquired or held; (iii) any and all design rights which may be
available to Borrower now or hereafter existing, created, acquired or held; (iv) any and all claims
for damages by way of past, present and future infringement of any of the rights included above,
with the right, but not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above; (v) all licenses or other rights
to use any of the Copyrights, Patents, Trademarks, or Mask Works, and all license fees and
royalties arising from such use; (vi) all amendments, renewals and extensions of any of the
Copyrights, Trademarks, Patents or Mask Works; and (vii) all proceeds and products of the
foregoing, including without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.

     ”Inventory” shall mean all present and future inventory in which Borrower has any interest,
including merchandise, raw materials, parts, supplies, packing and shipping materials, work in
process and

-20-

 

finished products intended for sale or lease or to be furnished under a contract of
service, of every kind and
description now or at any time hereafter owned by or in the custody or possession, actual or
constructive, of Borrower, including such inventory as is temporarily out of its custody or
possession or in transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower’s Books relating to any of the
foregoing.

     ”Investment” shall mean the purchase or acquisition of any capital stock, equity interest, or
any obligations or other securities of, or any interest in, any Person, or the extension of any
advance, loan, extension of credit or capital contribution to, or any other investment in, any
Person.

     ”Lien” shall mean, with respect to any property, any security interest, mortgage, pledge,
lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom,
including, without limitation, the interest of a vendor or lessor under a conditional sale
agreement, capital lease or other title retention agreement, or any agreement to provide any of the
foregoing, and the filing of any financing statement or similar instrument under the Code or
comparable law of any jurisdiction.

     ”Loan Agreement” shall mean this Loan and Security Agreement, as amended, restated or
otherwise modified from time to time.

     ”Management Rights Agreement” shall mean a management rights agreement entered into by
Borrower and Agent contemporaneously with the execution of this Loan Agreement.

     ”Mask Works” shall mean all mask works or similar rights available for the protection of
semiconductor chips, now owned or hereafter acquired.

     ”Material Adverse Effect” shall mean a material adverse effect on (i) the business, assets,
operations, or financial condition of Borrower and its Subsidiaries, taken as a whole; (ii) the
ability of Borrower and its Subsidiaries to pay or perform the Obligations in accordance with the
terms of this Loan Agreement and the other Transaction Documents and to avoid an Event of Default
under any Transaction Document; or (iii) the rights and remedies of any Lender under this Loan
Agreement, the other Transaction Documents or any related document, instrument or agreement,
excluding any effect of changes in general economic conditions.

     ”Note” shall mean a promissory note or notes of Borrower substantially in the form attached as
Exhibit A hereto.

     ”Obligations” shall mean and include all loans, advances, debts, liabilities, and obligations,
including, without limitation, the noncancelable obligation to make each payment scheduled to be
made under Sections 1.02(b), 1.02(c) and 1.02(d), howsoever arising, owed by Borrower to Lenders of
every kind and description (whether or not evidenced by any note or instrument and whether or not
for the payment of money), now existing or hereafter arising under or pursuant to the terms of this
Loan Agreement or the other Transaction Documents (other than the Warrant and the Management Rights
Agreement), including, without limitation, all interest, fees, charges, expenses, attorneys’ fees
and costs and accountants’ fees and costs chargeable to and payable by Borrower hereunder and
thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due,
and whether or not arising after the commencement of a proceeding under Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.), as amended from time to time (including post-petition
interest) and whether or not allowed or allowable as a claim in any such proceeding.

     ”Patents” shall mean all patents, patent applications and like protections, including without
limitation improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.

     ”Payment Date” shall have the meaning set forth in Section 1.02(b) of this Loan Agreement.

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     ”Permitted Indebtedness” shall mean: (i) Indebtedness of Borrower in favor of Lenders arising
under this Loan Agreement or any other Transaction Document; (ii) Indebtedness existing at Closing
and disclosed on Schedule 2; (iii) Indebtedness secured by a lien described in clause
(vi)(A) of the defined term “Permitted Liens,” provided (A) such Indebtedness does not exceed the
lesser of the cost or fair market value of the equipment financed with such Indebtedness, (B) such
Indebtedness does not exceed $100,000 in the aggregate at any given time, and (C) the holder of
such Indebtedness agrees to waive any rights of set off, if applicable, such holder may have with
respect to such Indebtedness in the deposit or investment accounts of Borrower and its Subsidiaries
on terms reasonably satisfactory to Agent; (iv) Subordinated Debt; (v) Indebtedness incurred for
the acquisition of supplies or inventory on normal trade credit; (vi) Indebtedness incurred
pursuant to an A/R Line; (vii) Indebtedness permitted by clause (viii) of the defined term
“Permitted Investments”; (viii) unsecured Indebtedness incurred pursuant to the Exchange Agreement
dated as of March 29, 2006 by and among Borrower, the iFone Shareholders (as defined therein) and
the Representative (as defined therein) or the Consulting Agreement dated as of March 29, 2006 by
an between Borrower and LOLA, a Societe Anonyme Monegasque, in an aggregate principal amount for
all Indebtedness incurred under this clause (viii) not to exceed $4,500,000, and provided that such
holders shall have entered into a subordination agreement in substantially the form attached hereto
as Exhibit D; and (ix) extensions, refinancings, modifications, amendments and restatements of any
item of Permitted Indebtedness (i) through (vii) above.

     ”Permitted Investments” shall mean: (i) Investments existing at Closing disclosed on
Schedule 2; (ii) (A) marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency or any State thereof maturing within one (1) year from
the date of acquisition thereof, (B) commercial paper maturing no more than one (1) year from the
date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard &
Poor’s Corporation or Moody’s Investors Service, Inc., and (C) certificates of deposit maturing no
more than one (1) year from the date of investment therein; (iii) temporary advances to cover
incidental expenses in the ordinary course of business; (iv) investments in joint ventures,
strategic alliances, licensing and similar arrangements customary in Borrower’s industry and which
do not require Borrower to assume or otherwise become liable for the obligations of any third party
not directly related to or arising out of such arrangement or require Borrower to transfer
ownership of non-cash assets to such joint venture or other entity; (v) Investments consisting of
(A) travel advances, employee relocation loans and other employee loans and advances in the
ordinary course of business not to exceed $50,000 and (B) non-cash loans to employees, officers or
directors relating to the purchase of equity securities of Borrower pursuant to employee stock
purchase plans or arrangements approved by Borrower’s board of directors; (vi) Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of
customers or suppliers and in settlement of delinquent obligations of, and other disputes with,
customers or suppliers arising in the ordinary course of business; (vii) Investments where the
primary consideration is Borrower’s common stock, provided that the aggregate value of
consideration other than common stock together with the value of consideration of cash, Collateral
or debt obligations for Investments permitted under clause (viii) does not exceed, in the
aggregate, $4,000,000 in any fiscal year; (viii) Investments where the primary consideration is
other than cash, Collateral, or debt obligations, provided that the aggregate value of
consideration of cash, Collateral or debt obligations together with the value of consideration
other than common stock for Investments permitted under clause (vii) does not exceed, in the
aggregate, $4,000,000 in any fiscal year; (viii) Investments consisting of notes receivable or,
prepaid royalties and other credit obligations to customers and suppliers who are not Affiliates,
in the ordinary course of business (which shall include, as an example, advances paid to
licensor(s) pursuant to a license agreement); and (ix) Investments by Borrower in any Subsidiary in
an aggregate amount not to exceed $5,000,000 in any fiscal year or Investments by any Subsidiary in
Borrower.

     ”Permitted Liens” shall mean and include: (i) Liens in favor of Agent; (ii) Liens existing at
Closing and disclosed on Schedule 2; (iii) other Liens subordinated to the Liens in favor
of Agent; (iv) Liens of carriers, warehousemen, mechanics, materialmen, vendors, and landlords
incurred in the ordinary course of business for sums not overdue or being contested in good faith,
provided appropriate reserves are maintained by Borrower in accordance with generally accepted
accounting principles for the eventual payment thereof if subsequently found payable; (v) leases or
subleases and licenses or sublicenses granted in the ordinary course of Borrower’s business; (vi)
Liens (A) upon or in any Equipment which was acquired or held by Borrower or any of its
Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred

-22-

 

solely for the purpose of financing the acquisition of such Equipment, or (B) existing on such
equipment at the time of its acquisition, provided that the Lien is confined solely to the property
so acquired and improvements thereon, and the proceeds of such equipment; (vii) bankers’ liens,
rights of setoff and similar Liens incurred on deposits made in the ordinary course of business;
(viii) Liens arising from judgments, decrees or attachments in circumstances not constituting an
Event of Default; (ix) Liens for taxes or other Taxes not at the time delinquent or thereafter
payable without penalty or being contested in good faith, provided appropriate reserves are
maintained by Borrower in accordance with generally accepted accounting principles for the eventual
payment thereof if subsequently found payable; (x) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payments of customs duties in connection with the
importation of goods; (xi) Liens on insurance proceeds in favor of insurance companies granted
solely as security for financed premiums; (xii) Liens on accounts receivable securing Indebtedness
permitted under clause (vi) of the definition of Permitted Indebtedness, and (xiii) Liens incurred
in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of
the type described in clauses (i) through (iii) above, provided that any extension, renewal
or replacement Lien shall be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness being extended, renewed or refinanced does not increase.

     ”Person” shall mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, an unincorporated association,
a joint venture or other entity or a Governmental Authority.

     ”Prime Rate” shall mean the prime rate published in the Wall Street Journal dated as of the
applicable Funding Date.

     ”Requirement of Law” applicable to any Person shall mean (i) the articles or certificate of
incorporation, bylaws or other governing documents of such Person, (ii) any Governmental Rule
applicable to such Person, (iii) any license, permit, approval or other authorization granted by
any Governmental Authority to or for the benefit of such Person and (iv) any judgment, decision or
determination of any Governmental Authority or arbitrator, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its property is subject.

     ”Subordinated Debt” shall mean any debt incurred by Borrower that is subordinated to the debt
owing by Borrower to Lenders on terms acceptable to Lenders (and identified as being such by
Borrower and Lenders).

     ”Subsidiary” of any Person shall mean (i) any corporation of which more than fifty percent
(50%) of the issued and outstanding equity securities having ordinary voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether at the time capital
stock of any other class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s
other Subsidiaries, (ii) any partnership, joint venture, or other association of which more than
fifty percent (50%) of the equity interest having the power to vote, direct or control the
management of such partnership, joint venture or other association is at the time owned and
controlled by such Person, by such Person and one or more of the other Subsidiaries or by one or
more of such Person’s other subsidiaries and (iii) any other Person included in the financial
statements of such Person on a consolidated basis. Any reference to a Subsidiary without
designation of the ownership of such Subsidiary shall be deemed to refer to a Subsidiary of
Borrower.

     “Tax” or “Taxes” shall mean any present or future tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and
wherever imposed, levied, collected, withheld or assessed, including interest, penalties, additions
to tax and any similar liabilities with respect thereto; except that, in the case of a Lender,
there shall be excluded (i) taxes that are imposed on the overall net income or net profits
(including franchise taxes imposed in lieu thereof) (a) by the United States, (b) by any other
Governmental Authority under the laws of which such Lender is organized or has its

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principal office or maintains its applicable lending office, or (c) by any jurisdiction solely
as a result of a present or former connection between such Lender and such jurisdiction (other than
any such connection arising solely from such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, any of the Transaction Documents), and (ii)
any branch profits taxes imposed by the United States or any similar tax imposed by any other
jurisdiction in which such Lender is located.

     ”Trademarks” shall mean any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and the entire
goodwill of the business of Borrower connected with and symbolized by such trademarks.

     ”Transaction Documents” shall mean, collectively, the Loan Agreement, the Notes, the
Management Rights Agreement, the Warrant Purchase Agreement, the Warrants and the other documents
executed in connection herewith.

     ”Warrant” shall mean a warrant or warrants to purchase capital stock of the Borrower issued by
Borrower to an Affiliate of Lenders pursuant to a Warrant Purchase Agreement contemporaneously with
the execution of this Loan Agreement.

     ”Warrant Purchase Agreement” shall mean a warrant purchase agreement under which a Warrant is
issued entered into by Borrower and an Affiliate of Lenders contemporaneously with the execution of
this Loan Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement as of the date first
written above.

	 	 	 	 	 	 	 
	AGENT:	 	BORROWER:
	 
	 	 	 	 	 	 
	PINNACLE VENTURES, L.L.C.,

a Delaware limited liability company	 	Glu Mobile Inc.,

a California corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/ Robert N. Savoie	 	By:	 	/s/ L. Gregory Ballard
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	Robert N. Savoie
	 	Name:	 	L. Gregory Ballard
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	Chief Financial Officer
	 	Title:	 	President and CEO
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	LENDERS:	 	 	 	 
	 
	 	 	 	 	 	 
	PINNACLE VENTURES I-A (SUB) (Q), L.P.,	 	 	 	 
	a Delaware limited partnership	 	 	 	 
	PINNACLE VENTURES I-B, L.P.,	 	 	 	 
	a Delaware limited partnership	 	 	 	 
	PINNACLE VENTURES I AFFILIATES, L.P.,	 	 	 	 
	a Delaware limited partnership	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Pinnacle Ventures Management I, L.L.C.,

their general partner	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Robert N. Savoie 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	Robert N. Savoie	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	Chief Financial Officer	 	 	 	 
	 
	 	 	 	 	 	 
	PINNACLE VENTURES II-A (SUB), L.P.,	 	 	 	 
	a Delaware limited partnership	 	 	 	 
	PINNACLE VENTURES II-B, L.P.,	 	 	 	 
	a Delaware limited partnership	 	 	 	 
	PINNACLE VENTURES II-C, L.P.,	 	 	 	 
	a Delaware limited partnership	 	 	 	 
	PINNACLE VENTURES II-R (SUB), L.P.,	 	 	 	 
	a Delaware limited partnership	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Pinnacle Ventures Management II, L.L.C.,

their general partner	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Robert N. Savoie 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	Robert N. Savoie	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	Chief Financial Officer	 	 	 	 

 

 

EXHIBIT A

Secured Promissory Note

					
	$                    
	 	 
	 	Dated:                     , 2006

     FOR VALUE RECEIVED, the undersigned, Glu Mobile Inc. (“Borrower”), a California corporation,
HEREBY PROMISES TO PAY to the order of Pinnacle Ventures, L.L.C. (“Agent”) for the account of the
Lenders the principal amount of                                          Dollars ($                    ) or such lesser amount
as shall equal the aggregate outstanding principal balance of the Advance made by Agent on the date
hereof to Borrower pursuant to the Loan and Security Agreement referred to below (the “Loan
Agreement”), plus all payments arising under Sections 1.02(b) (excluding the portion of the
payments representing the original principal amount), 1.02(c) and 1.02(d) of the Loan Agreement
with respect to such Advance, on the dates and in the amounts set forth in the Loan Agreement.
Capitalized terms used herein and not otherwise defined have the respective meanings set forth in
the Loan Agreement.

     Payments under this Note shall be made as follows:

	 	 	 
	Interim Payment on Funding Date:

	 	$                    
	 
	 	 
	___monthly payments on the
first Business Day of each
Month after the Funding Date

	 	$                    , commencing                     , 2006
	 
	 	 
	30 monthly payments on the
first Business Day of each
Month after the Funding Date

	 	$                    , commencing January 1, 2007

     All other payments due under this Note or under the Loan Agreement shall be payable as and
when specified in the Loan Agreement.

     This Note is the Note referred to in, and is entitled to the benefits of, the Loan and
Security Agreement, dated as of May 2, 2006 between Borrower, Agent and the Lenders. This Note and
the obligation of Borrower to repay the unpaid principal amount of the Advance, interest on the
Advance, premium, if any, and all other amounts due Agent and Lenders under the Loan Agreement is
secured under the Loan Agreement.

     Presentment for payment, demand, notice of protest and all other demands and notices of any
kind in connection with the execution, delivery, performance and enforcement of this Note are
hereby waived.

     Borrower shall pay all reasonable fees and expenses, including, without limitation, reasonable
attorneys’ fees and costs, incurred by Agent or any Lender in the enforcement or attempt to enforce
any of Borrower’s obligations hereunder not performed when due. This Note shall be governed by,
and construed and interpreted in accordance with, the laws of the State of California.

 

 

     IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of its officers
thereunto duly authorized on the date hereof.

	 	 	 	 	 
	 	 	Glu Mobile Inc.,

a California corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

 

 

EXHIBIT B

     The Collateral shall consist of all right, title, interest, claims and demands of Borrower in
and to the following:

     (a) All goods and equipment now owned or hereafter acquired, including, without limitation,
all laboratory equipment, computer equipment, office equipment, machinery, fixtures, vehicles, and
any interest in any of the foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever located;

     (b) All inventory now owned or hereafter acquired, including, without limitation, all
merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and
finished products including such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower’s books relating to any of the
foregoing;

     (c) All contract rights, general intangibles, health care insurance receivables, payment
intangibles and commercial tort claims, now owned or hereafter acquired, including, without
limitation, all patents, patent rights (and applications and registrations therefor), trademarks
and service marks (and applications and registrations therefor), inventions, copyrights, mask works
(and applications and registrations therefor), trade names, trade styles, software and computer
programs, trade secrets, methods, processes, know how, drawings, specifications, descriptions, and
all memoranda, notes, and records with respect to any research and development, goodwill, license
agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route
lists, infringements, claims, computer programs, computer disks, computer tapes, literature,
reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment
of any kind and whether in tangible or intangible form or contained on magnetic media readable by
machine together with all such magnetic media;

     (d) All now existing and hereafter arising accounts, contract rights, royalties, license
rights and all other forms of obligations owing to Borrower arising out of the sale or lease of
goods, the licensing of technology or the rendering of services by Borrower (subject, in each case,
to the contractual rights of third parties to require funds received by Borrower to be expended in
a particular manner), whether or not earned by performance, and any and all credit insurance,
guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by
Borrower and Borrower’s books relating to any of the foregoing;

     (e) All documents, cash, deposit accounts, letter of credit rights, supporting obligations,
certificates of deposit, instruments, chattel paper, electronic chattel paper, tangible chattel
paper and investment property, including, without limitation, all securities, whether certificated
or uncertificated, security entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or otherwise, wherever located,
now owned or hereafter acquired and Borrower’s books relating to the foregoing; and

     (f) Any and all claims, rights and interests in any of the above and all substitutions for,
additions and accessions to and proceeds thereof, including, without limitation, insurance,
condemnation, requisition or similar payments and the proceeds thereof.

 

 

EXHIBIT C

Form of Opinion

[See Attached.]

 

 

EXHIBIT D

Form of Subordination Agreement

[See Attached.]exv10w20

 

Exhibit 10.20

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM
THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF
SECTION 8 OF THIS WARRANT.

GLU MOBILE INC.

WARRANT TO PURCHASE PREFERRED STOCK

     For value received and subject to the provisions set forth in this warrant (this “Warrant”),
PINNACLE VENTURES I EQUITY HOLDINGS, L.L.C. and its assigns are entitled to purchase from GLU
MOBILE INC., a California corporation (the “Company”):

	 	 	 
	Shares of Series D Preferred Stock:

	 	102,060 
	 
	 	 
	Exercise Price:

	 	$3.0100 
	 
	 	 
	Term of Warrant:

	 	7 years from the Warrant Date
	 
	 	 
	Warrant Date:

	 	May 2, 2006 

The number of Shares for which this Warrant is exercisable and the Exercise Price may be adjusted
as specified in Section 5.

     1. Definitions. As used herein, capitalized terms not otherwise defined herein shall
have the meanings set forth in the introductory paragraph of this Warrant or the following
meanings:

          (a) “Applicable Stock” means (i) the Company’s presently authorized series of preferred stock
specified in the introductory paragraph of this Warrant, (ii) after the conversion of all of the
outstanding shares of such series of preferred stock into Common Stock, either automatically or by
vote of the requisite holders thereof, the Company’s Common Stock, and (iii) upon any conversion,
exchange, reclassification or change, any security into which the securities described in clauses
(i) or (ii) of this definition may be converted, exchanged, reclassified or otherwise changed.

          (b) “Common Stock” means the common stock of the Company.

          (c) “Exercise Price” means the exercise price per share of Applicable Stock specified in the
introductory paragraph of this Warrant.

          (d) “Holder” means the initial holder of this Warrant set forth in the first paragraph of this
Warrant and any other person or entity which becomes a holder of this Warrant pursuant to the terms
of this Warrant.

          (e) “Shares” means the shares of Applicable Stock of Company issuable upon exercise of this
Warrant.

 

 

          (f) “Warrant Date” means the date of this Warrant specified in the introductory paragraph of
this Warrant.

     2. Term. The right to purchase Applicable Stock upon exercise hereof is exercisable
at any time and from time to time from the Warrant Date until the seventh anniversary of the
Warrant Date.

     3. Payment and Exercise.

          (a) Methods of Exercise. The purchase right represented by this Warrant may be
exercised by the Holder, in whole or in part and from time to time, at the election of the Holder,
by (a) the surrender of this Warrant (with the notice of exercise substantially in the form
attached hereto as Exhibit A duly completed and executed) at the principal office of the Company
and by the payment to the Company, by check, or by wire transfer to an account designated by the
Company of an amount equal to the then applicable Exercise Price multiplied by the number of Shares
then being purchased (the “Aggregate Purchase Price”); (b) if in connection with a registered
public offering of the Company’s securities, the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit B duly completed and executed) at the principal office of
the Company together with notice of arrangements reasonably satisfactory to the Company for payment
to the Company from the proceeds of the sale of shares to be sold by the Holder in such public
offering of the Aggregate Purchase Price; or (c) exercise of the “net issuance” right provided for
in Section 3(b) hereof. The person or persons in whose name(s) any certificate(s) representing
Shares of Applicable Stock shall be issuable upon exercise of this Warrant shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the record holder(s)
of, the Shares represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this Warrant is
exercised. In the event of any exercise of the rights represented by this Warrant, certificates
for the Shares so purchased shall be delivered to the Holder as soon as possible and in any event
within thirty (30) days after such exercise and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the Holder as soon as possible
and in any event within such thirty-day period; provided, however, that at such time as the Company
is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, if
requested by the Holder, the Company shall cause its transfer agent to deliver the certificate
representing Shares issued upon exercise of this Warrant to a broker or other person (as directed
by the Holder exercising this Warrant) within the time period required to settle any trade made by
the Holder after exercise of this Warrant.

          (b) Right to Convert Warrant into Stock: Net Issuance.

               (i) Net Issuance Right. In addition to and without limiting the rights of the Holder
under the terms of this Warrant, the Holder shall have the right to convert this Warrant or any
portion thereof (the “Net Issuance Right”) into shares of Applicable Stock as provided in this
Section 3(b) at any time or from time to time during the term of this Warrant. Upon exercise of
the Net Issuance Right with respect to a particular number of shares subject to this Warrant (the
“Converted Warrant Shares”), the Company shall deliver to the Holder (without payment by the Holder
of any exercise price or any cash or other consideration) that number of shares of fully paid and
nonassessable Applicable Stock as is determined according to the following formula:

	 	 	 	 	 
	X =

	 	A – B	 	 
	 

	 	 	 	 
	 

	 	Y	 	 
	 
	 	 	 	 
	Where:

	 	X =
	 	the number of shares of Applicable Stock that shall be issued to Holder
	 
	 	 	 	 
	 

	 	Y =
	 	the fair market value of one share of Applicable Stock

-2-

 

	 	 	 	 	 
	 

	 	A =
	 	the aggregate fair market value of the specified number of
Converted Warrant Shares (i.e., the number of Converted Warrant Shares
multiplied by the fair market value of one Converted Warrant Share)
	 
	 	 	 	 
	 

	 	B =
	 	the aggregate Exercise Price of the specified number of
Converted Warrant Shares immediately prior to the exercise of the Net Issuance
Right (i.e., the number of Converted Warrant Shares multiplied by the Exercise
Price)

No fractional shares shall be issuable upon exercise of the Net Issuance Right, and, if the number
of shares to be issued determined in accordance with the foregoing formula is other than a whole
number, the Company shall pay to the Holder an amount in cash equal to the fair market value of the
resulting fractional share on the Conversion Date (as hereinafter defined). For purposes of
Section 10 of this Warrant, shares issued pursuant to the Net Issuance Right shall be treated as if
they were issued upon the exercise of this Warrant.

               (ii) Exercise of Net Issuance Right. The Net Issuance Right may be exercised by the
Holder by the surrender of this Warrant at the principal office of the Company together with a
written statement (which may be in the form of Exhibit A or Exhibit B hereto) specifying that the
Holder thereby intends to exercise the Net Issuance Right and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in Section 3(b)(i) hereof as the
Converted Warrant Shares) in exercise of the Net Issuance Right. Such conversion shall be
effective upon receipt by the Company of this Warrant together with the aforesaid written
statement, or on such later date as is specified therein (the “Conversion Date”), and, at the
election of the Holder, may be made contingent upon the closing of the sale of the Company’s Common
Stock to the public in a public offering (a “Public Offering”) pursuant to a Registration Statement
under the Securities Act of 1933, amended (the “Act”). Certificates for the shares issuable upon
exercise of the Net Issuance Right and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within thirty (30) days following the Conversion Date.

               (iii) Determination of Fair Market Value. For purposes of this Section 3(b), “fair
market value” of a share of Applicable Stock (which shall be Common Stock if the Applicable Stock
has been converted into Common Stock) as of a particular date (the “Determination Date”) shall
mean:

     (1) If the Net Issuance Right is exercised in connection with and contingent upon a Public
Offering, and if the Company’s Registration Statement relating to such Public Offering
(“Registration Statement”) has been declared effective by the Securities and Exchange Commission,
then the initial “price to the public” specified in the final prospectus with respect to such
offering.

     (2) If the Net Issuance Right is not exercised in connection with and contingent upon a Public
Offering, then as follows:

          (A) If traded on a securities exchange, then the fair market value shall be the average
of the closing prices of the Common Stock on such exchange over the five trading days
immediately prior to the Determination Date;

          (B) If traded on the Nasdaq Stock Market or other over-the-counter system, then the
fair market value shall be the average of the closing bid prices of the Common Stock over
the five trading days immediately prior to the Determination Date; and

          (C) If there is no public market, then fair market value shall be determined in good
faith by the Company’s Board of Directors.

In making a determination under clauses (A) or (B) above, if on the Determination Date, five
trading days have not passed since the Company’s initial Public Offering then the fair market value
of the Common Stock shall be the average closing prices or closing bid prices, as applicable, for
the shorter period beginning on and

-3-

 

including the date of the initial Public Offering and ending on the trading day prior to the
Determination Date (or if such period includes only one trading day the closing price or closing
bid price, as applicable, for such trading day). If closing prices or closing bid prices are no
longer reported by a securities exchange or other trading system, the closing price or closing bid
price shall be that which is reported by such securities exchange or other trading system at 4:00
p.m. New York City time on the applicable trading day.

          (c) Exercise Prior to Expiration.  To the extent this Warrant is not previously
exercised as to all of the Shares subject hereto, and if the fair market value of one share of the
Applicable Stock is greater than the Exercise Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to Section 3(b) (even if not surrendered) immediately before its
expiration, including but not limited to expiration pursuant to Section 2. For purposes of such
automatic exercise, the fair market value of one share of the Applicable Stock upon such expiration
shall be determined pursuant to Section 3(b)(iii). To the extent this Warrant or any portion
thereof is deemed automatically exercised pursuant to this Section 3(c), the Company agrees to
promptly notify the Holder of the number of Shares, if any, the Holder is to receive by reason of
such automatic exercise.

     4. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and
conditions herein, be fully paid and nonassessable, and free from all preemptive rights and taxes,
liens and charges with respect to the issuance thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Applicable Stock to provide for the exercise of the
rights represented by this Warrant and, while the Applicable Stock is convertible preferred stock,
a sufficient number of shares of its Common Stock to provide for the conversion of the Applicable
Stock into Common Stock.

     5. Adjustment of Exercise Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:

          (a) Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or into another entity
(other than a merger with another entity in which the Company is the acquiring and the surviving
entity and which does not result in any reclassification or change of outstanding securities
issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the
assets of the Company, the Company, or such successor or purchasing corporation, as the case may
be, shall duly execute and deliver to the Holder a new Warrant (in form and substance satisfactory
to the Holder), or the Company shall make appropriate provision without the issuance of a new
Warrant, so that the Holder shall have the right to receive upon exercise of this Warrant, at a
total purchase price not to exceed that payable upon the exercise of the unexercised portion of
this Warrant, and in lieu of the shares of Applicable Stock theretofore issuable upon exercise of
this Warrant, the kind and amount of shares of stock, other securities, money and property
receivable upon such reclassification, change, merger or sale by a holder of the number of shares
of Applicable Stock then purchasable under this Warrant. The provisions of this Section 5(a) shall
similarly apply to successive reclassifications, changes, mergers and sales.

          (b) Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of
Applicable Stock, the Exercise Price shall be proportionately decreased and the number of Shares
issuable hereunder shall be proportionately increased in the case of a subdivision and the Exercise
Price shall be proportionately increased and the number of Shares issuable hereunder shall be
proportionately decreased in the case of a combination.

          (c) Stock Dividends and Other Distributions. If the Company at any time while this
Warrant is outstanding and unexpired shall (i) pay a dividend with respect to Applicable Stock
payable in Applicable

-4-

 

Stock, then the Exercise Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of determination by a
fraction (A) the numerator of which shall be the total number of shares of Applicable Stock
outstanding immediately prior to such dividend or distribution, and (B) the denominator of which
shall be the total number of shares of Applicable Stock outstanding immediately after such dividend
or distribution; or (ii) make any other distribution with respect to Applicable Stock (except any
distribution specifically provided for in Sections 5(a) and 5(b)), then, in each such case,
provision shall be made by the Company such that the Holder shall receive upon exercise of this
Warrant a proportionate share of any such dividend or distribution as though it were the holder of
the Applicable Stock as of the record date fixed for the determination of the shareholders of the
Company entitled to receive such dividend or distribution.

          (d) Adjustment of Number of Shares. Upon each adjustment in the Exercise Price, the
number of Shares of Applicable Stock purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable immediately prior to
such adjustment in the Exercise Price by a fraction, the numerator of which shall be the Exercise
Price immediately prior to such adjustment and the denominator of which shall be the Exercise Price
immediately thereafter.

          (e) Antidilution Rights. The other current (as of the date of the original issuance
of this Warrant) antidilution rights applicable to the Shares of Applicable Stock purchasable
hereunder are set forth in the Company’s Articles of Incorporation, as amended through the Warrant
Date, a true and complete copy of which is attached hereto as Exhibit C (the “Charter”). The
Company shall promptly provide the Holder with any restatement, amendment, modification or waiver
of the Charter promptly after the same has been made.

     6. Notice of Adjustments. Whenever the Exercise Price or the number of Shares
purchasable hereunder shall be adjusted pursuant to Section 5 hereof, the Company shall make a
certificate signed by its chief financial officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment was
calculated, and the Exercise Price and the number of Shares purchasable hereunder after giving
effect to such adjustment, and shall cause copies of such certificate to be delivered to the
Holder. In addition, whenever the conversion price or conversion ratio of the Applicable Stock
shall be adjusted, the Company shall make a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the conversion price or ratio
of the Applicable Stock after giving effect to such adjustment, and shall cause copies of such
certificate to be delivered to the Holder.

     7. Fractional Shares. No fractional shares of Applicable Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares the Company shall
make a cash payment therefor based on the fair market value of the Applicable Stock on the date of
exercise as reasonably determined in good faith by the Company’s Board of Directors.

     8. Compliance with Act; Disposition of Warrant or Shares of Applicable Stock.

          (a) Compliance with Act. The Holder, by acceptance hereof, agrees that this Warrant,
and the shares of Applicable Stock to be issued upon exercise hereof and any Common Stock issued
upon conversion thereof are being acquired for investment and that the Holder will not offer, sell
or otherwise dispose of this Warrant, or any shares of Applicable Stock to be issued upon exercise
hereof or any Common Stock issued upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state securities laws. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any applicable state
securities laws or an exemption from such registration is available, the Holder shall confirm in
writing that the shares of Applicable Stock so purchased (and any shares of Common Stock issued
upon conversion thereof) are being acquired for investment and not with a view toward distribution
or resale in violation of the Act and shall confirm such other matters related thereto as may be
reasonably requested by the Company. This Warrant and all shares of Applicable Stock issued upon
exercise of this Warrant (unless registered under the Act and any applicable state securities laws)
shall be stamped or imprinted with a legend in substantially the following form:

-5-

 

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i)
EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF
NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH
THE PROVISIONS OF SECTION 8 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR
INDIRECTLY.”

Said legend shall be removed by the Company, upon the request of the Holder, at such time as the
restrictions on the transfer of the applicable security shall have terminated.

          (b) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any shares of Applicable Stock acquired pursuant to the exercise of
this Warrant prior to registration of such Warrant or shares, the Holder agrees to give written
notice to the Company prior thereto, describing briefly the manner thereof, together with a written
opinion of counsel, if requested by the Company, or other evidence, if reasonably satisfactory to
the Company, to the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or state securities
law then in effect) of this Warrant or such shares of Applicable Stock and indicating whether or
not under the Act certificates for this Warrant or such shares of Applicable Stock to be sold or
otherwise disposed of require any restrictive legend as to applicable restrictions on
transferability in order to ensure compliance with such law. Upon receiving such written notice
and reasonably satisfactory opinion or other evidence, the Company, as promptly as practicable but
no later than fifteen (15) days after receipt of the written notice, shall notify the Holder that
the Holder may sell or otherwise dispose of this Warrant or such shares of Applicable Stock, all in
accordance with the terms of the notice delivered to the Company. If a determination has been made
pursuant to this Section 8(b) that the opinion of counsel or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly with details thereof
after such determination has been made. Notwithstanding the foregoing, this Warrant or such shares
of Applicable Stock may, as to such federal laws, be offered, sold or otherwise disposed of in
accordance with Rule 144 or 144A under the Act, provided that the Company shall have been furnished
with such information as the Company may reasonably request to provide a reasonable assurance that
the provisions of Rule 144 or 144A have been satisfied. Each certificate representing this Warrant
or the shares of Applicable Stock thus transferred (except a transfer pursuant to Rule 144 or 144A)
shall bear a legend as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the Holder, such legend
is not required in order to ensure compliance with such laws. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.

          (c) Applicability of Restrictions. Neither any restrictions of any legend described
in this Warrant nor the requirements of Section 8(b) above shall apply to any transfer of, or grant
of a security interest in, this Warrant (or the Applicable Stock or Common Stock obtainable upon
exercise thereof) or any part hereof (i) to a partner of the Holder if the Holder is a partnership
or to a member of or other holder of an interest in the Holder if the Holder is a limited liability
company, (ii) to a partnership of which the Holder is a partner or to a limited liability company
of which the Holder is a member or other holder of an interest, or (iii) to any affiliate of the
Holder if the Holder is a corporation; provided, however, in any such transfer, if
applicable, the transferee shall on the Company’s request agree in writing to be bound by the terms
of this Warrant as if an original holder hereof.

     9. Rights as Shareholders; Information. No Holder, as a holder of this Warrant, shall
be entitled to vote or receive dividends or be deemed the holder of Applicable Stock or any other
securities of the Company which may at any time be issuable upon the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any
of the rights of a shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided herein.
Notwithstanding the foregoing, the Company will transmit to the Holder such information, documents
and

-6-

 

reports as are generally distributed to the holders of any class or series of the securities
of the Company concurrently with the distribution thereof to the shareholders.

     10. Registration Rights. The Company grants registration rights to the Holder for any
Applicable Stock of the Company (after its conversion to Common Stock) obtained upon exercise of
this Warrant pursuant to that certain Amended and Restated Investors Rights Agreement dated as of
March 29, 2006, as amended by that certain Amendment No. 1 and Joinder to the Investors’ Rights
Agreement dated as the date hereof.

     11. Notice Rights.

          (a) Acquisition Transactions. The Company shall provide the Holder with at least
twenty (20) days’ written notice prior to closing thereof of the terms and conditions of any of the
following transactions (to the extent the Company has notice thereof): (i) the sale, lease,
exchange, conveyance or other disposition of all or substantially all of the Company’s property or
business, or (ii) its merger into or consolidation with any other corporation (other than a
wholly-owned subsidiary of the Company), or any transaction (including a merger or other
reorganization) or series of related transactions, in which more than 50% of the voting power of
the Company is disposed of.

          (b) Dividends and Repurchases. The Company shall provide the Holder with at least ten
(10) days notice prior to the record date of any cash dividend with respect to or offer to
repurchase the Applicable Stock.

          (c) Liquidation. The Company shall provide the Holder with at least ten (10) days
notice prior to any voluntary or involuntary dissolutions, liquidation or winding-up of the
Company.

     12. Representations and Warranties. The Company represents and warrants to the Holder
as follows:

          (a) This Warrant has been duly authorized and executed by the Company and is a valid and
binding obligation of the Company enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors and the rules of
law or principles at equity governing specific performance, injunctive relief and other equitable
remedies.

          (b) The Shares have been duly authorized and reserved for issuance by the Company and, when
issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable
and free from preemptive rights.

          (c) The current (as of the original issuance of this Warrant) rights, preferences, privileges
and restrictions granted to or imposed upon the Applicable Stock and the holders thereof are as set
forth in the Charter, and on the Warrant Date, each share of the Applicable Stock represented by
this Warrant is convertible into one share of Common Stock.

          (d) The shares of Common Stock issuable upon conversion of the Shares have been duly
authorized and reserved for issuance by the Company and, when issued in accordance with the terms
of the Charter will be validly issued, fully paid and nonassessable.

          (e) The execution and delivery of this Warrant are not, and the issuance of the Shares upon
exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the
Company’s Charter or by-laws, do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to the Company, or require the consent or approval of, the
giving of notice to, the registration or filing with or the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person, except for the
filing of notices pursuant to federal and state securities laws, which filings will be effected by
the time required thereby.

-7-

 

          (f) There are no actions, suits, audits, investigations or proceedings pending or, to the
knowledge of the Company, threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, could have a material adverse effect
on the ability of the Company to perform its obligations under this Warrant.

          (g) The number of shares of Common Stock of the Company outstanding on the date hereof, on a
fully diluted basis (assuming the conversion of all outstanding convertible securities and the
exercise of all outstanding options and warrants), does not exceed 75 million shares.

     13. Modification and Waiver. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.

     14. Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the Holder or the Company shall be delivered, or shall be
sent by certified or registered mail, postage prepaid, or overnight courier or delivered personally
to the Holder at its address as shown on the books of the Company or to the Company at the address
indicated therefor on the signature page of this Warrant.

     15. Binding Effect on Successors. This Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or substantially all of the
Company’s assets, and all of the obligations of the Company relating to the Applicable Stock
issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the Holder.

     16. Lost Warrants or Stock Certificates. The Company covenants to the Holder that,
upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of
any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the
lost, stolen, destroyed or mutilated Warrant or stock certificate.

     17. Descriptive Headings. The descriptive headings of the various Sections of this
Warrant are inserted for convenience only and do not constitute a part of this Warrant. The
language in this Warrant shall be construed as to its fair meaning without regard to which party
drafted this Warrant.

     18. Governing Law. This Warrant shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of the State of California.

     19. Survival of Representations, Warranties and Agreements. All representations and
warranties of the Company and the Holder contained herein shall survive the Warrant Date, the
exercise or conversion of this Warrant (or any part hereof) or the termination or expiration of
rights hereunder. All agreements of the Company and the Holder contained herein shall survive
indefinitely until, by their respective terms, they are no longer operative.

     20. Remedies. In case any one or more of the covenants and agreements contained in
this Warrant shall have been breached, the Holder (in the case of a breach by the Company), or the
Company (in the case of a breach by the Holder), may proceed to protect and enforce their or its
rights either by suit in equity and/or by action at law, including, but not limited to, an action
for damages as a result of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.

     21. No Impairment of Rights. The Company will not, by amendment of its Charter or
through any other means, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order to protect the
rights of the Holder against impairment.

-8-

 

     22. Severability. The invalidity or unenforceability of any provision of this Warrant
in any jurisdiction shall not affect the validity or enforceability of such provision in any other
jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and
effect.

     23. Recovery of Litigation Costs. If any legal action or other proceeding is brought
for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Warrant, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which it or they may be
entitled.

     24. Entire Agreement; Modification. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and undertakings of the parties, whether oral or
written, with respect to such subject matter.

-9-

 

     The Company has caused this Warrant to be duly executed and delivered as of the Warrant Date
specified above.

	 	 	 	 	 	 	 
	 	 	GLU MOBILE INC.
	 
	 	 	 	 	 	 
	 

	 	By	 	/s/ L. Gregory Ballard 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title	 	President and CEO
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	 	 	Glu Mobile Inc.

1810 Gateway Drive, Suite 200

San Mateo, CA 94404

 

 

EXHIBIT A

NOTICE OF EXERCISE

To: Glu Mobile Inc. (the “Company”)

     1. The undersigned hereby:

	 	 	 	 	 
	 

	 	o
	 	elects to purchase___shares of [Applicable Stock] [Common Stock] of the
Company pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full, or
	 
	 	 	 	 
	 

	 	o
	 	elects to exercise its net issuance rights pursuant to Section 3(b) of the
attached Warrant with respect to___Shares of [Applicable Stock] [Common
Stock].

     2. Please issue a certificate or certificates representing ___shares in the name of the
undersigned or in such other name or names as are specified below:

	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	(Name)	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	(Address)	 	 

     3. The undersigned represents to the Company as follows:

          (a) The undersigned is aware of the Company’s business affairs and financial condition, and
has acquired information about the Company sufficient to reach an informed and knowledgeable
decision to acquire the aforesaid shares (the “Shares”). The undersigned is acquiring the Shares
for its own account for investment purposes only and not with a view to, or for the resale in
connection with, any “distribution” thereof in violation of the Securities Act of 1933, as amended
(the “Act”).

          (b) The undersigned understands that the Shares have not been registered under the Act in
reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of the undersigned’s investment intent as expressed herein.

          (c) The undersigned further understands that the Shares must be held indefinitely unless
subsequently registered under the Act and qualified under any applicable state securities laws, or
unless exemptions from registration and qualification are otherwise available. The undersigned is
aware that the Shares are “restricted securities” and is aware of the provisions of Rule 144,
promulgated under the Act.

          (d) The undersigned is an “accredited investor” as such term is defined in Rule 501 of
Regulation D promulgated under the Act.

	 	 	 
	 

	 	 
	 
	 	 
	 

	 	(Signature)
	 
	 	 
	 
	 	 
	(Date)
	 	 

 

 

EXHIBIT B

NOTICE OF EXERCISE

To: Glu Mobile Inc. (the “Company”)

     1. Contingent upon and effective immediately prior to the closing (the “Closing”) of the
Company’s public offering contemplated by the Registration Statement on Form S___, filed___,
200___, the undersigned hereby:

	 	 	 	 	 
	 

	 	o
	 	elects to purchase___shares of [Applicable Stock] [Common Stock] of the Company (or such
lesser number of shares as may be sold on behalf of the undersigned at the Closing) pursuant to the
terms of the attached Warrant, or
	 
	 	 	 	 
	 

	 	o
	 	elects to exercise its net issuance rights pursuant to Section 3(b) of the attached Warrant
with respect to___Shares of [Applicable Stock] [Common Stock].

     2. Please deliver to the custodian for the selling shareholders a stock certificate
representing such___shares.

     3. The undersigned has instructed the custodian for the selling shareholders to deliver to the
Company $___or, if less, the net proceeds due the undersigned from the sale of shares in the
aforesaid public offering. If such net proceeds are less than the purchase price for such shares,
the undersigned agrees to deliver the difference to the Company prior to the Closing.

     4. The undersigned represents to the Company as follows:

          (a) The undersigned is aware of the Company’s business affairs and financial condition, and
has acquired information about the Company sufficient to reach an informed and knowledgeable
decision to acquire the aforesaid shares (the “Shares”). The undersigned is acquiring the Shares
for its own account for investment purposes only and not with a view to, or for the resale in
connection with, any “distribution” thereof in violation of the Securities Act of 1933, as amended
(the “Act”).

          (b) The undersigned understands that the Shares have not been registered under the Act in
reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of the undersigned’s investment intent as expressed herein.

          (c) The undersigned further understands that the Shares must be held indefinitely unless
subsequently registered under the Act and qualified under any applicable state securities laws, or
unless exemptions from registration and qualification are otherwise available. The undersigned is
aware that the Shares are “restricted securities” and is aware of the provisions of Rule 144,
promulgated under the Act.

          (d) The undersigned is an “accredited investor” as such term is defined in Rule 501 of
Regulation D promulgated under the Act.

	 	 	 
	 

	 	 
	 
	 	 
	 

	 	(Signature)
	 
	 	 
	 
	 	 
	(Date)
	 	 

 

 

EXHIBIT C

CHARTER

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