Exhibit 3.1

 

AMENDED AND RESTATED

 

CERTIFICATE OF INCORPORATION

 

OF

 

OUTBRAIN INC.

 

a Delaware corporation

 

The following Amended and Restated Certificate of Incorporation of Outbrain Inc. (the “Corporation”) (i) amends and restates the provisions of the Certificate of Incorporation of the Corporation originally filed with the Secretary of State of the State of Delaware on August 11, 2006, (ii) supersedes the original Certificate of Incorporation and all subsequent amendments and restatements thereto through the date hereof in their entirety, and (iii) was approved pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware.

 

ARTICLE I

 

The name of the Corporation is Outbrain Inc.

 

ARTICLE II

 

The address of the Corporation’s registered office in the State of Delaware is located at 251 Little Falls Drive, in the City of Wilmington, in the County of New Castle, in the State of Delaware 19808. The name of its registered agent at such address is Corporation Service Company.

 

ARTICLE III

 

The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

 

ARTICLE IV

 

A.           Classes of Stock. The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock”. The total number of shares of all classes of stock which the Corporation is authorized to issue is One Hundred Fifty Eight Million Fifteen Thousand Five Hundred Ninety Two (158,015,592) shares, of which (i) One Hundred Ten Million Eight Hundred Twelve Thousand Four Hundred Thirty Five (110,812,435) shares shall be Common Stock, par value $0.001 per share (“Common Stock”) and (ii) Forty Seven Million Two Hundred Three Thousand One Hundred Fifty Seven (47,203,157) shares shall be Preferred Stock, par value $0.001 per share, of which Seven Million Sixty-five Thousand Nine Hundred And Seven (7,065,907) shares are designated as Series A Preferred Stock (the “Series A Preferred”), Fourteen Million Five Hundred Sixty-five Thousand Seven Hundred Sixty(14,565,760) shares are designated as Series B Preferred Stock (the “Series B Preferred”), Six Million Four Hundred Seventy-seven Thousand Four Hundred Forty-seven (6,477,447) shares are designated as Series C Preferred Stock (the “Series C Preferred”), Five Million Seven Hundred Thirty-five Thousand And Twenty-six (5,735,026) shares are designated as Series D Preferred Stock (the “Series D Preferred”), One Million Eighty Thousand One Hundred Ninety-seven (1,080,197) shares are designated as Series E Preferred Stock (the “Series E Preferred”), Five Million Three Hundred Forty-Three Thousand Four Hundred Twenty-five (5,343,425) shares are designated as Series F Preferred Stock (the “Series F Preferred”), Five Million Six Hundred Sixty-six Thousand One Hundred Seventy-two (5,666,172) shares are designated as Series G Preferred Stock (the “Series G Preferred”), and One Million Two Sixty Nine Thousand Two Hundred Twenty Three (1,269,223) shares are designated as Series H Preferred Stock (the “Series H Preferred”). The Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series F Preferred and Series G Preferred are referred to herein collectively as the “Senior Preferred Stock.” The Series E Preferred, Series H Preferred and the Common Stock are referred to herein collectively as the “Junior Stock.”

B.            Rights, Preferences and Restrictions of Preferred Stock. The rights, preferences, privileges and restrictions granted to and imposed on the Common Stock and the Preferred Stock are as set forth below in this Amended and Restated Certificate of Incorporation.

 

1.            Dividends. The holders of Senior Preferred Stock shall be entitled to receive, pro rata among themselves and on an as converted basis, noncumulative dividends, if and when declared by the Corporation’s Board of Directors (the “Board”), out of any funds legally available therefor, prior and in preference to any declaration or payment of any dividend according to the following preferences and rates: (i) first, and in preference and priority to any payment of any dividend on Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred or Junior Stock, the holders of shares of Series G Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series G Original Issue Price (as defined below) (the “Preferred G Dividend Preference”); (ii) second, following payment in full of the Preferred G Dividend Preference, and in preference and priority to any payment of any dividend on Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred or Junior Stock, the holders of shares of Series F Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series F Original Issue Price (as defined below) (the “Preferred F Dividend Preference”); (iii) third, following payment in full of the Preferred G Dividend Preference and the Preferred F Dividend Preference and in preference and priority to any payment of any dividend on Series C Preferred, Series B Preferred, Series A Preferred or Junior Stock, the holders of shares of Series D Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series D Original Issue Price (as defined below) (the “Preferred D Dividend Preference”); (iv) fourth, following payment in full of the Preferred G Dividend Preference, the Preferred F Dividend Preference and the Preferred D Dividend Preference, and in preference and priority to any payment of any dividend on Series B Preferred, Series A Preferred or Junior Stock, the holders of shares of Series C Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series C Original Issue Price (as defined below) (the “Preferred C Dividend Preference”); (v) fifth, following payment in full of the Preferred G Dividend Preference, the Preferred F Dividend Preference, the Preferred D Dividend Preference and the Preferred C Dividend Preference, and in preference and priority to any payment of any dividend on Series A Preferred or Junior Stock, the holders of shares of Series B Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series B Original Issue Price (as defined below) (the “Preferred B Dividend Preference”); (vi) sixth, following payment in full of the Preferred G Dividend Preference, the Preferred F Dividend Preference, the Preferred D Dividend Preference, the Preferred C Dividend Preference and the Preferred B Dividend Preference and in preference and priority to any payment of any dividend on Junior Stock, the holders of shares of Series A Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series A Original Issue Price (as defined below) (the “Preferred A Dividend Preference”); and (vii) seventh, following payment in full of the Preferred G Dividend Preference, the Preferred F Dividend Preference, the Preferred D Dividend Preference, the Preferred C Dividend Preference, the Preferred B Dividend Preference and the Preferred A Dividend Preference, all stockholders of the Corporation will participate on a pro rata basis in the receipt of any additional dividends on an as-converted basis.

2.           Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, distributions to the stockholders of the Corporation shall be made in the following order of preference:

 

(a)         First, the holders of shares of Series G Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to the Series G Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series G Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series G Preferred (the “Series G Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series G Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series G Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series G Preferred shall mean $8.8243 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series G Original Issue Price”).

 

(b)         Second, and after the Series G Preference has been paid in full, the holders of shares of Series F Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to two (2.0) times the Series F Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series F Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series F Preferred (the “Series F Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series F Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after distribution of the Series G Preference) shall be distributed ratably among the holders of the Series F Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series F Preferred shall mean $6.7075 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series F Original Issue Price”).

(c)         Third, and after the Series G Preference and the Series F Preference have been paid in full, the holders of shares of Series D Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series C Preferred, Series B Preferred, Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to the Series D Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series D Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series D Preferred (the “Series D Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series D Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after distribution of the Series G Preference and the Series F Preference) shall be distributed ratably among the holders of the Series D Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series D Preferred shall mean $6.1407 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series D Original Issue Price”).

 

(d)         Fourth, and after the Series G Preference, the Series F Preference and the Series D Preference have been paid in full, the holders of shares of Series C Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series B Preferred Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to the Series C Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series C Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series C Preferred (the “Series C Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series C Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after distribution of the Series G Preference, the Series F Preference and the Series D Preference) shall be distributed ratably among the holders of the Series C Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series C Preferred shall mean $1.6982 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series C Original Issue Price”).

 

(e)         Fifth, and after the Series G Preference, the Series F Preference, the Series D Preference and the Series C Preference have been paid in full, the holders of shares of Series B Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to the Series B Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series B Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series B Preferred (the “Series B Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series B Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after distribution of the Series G Preference, the Series F Preference, the Series D Preference and the Series C Preference) shall be distributed ratably among the holders of the Series B Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series B Preferred shall mean $0.82385 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series B Original Issue Price”).

(f)          Sixth, and after the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference and the Series B Preference have been paid in full, the holders of shares of Series A Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Junior Stock by reason of their ownership thereof, an amount per share equal to the Series A Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series A Preferred pursuant to Section 1 hereinabove, plus an amount equal to declared but unpaid dividends on each share of Series A Preferred (the “Series A Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after the distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference and the Series B Preference) shall be distributed ratably among the holders of the Series A Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series A Preferred shall mean $0.7226 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series A Original Issue Price”).

 

(g)         Seventh, and after the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference and the Series A Preference have been paid in full, the holders of shares of Series E Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series H Preferred and Common Stock by reason of their ownership thereof, an amount per share equal to the Series E Original Issue Price for each such share (the “Series E Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series E Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after the distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference and the Series A Preference) shall be distributed ratably among the holders of the Series E Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series E Preferred shall mean $5.5545 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series E Original Issue Price”).

(h)          Eighth, and after the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference, the Series A Preference and the Series E Preference have been paid in full, the holders of shares of Series H Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the Series H Original Issue Price for each such share (the “Series H Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series H Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after the distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference, the Series A Preference and the Series E Preference) shall be distributed ratably among the holders of the Series H Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series H Preferred shall mean $8.8243 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series H Original Issue Price” and, together with the Series G Original Issue Price, the Series F Original Issue Price, the Series D Original Issue Price, the Series C Original Issue Price, the Series B Original Issue Price, the Series A Original Issue Price and the Series E Original Issue Price, each an “Original Issue Price”).

 

(i)           Ninth, upon the completion of the distribution required by subparagraphs (a), (b), (c), (d), (e), (f), (g) and (h) of this Section 2, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among the holders of Common Stock and to the holders of the Senior Preferred Stock other than the Series F Preferred (on an as-if converted basis) pro rata in proportion to the number of shares of Common Stock held by each holder.

 

(j)           Notwithstanding Sections 2(a) through 2(i) above:

 

(i)           Without giving effect to the distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference, the Series A Preference, the Series E Preference and the Series H Preference pursuant to Sections 2(a) through 2.(i) above, if upon a pari passu pro rata distribution of all assets of the Corporation to all holders of shares of the Corporation on an as-if converted basis, the amount per share of Series G Preferred actually distributed to the holders of Series G Preferred (including, for the removal of doubt, cash dividends actually received by such holders of Series G Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series G Preferred) is (x) in the case of a liquidation, dissolution or winding up (including a Deemed Liquidation) occurring on or before February 9, 2016 (the “Series G First Anniversary Date”), greater than two hundred percent (200%) or (y) occurring after the Series G First Anniversary Date, greater than three hundred percent (300%) of the Series G Original Issue Price (each of (x) and (y) being referred to as the “Cap G Amount”), then all Senior Preferred Stock, including the Series F Preferred (which holders thereof, for the avoidance of doubt, shall receive at least two hundred percent (200%) of the Series F Original Issue Price pursuant to this subsection i.), the Series E Preferred and the Series H Preferred, shall not be entitled to their respective preferences described in Sections 2(a) through 2(i) above, but rather to their pro rata share (on an as-if converted basis) of all assets, provided, however, that in such event, each holder of Series G Preferred actually receives an amount per share of Series G Preferred which (together, for the removal of doubt, with cash dividends actually received by such holders of Series G Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series G Preferred) is not less than the Cap G Amount.

(ii)           In addition, in the event that (1) a distribution of the pro rata share (on an as-if converted basis) of all assets is not effected pursuant to subsection i. above; (2) after distribution of the Series G Preference; and (3) without giving effect to the distribution of the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference, the Series A Preference, the Series E Preference and the Series H Preference pursuant to Sections 2(b) through 2(i) above, if upon a pari passu pro rata distribution of all remaining assets of the Corporation to all holders of shares of the Corporation on an as-if converted basis, the amount per share of Series D Preferred actually distributed to the holders of Series D Preferred (including, for the removal of doubt, cash dividends actually received by such holders of Series D Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series D Preferred) is greater than two hundred twenty five percent (225%) of the Series D Original Issue Price (the “Cap D Amount”), then all the Series F Preferred (which holders thereof, for the avoidance of doubt, shall receive at least two hundred percent (200%) of the Series F Original Issue Price pursuant to this subsection ii.), the Series C Preferred, the Series B Preferred, the Series A Preferred, the Series E Preferred and the Series H Preferred, shall not be entitled to their respective preferences described in Sections 2(b) through 2(i) above, but rather to their pro rata share (on an as-if converted basis) of all remaining assets, provided, however, that this subsection ii. shall apply to the holders of the Series F Preferred, the Series D Preferred, the Series C Preferred, the Series B Preferred, the Series A Preferred, the Series E Preferred and the Series H Preferred only if each holder of Series D Preferred actually receive an amount per share of Series D Preferred which (together, for the removal of doubt, with cash dividends actually received by such holders of Series D Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series D Preferred) is not less than the Cap D Amount.

 

(iii)           In addition, in the event that (1) a distribution is not effected pursuant to subsections i. or ii. above; (2) after distribution of the Series G Preference, the Series F Preference and the Series D Preference, and (3) without giving effect to the distribution of the Series C Preference, the Series B Preference, the Series A Preference, the Series E Preference and the Series H Preference pursuant to Sections 2(d) through 2(i) above, if upon a pari passu pro rata distribution of all remaining assets of the Corporation to all holders of shares of the Corporation on an as-if converted basis, the amount per share of Series C Preferred actually distributed to the holders of Series C Preferred (including, for the removal of doubt, cash dividends actually received by such holders of Series C Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series C Preferred), is greater than two hundred fifty percent (250%) of the Series C Original Issue Price (the “Cap C Amount”), then the Series C Preferred, the Series B Preferred, and the Series A Preferred shall not be entitled to their respective preferences described in Sections 2(d) through 2(i) above but rather to their pro rata share (on an as-if converted basis) of all remaining assets, provided, however, that this subsection iii. shall apply to the holders of Series C Preferred, Series B Preferred, and Series A Preferred only if each of the holders of Series C Preferred actually receives an amount per share of Series C Preferred which (together, for the removal of doubt, with cash dividends actually received by such holders of Series C Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series C Preferred) is not less than the Cap C Amount.

(iv)         In addition, in the event that (1) a distribution is not effected pursuant to subsections i., ii. or iii. above, (2) after distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference and the Series B Preference, and (3) without giving effect to the distribution of the Series A Preference, the Series E Preference and the Series H Preference pursuant to Sections 2(f) through 2(i) above, if upon a pari passu pro rata distribution of all remaining assets of the Corporation to all holders of shares of the Corporation on an as-if converted basis, the amount per share of Series A Preferred actually distributed to the holders of Series A Preferred (including, for the removal of doubt, cash dividends actually received by such holders of Series A Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series A Preferred), is greater than three hundred percent (300%) of the Series A Original Issue Price (the “Cap A Amount”), then the Series A Preferred shall not be entitled to their preference described in Section 2(£) above but rather to their pro rata share (on an as-if converted basis) of all remaining assets, provided, however, that this subsection iv. shall apply to the holders of Series A Preferred only if each of the holders of Series A Preferred actually receives an amount per share of Series A Preferred which (together, for the removal of doubt, with cash dividends actually received by such holders of Series A Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each Series A Preferred) is not less than the Cap A Amount.

 

(v)         Finally, for purposes of determining the amount each holder of shares of Series E Preferred or Series H Preferred is entitled to receive upon a liquidation, dissolution or winding up of this Corporation, either voluntary or involuntary, including a Deemed Liquidation, each such holder of shares of Series E Preferred or Series H Preferred shall be deemed to have converted (regardless of whether such holder actually converted) such holder’s shares of Series E Preferred or Series H Preferred into shares of Common Stock immediately prior to such liquidation, dissolution or winding up, either voluntary or involuntary, including a Deemed Liquidation, if, as a result of an actual conversion, such holder would receive, in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert such shares of Series E Preferred or Series H Preferred into shares of Common Stock. If any such holder shall be deemed to have converted shares of Series E Preferred or Series H Preferred into Common Stock pursuant to this subsection v., then such holder shall not be entitled to receive any distribution that would otherwise be made to holders of Series E Preferred or Series H Preferred that have not converted (or have not been deemed to have converted) into shares of Common Stock.

 

(k)          For purposes of this Section 2, a liquidation, dissolution or winding up of the Corporation shall be deemed to be occasioned by, and to include (each of the below events, a “Deemed Liquidation”), (x) in the event of a consolidation, merger or reorganization of the Corporation with or into, or a sale, transfer, or other disposition of all or substantially all of the Corporation’s assets or intellectual property, or substantially all of the Corporation’s issued and outstanding capital stock, to, any other corporation, or any other entity or person, other than a wholly-owned subsidiary of the Corporation, excluding a transaction in which stockholders of the Corporation prior to the transaction will maintain voting control of the resulting entity after the transaction (provided, however, that shares of the surviving entity held by stockholders of the Corporation acquired by means other than the exchange or conversion of the shares of the Corporation shall not be used in determining if the stockholders of the Corporation own more than fifty percent (50%) of the voting power of the surviving entity (or its parent), but shall be used for pursuant to a transaction or series of related transactions, other than a transaction that is a bona fide equity financing with the primary purpose of raising capital for the Corporation, a person or entity acquires fifty percent (50%) or more of the issued and outstanding shares of the Corporation or the right to appoint or elect at least fifty percent (50%) or more of the members of the Board; or (z) in the event the Corporation transfers or grants a perpetual exclusive license of all or substantially all of the Corporation’s intellectual property. An IPO (as defined below) shall not be considered a liquidation, dissolution or winding up of the Corporation pursuant to this Section 2.

(1)          In any of such events, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board. Any securities shall be valued as follows:

 

(A)         Securities not subject to an investment letter or other similar restrictions on free marketability shall be valued as follows:

 

(1)           If traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty (30) day period ending three (3) days prior to the closing;

 

(2)           if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing; and

 

(3)           if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board.

 

(B)          in the event the requirements of this Section 2 are not complied with, the Corporation shall forthwith either:

 

(1)          cause such closing to be postponed until such time as the requirements of this Section 2 have been complied with; or

 

(2)          cancel such transaction, in which event the rights, preferences and privileges of the holders of the Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in subsection 2(k)(ii) hereof.

 

(C)         Securities subject to an investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be valued in such a manner as to make an appropriate discount from the market value determined in good faith as above in (A)(1), (A)(2) or (A)(3) to reflect the approximate fair market value thereof, as determined by the Board.

 

(ii)          The Corporation shall give each holder of record of Preferred Stock written notice of such impending transaction not later than ten (10) days prior to the stockholder meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction whichever notice date is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction, the provisions of this Section 2, and the amounts anticipated to be distributed to holders of each outstanding series and class of capital stock of the Corporation pursuant to this Section 2, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than ten (10) days after the Corporation has given the first notice provided for herein or sooner than ten (10) days after the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock that are entitled to such notice rights or similar notice rights and that represent at least a majority of the voting power of all then outstanding shares of such Preferred Stock (voting together as a single class on an as converted basis).

(iii)          Notwithstanding anything to the contrary contained herein, in the event of a Deemed Liquidation, if any portion of the consideration payable to the stockholders of the Corporation is placed into escrow and/or is payable to the stockholders of the Corporation subject to contingencies, the Merger Agreement (or other agreement effecting such Deemed Liquidation) shall provide that (a) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with subsections 2(a) through 2(i) above as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation and (b) any additional consideration which becomes payable to the stockholders of the Corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with subsections 2(a) through 2(i) above after taking into account the previous payment of the Initial Consideration as part of the same transaction.

 

3.            Conversion. The holders of Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

(a)          Right to Convert. Each share of Preferred Stock shall be convertible, without payment of additional consideration by the holder thereof at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the applicable Original Issue Price by the Conversion Price (as defined below) applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion.

 

The conversion price per share for each share of Preferred Stock shall initially be equal to the applicable Original Issue Price of such share of Preferred Stock (the “Conversion Price”); provided, however, that the Conversion Price shall be subject to adjustment as set forth in this Section 3.

(b)          Automatic Conversion.

 

(i)            All shares of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price at the time in effect for such Preferred Stock, immediately prior to the earlier of: (i) the closing of the Corporation’s initial underwritten public offering of its Common Stock pursuant to an effective registration statement under the United States Securities Act of 1933, as amended (the “Act”), or equivalent law of another jurisdiction (an “IPO”) yielding at least US $30 million net to the Corporation (a “Qualified IPO”); or (ii) the written election of the holders of the majority in interest of the Corporation’s issued and outstanding Senior Preferred Stock, provided that with respect to the conversion of Series G Preferred, as long as any originally issued shares of Series G Preferred remains outstanding the written consent of the holders of at least fifty-one percent (51%) of the outstanding shares of Series G Preferred (the “Series G Investor Majority”) shall also be required, and provided further that with respect to the conversion of the Series F Preferred, as long as any of the originally issued shares of Series F Preferred remain outstanding the written consent of the holders of at least fifty-one percent (51%) of the outstanding shares of Series F Preferred (the “Series F Investor Majority”) shall also be required, and provided further that with respect to the conversion of the Series D Preferred, as long as any of the originally issued shares of Series D Preferred remain outstanding the written consent of the holders of at least sixty percent (60%) of the outstanding shares of Series D Preferred (the “Series D Investor Majority”) shall also be required.

 

(ii)           Notwithstanding the foregoing and without amending or derogating in any way from the definition of the term “Qualified IPO”, with respect to the conversion of the Series G Preferred, Series F Preferred and Series D Preferred upon a Qualified IPO (and with respect to the Series G Preferred, upon any IPO), the following provisions shall apply: (w) the Conversion Price of the Series G Preferred shall be determined as follows: (A) if the price of the shares sold by the underwriters to the public before deducting underwriting discounts and related offering costs for such Qualified IPO (the “IPO Price”) is equal to or greater than $8.8243 (as adjusted for any stock splits, recapitalizations, stock dividends or the like including without limitation any adjustment pursuant to this subsection (ii)), the Conversion Price then in effect for the Series G Preferred shall not be affected thereby, and (B) if the IPO price is less than $8.8243 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like including without limitation any adjustment pursuant to this subsection (ii)), the Conversion Price then in effect for the Series G Preferred shall be reduced to the IPO Price concurrently with the closing of the IPO; (x) the Conversion Price of the Series F Preferred shall be determined as follows: (A) if the IPO Price is at least two (2.0) times the Series F Original Issue Price, the Conversion Price then in effect for the Series F Preferred shall not be affected thereby; and (B) if the IPO Price is less than two (2.0) times the Series F Original Issue Price, the Conversion Price shall be the lower of (i) the Conversion Price then in effect for the Series F Preferred, and (ii) the Series F Original Issue Price multiplied by a fraction, the denominator of which is the Series F Preference and the numerator of which is the IPO Price; and (y) the Conversion Price of the Series D Preferred shall be determined as follows: (A) if the IPO Price is at least one and one-half(1.5) times the Series D Original Issue Price, the Conversion Price then in effect for the Series D Preferred shall not be affected thereby; (B) if the IPO Price is less than one and one-half (1.5) times the Series D Original Issue Price and the original Conversion Price has not otherwise been subject to adjustment, the Conversion Price shall be two-thirds (2/3) of the original Conversion Price; and (C) if the IPO Price is less than one and one-half (1.5) times the Series D Original Issue Price and the original Conversion Price has otherwise been subject to adjustment, the Conversion Price shall be the lower of (i) the Conversion Price then in effect for the Series D Preferred, and (ii) two-thirds (2/3) of the original Conversion Price. For the removal of doubt, to the extent that Conversion Price for any of the Series G Preferred, Series F Preferred or Series D Preferred is adjusted pursuant to sub-sections (w)(B), (x)(B), (y)(B) or (y)(C) above respectively, then any such adjustment to the Conversion Price of the Series G Preferred, Series F Preferred or Series D Preferred shall be iterative (i.e. a circular calculation shall be employed) so that each of the Series G Preferred, Series F Preferred and Series D Preferred shall following all such adjustments receive its full entitlement pursuant to sub-sections (w)(B), (x)(B), (y)(B) or (y)(C) above.

(c)          Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred Stock, and shall give written notice to the Corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. If the conversion is in connection with an underwritten offering of securities registered pursuant to the Act, the conversion, unless otherwise designated by the holder, will be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock upon conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of such sale of securities. In the event of an automatic conversion pursuant to Section 3(b), the outstanding shares of Preferred Stock shall be converted automatically without any further action by the holder of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or the transfer agent for such Preferred Stock; and the Corporation shall not be obligated to issue certificates evidencing such Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred Stock are either delivered to the Corporation or the transfer agent for such Preferred Stock as provided above, or the holder notifies the Corporation or the transfer agent for such Preferred Stock that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable thereafter, issue and deliver to such address as the holder may direct, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled.

 

(d)           Conversion Price Adjustments of Preferred Stock for Certain Splits and Combinations. The applicable Conversion Price for each series of Preferred Stock shall be subject to adjustment from time to time as follows:

 

(i)            In the event the Corporation should at any time or from time to time after the date upon which any shares of Preferred Stock were first issued (the “Purchase Date”) fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock or for the determination of the outstanding shares of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock without payment of any consideration by such holder for the additional shares of Common Stock and without any comparable payment or distribution to the holders of Preferred Stock, then, as of such record date (or the date of such dividend, distribution, split or subdivision if no record date is fixed), the Conversion Price of each series of Preferred Stock then in effect shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase of the aggregate of shares of Common Stock outstanding.

(ii)           If the number of shares of Common Stock outstanding at any time after the Purchase Date is decreased by a combination of the outstanding shares of Common Stock or reverse stock split, then, as of the record date of such combination or reverse stock split, the Conversion Price of each series of Preferred Stock then in effect shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in outstanding shares.

 

(e)          Other Distributions. In the event the Corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 3(g)(iii) and excluding any repurchases of securities by the Corporation not made on a pro rata basis from all holders of any class of the Corporation’s securities, then, in each such case for the purpose of this subsection 3(e), the holders of the Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of the Corporation into which their shares of Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of the Corporation entitled to receive such distribution.

 

(f)          Recapitalizations, Merger and Consolidations. If at any time or from time to time there shall be a recapitalization of the Common Stock or a merger or consolidation of the Corporation with or into another corporation (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in Section 2 or this Section 3), provision shall be made so that the holders of the Preferred Stock shall thereafter be entitled to receive upon conversion of the Preferred Stock the number of shares of stock or other securities or property of the Corporation or otherwise, which a holder of Common Stock deliverable upon conversion immediately prior to such recapitalization, merger or consolidation would have been entitled to receive on such recapitalization, merger or consolidation. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3(f) with respect to the rights of the holders of the Preferred Stock after the recapitalization, merger or consolidation to the end that the provisions of this Section 3 (including adjustment of the Conversion Price of each series of Preferred Stock then in effect and the number of shares purchasable upon conversion of the Preferred Stock) shall be applicable after that event as nearly equivalently as may be practicable.

 (g)         Adjustments to Conversion Price of Senior Preferred Stock for Dilutive Issues. The Conversion Price of each series of Senior Preferred Stock shall be subject to further adjustments from time to time as follows:

 

(i)           Special Definitions. For purposes of this Section 3(g), the following definitions shall apply:

 

(A)         “Options” shall means rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (as defined below).

 

(B)         “Convertible Securities” shall mean any Preferred Stock or other securities (including convertible debt) convertible into or exchangeable for Common Stock, but excluding Options.

 

(C)         “Additional Shares of Common” shall mean all shares of Common Stock issued (or, pursuant to Section 3(g)(iii), deemed to be issued) by the Corporation after the filing of this Amended and Restated Certificate of Incorporation (the “Filing Date”), other than shares of Common Stock issued, issuable or, pursuant to Section 3(g)(iii) herein, deemed to be issued:

 

(1)           upon conversion of shares of Preferred Stock;

 

(2)          to officers, directors or employees of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a stock grant, option plan or purchase plan or other stock incentive program or arrangement approved by the Board for employees, officers, directors or consultants of the Corporation;

 

(3)           upon exercise of options or warrants outstanding as of the date of adoption of this Amended and Restated Certificate of Incorporation;

 

(4)           as a dividend or distribution on the Preferred Stock;

 

(5)           in connection with any transaction for which adjustment is made pursuant to Section 3(d)(i), 3(d)(ii), or 3(f) hereof;

 

(6)           without derogating from the adjustments to the Conversion Price of the Series G Preferred, the Series F Preferred and the Series D Preferred pursuant to Section 3(b)(ii), in connection with a sale to the public in an IPO;

 

(7)           securities issued in connection with a bona fide business acquisition of or by the Corporation, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise approved by the Board; or

 

(8)           securities of the Corporation regarding which the Series G Investor Majority determine are not Additional Shares of Common, provided that (i) in the event that such issuance is at a price per share lower than the Conversion Price of the Series F Preferred then in effect, the approval of the Series F Investor Majority (voting as a separate class) shall be required as well, (ii) in the event that such issuance is at a price per share lower than the Conversion Price of the Series D Preferred then in effect, the approval of the Series D Investor Majority (voting as a separate class) shall be required as well, (iii) in the event that such issuance is at a price per share lower than the Conversion Price of the Series C Preferred then in effect, the approval of the holders of the majority of the issued and outstanding shares of Series C Preferred (voting as a separate class) shall be required as well, (iv) in the event that such issuance is at a price per share lower than the Conversion Price of the Series B Preferred then in effect, the approval of the holders of the majority of the issued and outstanding shares of Series B Preferred (voting as a separate than the Conversion Price of the Series A Preferred then in effect, the approval of the holders of the majority of the issued and outstanding shares of Series A Preferred (voting as a separate class) shall be required as well.

(ii)           No Adjustment of Conversion Price. No adjustment in the Conversion Price of any series of Senior Preferred Stock shall be made in respect of the issuance of Additional Shares of Common unless the consideration per share for an Additional Share of Common issued or deemed to be issued by the Corporation is less than the applicable Conversion Price for such series of Senior Preferred Stock in effect on the date of, and immediately prior to such issue.

 

(iii)          Options and Convertible Securities. Except as provided in Section 3(g)(i)(C)(2) above, in the event that the Corporation at any time or from time to time after the Filing Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities (excluding, for the removal of doubt, those described in Sections 3(g)(i)(C)(1) through 3(g)(i)(C)(7)), shall be deemed to be Additional Shares of Common issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date; provided, however, that Additional Shares of Common shall not be deemed to have been issued unless the consideration per share of such Additional Shares of Common would be less than the applicable Conversion Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common are deemed to be issued:

 

(A)          no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities, in each case, pursuant to their respective terms;

 

(B)          if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

(C)         upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:

 

(1)           in the case of Convertible Securities Options for Common Stock, the only Additional Shares of Common issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange;

 

(2)           in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation upon the issue of the Convertible Securities with respect to which such Options were actually exercised; and

 

(3)           no readjustment pursuant to clauses (1) or (2) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price in effect immediately prior to the adjustment for which such readjustment is made (without giving effect to any prior adjustments that are no longer in effect), or (ii) the applicable Conversion Price that would have resulted from other issuances of Additional Shares of Common between the original adjustment date and such readjustment date.

 

(D)          in the case of an Option which expires by its terms not more than thirty (30) days after the date of issue thereof, no adjustment of the Conversion Price shall be made until the expiration or exercise of such Option, whereupon such adjustment shall be made in the same manner provided in clause (C) above.

 

(iv)         Adjustment of Conversion Price of the Senior Preferred Stock Upon Issuance of Additional Shares of Common. In the event that the Corporation shall at any time after the Filing Date issue Additional Shares of Common (including Additional Shares of Common deemed to be issued pursuant to Section 3(g)(iii) (x) without consideration, or (y) for a consideration per share less than the applicable Conversion Price of a series of Senior Preferred Stock (the “Affected Class”) in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price of the Affected Class(es) shall be reduced, concurrently with such issue to a price (calculated to the nearest cent) determined by multiplying the applicable Conversion Price of the Affected Class(es) theretofore in effect by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common so issued would purchase at such Conversion Price of the applicable Affected Class(es) in effect immediately prior to such issue, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common so issued; provided, however, that, for the purposes of this Section 3(g)(iv), all shares of Common Stock issuable upon exercise, conversion or exchange of outstanding Options or Convertible Securities, as the case may be, shall be deemed to be outstanding (except as set forth in Section 3(g)(v) below), and immediately after any Additional Shares of Common are deemed issued pursuant to Section 3(g)(iii), such Additional Shares of Common shall be deemed to be outstanding, and provided further that the Conversion Price of any Affected Class shall not be so reduced at such time if the amount of such reduction would be an amount less than $0.01, but any such amount shall be carried forward and reduction thereto with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any amount or amounts so carried forward, shall aggregate $0.01 or more.

(v)         In calculating the number of shares of Common Stock outstanding immediately prior to the issuance of the Additional Shares of Common, any Common Stock issuable upon conversion of the Senior Preferred Stock resulting from the amendment in the applicable Conversion Price provided for in subsection (iv) above being triggered due to such specific issuance, shall not be taken into consideration. For the avoidance of doubt, any previous adjustments to the Conversion Price prior to such issuance shall be taken into consideration.

 

(vi)        Determination of Consideration. For purposes of this Section 3(g), the consideration received by the Corporation for the issue of any Additional Shares of Common shall be computed as follows:

 

(A)         Cash and Property. Such consideration shall:

 

(1)           insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;

 

(2)           insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue if publicly traded or as determined by the Board.

 

(B)         Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common deemed to have been issued pursuant to Section 3(g)(iii), relating to Options and Convertible Securities, shall be determined by dividing (x) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by (y) the maximum number of shares of Common Stock issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, as determined in Section 3(g)(iii) hereof.

 

(h)          No Impairment. The Corporation will not, by amendment of its Amended and Restated Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Preferred Stock against impairment.

(i)           No Fractional Shares and Certificate as to Adjustment.

 

(i)            No fractional shares shall be issued upon the conversion of any share or shares of the Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

 

(ii)           Upon the occurrence of each adjustment or readjustment of the Conversion Price of the Preferred Stock pursuant to Section 3, the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the reasonable written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for the Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of Preferred Stock.

 

(j)           Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall notify each holder of Preferred Stock in writing, at least ten (10) days prior to the date specified therein, specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

 

(k)          Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, in addition to such other remedies as shall be available to the holder of such Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of common stock to such number of shares as shall be sufficient for such purposes.

(l)            Special Adjustment of Series G Preferred Stock Conversion Price. Solely with respect to the Series G Preferred and not with respect to any other series of Senior Preferred Stock, the Series E Preferred or the Series H Preferred, if the Conversion Price of the Series D Preferred or Series F Preferred is decreased by amendment (a “Ratchet Amendment”) of this Amended and Restated Certificate of Incorporation (in which the Series G Preferred is not entitled to vote pursuant to the last sentence of Section 4(a) hereof), the Conversion Price of the Series G Preferred in effect immediately prior to such Ratchet Amendment shall be reduced, concurrently with such issue, so that the Series G Percentage shall be the same immediately before and immediately after such Ratchet Amendment. For the purpose of this provision: “Series G Percentage” shall mean the percentage of the total number of shares of Common Stock outstanding immediately prior to the Ratchet Amendment into which the Series G Preferred would convert at the Conversion Rate then applicable to the Series G Preferred; provided, however, that, for the purposes of such calculation all shares of Common Stock issuable upon exercise, conversion or exchange of outstanding Options or Convertible Securities, as the case may be, shall be deemed to be outstanding (except as set forth in Section 3(g)(v)).

 

4.            Voting Rights.

 

(a)           General Voting Rights. Each holder of shares of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Preferred Stock could be converted and shall have voting rights and powers equal to the voting rights and powers of the Common Stock (except as otherwise expressly provided herein or as required by law, voting together with all other classes of Preferred Stock and with the Common Stock as a single class) and shall be entitled to notice of any stockholder meeting in accordance with the Bylaws of the Corporation. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). Each holder of Common Stock shall be entitled to one (1) vote for each share of Common Stock held. For avoidance of any doubt and without derogating from the generality of the above, except as otherwise required by law or as set forth herein, holders of Preferred Stock and Common Stock shall vote together as a single class at all times. Notwithstanding the foregoing, the Series G Preferred shall not be entitled to vote on an amendment to this Amended and Restated Certificate of Incorporation for the purpose of effecting a Ratchet Amendment.

 

(b)          Required Class Vote. Until the consummation of an IPO, the consent of the holders of a majority in interest of the Senior Preferred Stock (voting together as a single class on an as converted basis) shall be required for (which matters shall apply, mutatis mutandis, to the Corporation’s subsidiaries):

 

(i)            creating or issuing any class or series of shares or other securities having rights or a preference equal or superior to the Series G Preferred, Series F Preferred or Series D Preferred;

 

(ii)           the merger, consolidation, acquisition or other reorganization of the Corporation, or sale, lease, other disposition of, or pledge or grant of any security interest in all or substantially all of the Corporation’s assets or shares or otherwise effecting a Deemed Liquidation;

(iii)          an increase in the number of the Corporation’s directors above nine, decrease in the number of the Corporation’s directors below nine or change in the manner by which the composition of the Board is determined, other than as agreed in Section 7 of that certain Amended and Restated Stockholders’ Agreement dated as of April 1, 2019 (the “Stockholders’ Agreement”) whereby the director nominated by certain of the Series G Preferred holders shall resign upon the effectiveness of the registration statement for an IPO pursuant to the pre-signed letter of resignation delivered to the Company, which will become effective immediately prior to the effectiveness of the registration statement for the Company’s IPO;

 

(iv)          the increase of the size of the pool (i.e. the number of shares of Common Stock reserved for issuance upon exercise of options) for options to employees, directors, consultants and advisors (the “Pool”) or grant options or other equity based awards to any employee, officer, director, consultant or advisor outside the Pool;

 

(v)           any transaction with any stockholder, director or officer or any affiliate thereof (except for employment agreements and stock option agreements with individuals other than the Founders (as such term is defined in the Stockholders’ Agreement), approved in compliance with the law and the restrictive provisions otherwise set forth herein); and

 

(vi)          the liquidation, dissolution or winding up of the Corporation or termination of the Corporation’s activities.

 

In addition, until the consummation of an lPO and in addition to any other rights provided by law, the following provisions shall apply:

 

(x) as long as at least a majority of the originally issued shares of Series G Preferred remain outstanding, the consent of the Series G Investor Majority shall be required for any action which (by merger, reclassification or otherwise) (i) alters, amends or changes the rights, preferences or privileges of the Series G Preferred differently than the other series of Senior Preferred Stock in a manner that is adverse to the Series G Preferred, (ii) increases the number of authorized or issued shares of Series G Preferred, (iii) alters, amends, removes or waives any rights of the Series G Preferred under Section B(2) of ARTICLE N(B) (Liquidation Preference), (iv) alters, amends, removes or waives any rights of the Series G Preferred under Section B(3) of ARTICLE IV(B) (Conversion), (v) amends or removes the definition of the Series G Investor Majority set forth herein or (vi) amends this subsection (x); and

 

(y) as long as at least a majority of the originally issued shares of Series F Preferred remain outstanding, the consent of the Series F Investor Majority shall be required for any action which (by merger, reclassification or otherwise) (i) alters, amends or changes the rights, preferences or privileges of the Series F Preferred differently than the other series of Senior Preferred Stock in a manner that is adverse to the Series F Preferred, (ii) increases the number of authorized or issued shares of Series F Preferred, (iii) alters, amends, removes or waives any rights of the Series F Preferred under Section B(2) of ARTICLE N(B) (Liquidation Preference), (iv) alters, amends, removes or waives any rights of the Series F Preferred under Section B(3) of ARTICLE IV(B) (Conversion), (v) amends the definition of the Series F Investor Majority set forth herein or (vi) amends this subsection (y); and

(z) as long as the originally issued shares of Series D Preferred remain outstanding, the consent of the Series D Investor Majority shall be required for any action which (by merger, reclassification or otherwise) (i) alters, amends or changes the rights, preferences or privileges of the Series D Preferred differently than the other series of Senior Preferred Stock in a manner that is adverse to the Series D Preferred, (ii) increases the number of authorized or issued shares of Series D Preferred, (iii) alters, amends, removes or waives any rights of the Series D Preferred under Section B(2) of ARTICLE IV(B) (Liquidation Preference), (iv) alters, amends, removes or waives any rights of the Series D Preferred under Section B(3) of ARTICLE IV(B) (Conversion), (v) amends the definition of the Series D Investor Majority set forth herein or (vi) amends this subsection (z);

 

provided, that, notwithstanding the foregoing or anything else contained herein and for the removal of doubt: (i) no provision herein grants the holders of the Series G Preferred, Series F Preferred and/or Series D Preferred (or any part thereof) the ability or right to prevent the Corporation from consummating a Qualified IPO, including the adoption of an amended and restated Certificate of Incorporation to be effective no earlier than the closing of such Qualified IPO, that has been approved by a majority of the members of the Corporation’s Board, and (ii) authorizing or issuing by the Corporation of any new class or series of shares (including a class or a series with rights and preferences inferior, equal or superior to the rights of the Series G Preferred, Series F Preferred or Series D Preferred, as applicable) shall not by itself be deemed to alter, change amend or waive the rights, preferences and/or privileges of the Series G Preferred, Series F Preferred or Series D Preferred.

 

In addition, until the consummation of an IPO and in addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of at least two directors designated by the holders of the Senior Preferred Stock, appoint or remove the Corporation’s Chief Executive Officer or determine his employment terms.

 

Any altering or changing of the rights, preferences and/or privileges of the Series G Preferred, Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred, Series E Preferred or Series H Preferred, shall require the consent of the Series G Investor Majority and/or the Series F Investor Majority and/or the Series D Investor Majority and/or the holders of a majority of the Series C Preferred and/or Series B Preferred and/or Series A Preferred and/or Series E Preferred and/or Series H Preferred, as the case may be, voting separately on an as-converted basis, provided, however, that creating, authorizing or issuing by the Corporation of any new class or series of shares (including a class or a series with rights and preferences inferior, equal or superior to the rights of the Series G Preferred, Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred, Series E Preferred and/or Series H Preferred) shall not by itself be deemed as a change in the rights, preferences and/or privileges of the Series G Preferred, Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred, Series E Preferred or Series H Preferred.

 

(c)           Status of Converted Preferred Stock. In the event any shares of Preferred Stock shall be converted pursuant to Section 3, the shares so converted shall be cancelled and shall not thereafter be issuable by the Corporation.

 

5.            Common Stock.

 

(a)           Dividend Rights. Subject to Section 1 of ARTICLE IV(B), dividends may be paid on the Common Stock as and when declared by the Board, subject to the prior dividend rights of the Senior Preferred Stock. Such dividends shall be distributed among the holders of Common Stock pro rata in proportion of the number of shares of Common Stock held by each (assuming conversion of all such Preferred Stock).

(b)           Liquidation Rights. Upon the liquidation, dissolution or winding up of the Corporation, the assets of the Corporation shall be distributed as provided in Section 2 of ARTICLE IV(B) hereof.

 

(c)           Redemption. The Common Stock is not redeemable.

 

(d)          Voting Rights. The holder of each share of Common Stock shall have the right to one (1) vote, and shall be entitled to notice of any stockholder meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote upon such matters and in such manner as is otherwise provided herein or as may be provided by law. Notwithstanding the foregoing, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares of Common Stock then outstanding) by an affirmative vote of the holders of a majority of the stock of the Corporation (voting as a single class on an as -converted basis), irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware.

 

6.            Preemptive Rights. The holders of Senior Preferred Stock shall have such preemptive rights as set forth in that certain Amended and Restated Investors’ Rights Agreement dated February 9, 2015, among the Corporation and certain of its stockholders, as amended from time to time.

 

ARTICLE V

 

The Corporation is to have perpetual existence.

 

ARTICLE VI

 

Except as otherwise provided in this Amended and Restated Certificate of Incorporation, the Board may make, repeal, alter, or rescind any or all of the Bylaws of the Corporation, provided, however, that no such repeal, alteration or rescission to the Bylaws of the Corporation shall be made if its effect is to delegate any of the powers vested within the Board to any committee or sub-committee of the Board, unless such repeal, alteration or rescission to the Bylaws of the Corporation, as the case may be, is consented to in writing by at least two of the directors designated by the holders of Senior Preferred Stock.

 

ARTICLE VII

 

The Board shall consist of up to nine (9) directors. The directors shall be appointed as follows: (i) the holders of the Junior Stock, voting together as a single class, shall be entitled to elect two (2) directors to the Board, (ii) the holders of Senior Preferred Stock, voting together as a single class, shall be entitled to elect six (6) directors to the Board and (iii) Gruner + Jahr GmbH (“G+J”), so long as G+J continues to hold capital stock of the Company that represents at least 5% of the issued and outstanding shares of stock of the Company on a fully diluted basis, shall be entitled to elect one (1) director to the Board. Each committee of the Board shall include at least two of the directors designated by the holders of Senior Preferred Stock.

In the event of any vacancy in the office of a director elected by an entity or by the holders of a particular class or series of stock, the vacancy may be filled only by such entity or the vote of the holders of such class or series of stock (unless such vacancy resulted from circumstances requiring a resignation pursuant to Section 7 of the Stockholders, Agreement, in which case the vacancy may be filled by a vote of the holders of Senior Preferred Stock, voting together as a single class). Any director who shall have been elected by an entity or by the holders of a particular class or series of stock may be removed without cause by, and only by, such entity or the applicable vote of the holders of shares of such class or series of stock (unless such removal resulted from circumstances requiring a resignation pursuant to Section 7 of the Stockholders, Agreement which resignation has not occurred, in which case such removal may effected by a vote of the holders of Senior Preferred Stock, voting together as a single class).

 

At any meeting (or in a written consent in lieu thereof) held for the purpose of electing directors, the presence in person or by proxy (or the written consent) of the holders of at least a majority in interest of the then outstanding shares of the respective class(es) of the Corporation’s stock designated for appointment of a director as set forth above, shall constitute a quorum for the election of directors to be elected by such class(es).

 

A vacancy in any directorship elected by the holders of the Junior Stock shall be filled only by vote or written consent of the holders of the Junior Stock, consenting or voting, as the case may be, separately. The directors to be elected by the holders of the Junior Stock, voting separately as one class, shall serve for terms extending from the date of their election and qualification and until their respective successors have been elected and qualified.

 

A vacancy in any directorship elected by the holders of a specific class of Senior Preferred Stock shall be filled only by vote or written consent of the holders of such specific class of Senior Preferred Stock, consenting or voting, as the case may be, separately as one class. The directors to be elected by the holders of the Senior Preferred Stock, voting separately as one class, shall serve for terms extending from the date of their election and qualification until the time of the next succeeding annual meeting of stockholders and until their successors have been elected and qualified.

 

ARTICLE VIII

 

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws of the Corporation.

 

ARTICLE IX

 

To the fullest extent permitted by the General Corporation Law of Delaware, as the same may be amended from time to time, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law of Delaware is hereafter amended to authorize, with or without the approval of a corporation’s stockholders, further reductions in the liability of the corporation’s directors for breach of fiduciary duty, then a director of the Corporation shall not be liable for any such breach to the fullest extent permitted by the General Corporation Law of Delaware as so amended.

Any repeal or modification of the foregoing provisions of this ARTICLE IX or by operation of law, shall not adversely affect any right or protection of a director of the Corporation with respect to any acts or omissions of such director occurring prior to such repeal or modification.

 

ARTICLE X

 

To the fullest extent permitted by applicable law, the Corporation shall provide indemnification of (and advancement of expenses to) directors, officers, employees and other agents of the Corporation (and any other persons to which Delaware law permits the Corporation to provide indemnification), through Bylaw provisions, agreements with any such director, officer, employee or other agent or other person, vote of stockholders or disinterested directors, or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the Delaware General Corporation Law, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to a corporation, its stockholders and others.

 

Any repeal or modification of any of the foregoing provisions of this ARTICLE X, by amendment of this ARTICLE X or by operation of law, shall not adversely affect any right or protection of a director, officer, employee or other agent or other person existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director, officer or agent occurring prior to such repeal or modification.

 

ARTICLE XI

 

Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.

ARTICLE XII

 

The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, “Covered Persons’’), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation.

IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer of the Corporation, hereby certifies that the facts hereinabove stated are truly set forth, and accordingly executes this Amended and Restated Certificate of Incorporation this 1st day of April, 2019.

 

OUTBRAIN INC.

 

/s/ Yaron Galai

 

By:      Yaron Galai, Chief Executive Officer

 

Exhibit 3.2

 

BY-LAWS

 

OF

 

OUTBRAIN INC.

 

ARTICLE I

OFFICES

 

SECTION 1. Principal Office. The registered office of the corporation shall be located in such place as may be provided from time to time in the Certificate of Incorporation.

 

SECTION 2. Other Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or as the business of the corporation may require.

 

ARTICLE II

STOCKHOLDERS

 

SECTION 1. Annual Meetings. The annual meeting of the stockholders of the corporation shall be held wholly or partially by means of remote communication or at such place, within or without the State of Delaware, on such date and at such time as may be determined by the board of directors and as shall be designated in the notice of said meeting.

 

SECTION 2. Special Meetings. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be held wholly or partially by means of remote communication or at any place, within or without the State of Delaware, and may be called by resolution of the board of directors, or by the Chairman or the President, or by the holders of not less than one-quarter of all of the shares entitled to vote at the meeting.

 

SECTION 3. Notice and Purpose of Meetings. Written or printed notice of the meeting stating the place, day and hour of the meeting and, in case of a special meeting, stating the purpose or purposes for which the meeting is called, and in case of a meeting held by remote communication stating such means, shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally, or by mail, or if prior consent has been received by a stockholder by electronic transmission, by or at the direction of the Chairman or the President, the Secretary, or the persons calling the meeting, to each stockholder of record entitled to vote at such meeting.

 

SECTION 4. Quorum. The holders of a majority of the shares of capital stock issued and outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified.

SECTION 5. Voting Process. If a quorum is present or represented, the affirmative vote of a majority of the shares of stock present or represented at the meeting, by ballot, proxy or electronic ballot, shall be the act of the stockholders unless the vote of a greater number of shares of stock is required by law, by the Certificate of Incorporation or by these by-laws. Each outstanding share of stock having voting power, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. A shareholder may vote either in person, by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact, or by an electronic ballot from which it can be determined that the ballot was authorized by a stockholder or proxyholder. The term, validity and enforceability of any proxy shall be determined in accordance with the General Corporation Law of the State of Delaware.

 

SECTION 6. Written Consent of Stockholders Without a Meeting. Whenever the stockholders are required or permitted to take any action by vote, such action may be taken without a meeting, without prior notice and without a vote, if a written consent or electronic transmission, setting forth the action so taken, shall be signed or e-mailed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting called for such purpose.

 

ARTICLE III

DIRECTORS

 

SECTION 1. Powers. The business affairs of the corporation shall be managed by its board of directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these by-laws directed or required to be exercised or done by the stockholders. The board of directors may adopt such rules and regulations, not inconsistent with the Certificate of Incorporation or these By-Laws or applicable laws, as it may deem proper for the conduct of its meetings and the management of the Corporation.

 

SECTION 2. Number, Qualifications, Term. The board of directors shall consist of one or more members. The number of directors shall be fixed initially by the Incorporator and may thereafter be changed from time to time by resolution of the board of directors or of the shareholders. Directors need not be residents of the State of Delaware nor stockholders of the corporation. The directors shall be elected at the annual meeting of the stockholders, and each director elected shall serve until the next succeeding annual meeting and until his successor shall have been elected and qualified.

 

SECTION 3. Vacancies. Vacancies and newly created directorships resulting from any increase in the number of directors may be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify. A vacancy created by the removal of a director by the stockholders may be filled by the stockholders.

SECTION 4. Place of Meetings. Meetings of the board of directors, regular or special, may be held either within or without the State of Delaware.

 

SECTION 5. First Meeting. The first meeting of each newly elected board of directors shall be held immediately following and at the place of the annual meeting of stockholders and no other notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or it may convene at such place and time as shall be fixed by the consent in writing of all the directors.

 

SECTION 6. Regular Meetings. Regular meetings of the board of directors may be held upon such notice, or without notice, and at such time and at such place as shall from time to time be determined by the board.

 

SECTION 7. Special Meetings. Special meetings of the board of directors may be called by the Chairman or the President or by the number of directors who then legally constitute a quorum. Notice of each special meeting shall, if mailed, be addressed to each director at least ten nor more than sixty days prior to the date on which the meeting is to be held.

 

SECTION 8. Notice; Waiver. Attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.

 

SECTION 9. Quorum. One-third of the directors then in office shall constitute a quorum for the transaction of business unless a greater number is required by law, by the Certificate of Incorporation or by these by-laws. If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

SECTION 10. Action Without A Meeting. Any action required or permitted to be taken at a meeting of the directors may be taken without a meeting if a consent in writing or by electronic transmission, setting forth the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof. In addition, meetings of the board may be held by means of conference telephone or voice communication as permitted by the General Corporation Law of the State of Delaware.

 

SECTION 11. Action. Except as otherwise provided by law or in the Certificate of Incorporation or these by-laws, if a quorum is present, the affirmative vote of a majority of the members of the board of directors will be required for any action.

SECTION 12. Removal of Directors. Any director may be removed, either for or without cause, at any time by action of the holders of a majority of the outstanding shares of stock entitled to vote thereon, either at a meeting of the holders of such shares or, whenever permitted by law, without a meeting by their written consents thereto.

 

ARTICLE IV

COMMITTEES

 

SECTION 1. Executive Committee. The board may, by resolution adopted by a majority of the whole board, designate one or more of its members to constitute members or alternate members of an Executive Committee.

 

SECTION 2. Powers and Authority of Executive Committee. The Executive Committee shall have and may exercise, between meetings of the Board, all the powers and authority of the Board in the management of the business and affairs of the Company, including, the right to authorize the purchase of stock, except that the Executive Committee shall not have such power or authority in reference to amending the Certificate of Incorporation; adopting an agreement of merger or consolidation; recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets; recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the by-laws of the Corporation or authorizing the declaration of a dividend.

 

SECTION 3. Other Committees. The Board may, by resolution adopted by a majority of the whole Board, designate one or more other committees, each of which shall, except as otherwise prescribed by law, have such authority of the Board as shall be specified in the resolution of the Board designating such committee. A majority of all the members of such committee may determine its action and fix the time and place of its meeting, unless the Board shall otherwise provide. The Board shall have the power at any time to change the membership of, to fill all vacancies in and to discharge any such committee, either with or without cause.

 

SECTION 4. Procedure; Meetings; Quorum. Regular meetings of the Executive Committee or any other committee of the Board, of which no notice shall be necessary, may be held at such times and places as shall be fixed by resolution adopted by a majority of the members thereof. Special meetings of the Executive Committee or any other committee of the Board shall be called at the request of any member thereof. So far as applicable, the provisions of Article III of these By-laws relating to notice, quorum and voting requirements applicable to meetings of the Board shall govern meetings of the Executive Committee or any other committee of the Board. The Executive Committee and each other committee of the Board shall keep written minutes of its proceedings and circulate summaries of such written minutes to the Board before or at the next meeting of the Board.

ARTICLE V

OFFICERS

 

SECTION 1. Number. The board of directors at its first meeting after each annual meeting of stockholders shall choose a President, a Secretary and a Treasurer, none of whom need be a member of the board. The board of directors may also choose a Chairman from among the directors, one or more Executive Vice Presidents, one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. The board of directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors. More than two offices may be held by the same person.

 

SECTION 2. Compensation. The salaries or other compensation of all officers of the corporation shall be fixed by the board of directors. No officer shall be prevented from receiving a salary or other compensation by reason of the fact that he is also a director.

 

SECTION 3. Term; Removal; Vacancy. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer may be removed at any time, with or without cause, by the affirmative vote of a majority of the whole board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors.

 

SECTION 4. Chairman. The Chairman shall, if one be elected, preside at all meetings of the board of directors.

 

SECTION 5. President. The President shall be the Chief Executive Officer of the corporation, shall preside at all meetings of the stockholders and the board of directors in the absence of the Chairman, shall have general supervision over the business of the corporation and shall see that all directions and resolutions of the board of directors are carried into effect.

 

SECTION 6. Vice President. The Executive Vice Presidents shall, in the absence or disability of the President, perform the duties and exercise the powers of the President and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. If there shall be more than one Executive Vice President, the Executive Vice Presidents shall perform such duties and exercise such powers in the absence or disability of the President, in the order determined by the board of directors. The Vice Presidents shall, in the absence or disability of the President and of the Executive Vice Presidents, perform the duties and exercise the powers of the President and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. If there shall be more than one vice president, the vice presidents shall perform such duties and exercise such powers in the absence or disability of the President and of the Executive Vice President, in the order determined by the board of directors.

 

SECTION 7. Secretary. The Secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or President, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have the authority to affix the same to an instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature.

SECTION 8. Assistant Secretary. The Assistant Secretary, if there shall be one, or if there shall be more than one, the assistant secretaries in the order determined by the board of directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such powers as the board of directors may from time to time prescribe.

 

SECTION 9. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the Chairman, the President and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all of his transactions as Treasurer and of the financial condition of the corporation.

 

SECTION 10. Assistant Treasurer. The Assistant Treasurer, if there shall be one, or, if there shall be more than one, the Assistant Treasurers in the order determined by the board of directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.

 

ARTICLE VI

CAPITAL STOCK

 

SECTION 1. Form. The shares of the capital stock of the corporation shall be represented by certificates in such form as shall be approved by the board of directors and shall be signed by the Chairman, the President, an Executive Vice President or a Vice President, and by the Treasurer or an assistant treasurer or the Secretary or an Assistant Secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof.

 

SECTION 2. Lost and Destroyed Certificates. The board of directors may direct a new certificate to be issued in place of any certificate theretofore issued by the corporation alleged to have been lost or destroyed. When authorizing such issue of a new certificate, the board of directors, in its discretion and as a condition precedent to the issuance thereof, may prescribe such terms and conditions as it deems expedient, and may require such indemnities as it deems adequate, to protect the corporation from any claim that may be made against it with respect to any such certificate alleged to have been lost or destroyed.

SECTION 3. Transfer of Shares. Upon surrender to the corporation or the transfer agent of the corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, a new certificate shall be issued to the person entitled thereto, and the old certificate cancelled and the transaction recorded upon the books of the corporation.

 

ARTICLE VII

INDEMNIFICATION

 

SECTION 1. (a) The Corporation shall indemnify, subject to the requirements of subsection (d) of this Section, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

 

(b) The Corporation shall indemnify, subject to the requirements of subsection (d) of this Section, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper.

 

(c) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this Section, or in defense of any claim, issue or matter therein, the Corporation shall indemnify him against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

(d) Any indemnification under subsections (a) and (b) of this Section (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (a) and (b) of this Section. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders.

 

(e) Expenses incurred by a director, officer, employee or agent in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Section. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.

 

(f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this Section shall not limit the Corporation from providing any other indemnification or advancement of expenses permitted by law nor shall they be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

 

(g) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Section.

 

(h) For the purposes of this Section, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

(i) For purposes of this Section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Section.

 

(j) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section shall, unless otherwise provided when authorized or ratified by the Board of Directors, continue as to a person who has ceased to be a director, officer, employee or agent of the Corporation and shall inure to the benefit of the heirs executors and administrators of such a person.

 

ARTICLE VIII

GENERAL PROVISIONS

 

SECTION 1. Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate.

 

SECTION 2. Fiscal Year. The fiscal year of the corporation shall be determined, and may be changed, by resolution of the board of directors.

 

SECTION 3. Seal. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

 

ARTICLE IX

AMENDMENTS

 

SECTION 1. These by-laws may be altered, amended, supplemented or repealed or new by-laws may be adopted (a) at any regular or special meeting of stockholders at which a quorum is present or represented, by the affirmative vote of the holders of a majority of the shares entitled to vote, provided notice of the proposed alteration, amendment or repeal be contained in the notice of such meeting, or (b) by a resolution adopted by a majority of the whole board of directors at any regular or special meeting of the board. The stockholders shall have authority to change or repeal any by-laws adopted by the directors.

Exhibit 4.2

 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) made as of the 1^st day of April, 2019 (the “Effective Date”), by and among Outbrain Inc. a Delaware corporation (the “Company”), Yaron Galai and Ori Lahav (each a “Founder” and together, the “Founders”), the individuals and entities identified in Schedule 1 attached hereto (collectively, the “Preferred G Holders”), the individuals and entities identified in Schedule 2 attached hereto (collectively, the “Preferred F Holders”), the individuals and entities identified in Schedule 3 attached hereto (collectively, the “Preferred D Holders”), the individuals and entities identified in Schedule 4 attached hereto (collectively, the “Preferred C Holders”), the individuals and entities identified in Schedule 5 attached hereto (collectively, the “Preferred B Holders”), the individuals and entities identified in Schedule 6 attached hereto (collectively, the “Preferred A Holders”) and the individuals and entities identified in Schedule 10 attached hereto (together with their Affiliates, “G+J”, and together with the Preferred G Holders, Preferred F Holders, Preferred D Holders, Preferred C Holders and the Preferred B Holders, the “Preferred Holders”), the individuals and entities identified in Schedule 7 attached hereto (collectively, the “Common Stock Holders”) and the individuals and entities identified in Schedule 8 attached hereto (collectively, the “Additional Common Stock Holders”).

 

W I T N E S S E T H :

 

WHEREAS, the Preferred Holders include the holders of all of the issued and outstanding shares of Series G Preferred Stock of the Company par value $0.001 each (“Series G Preferred”), all of the issued and outstanding shares of Series F Preferred Stock of the Company par value $0.001 each (“Series F Preferred”), all of the issued and outstanding shares of Series D Preferred Stock of the Company par value $0.001 each (“Series D Preferred”), all of the issued and outstanding shares of Series C Preferred Stock of the Company par value $0.001 each (“Series C Preferred”), all of the issued and outstanding shares of Series B Preferred Stock of the Company par value $0.001 each (“Series B Preferred”) and of all of the issued and outstanding shares of Series A Preferred Stock of the Company, par value $0.001 each (“Series A Preferred”, and together with the Series F Preferred, Series D Preferred, the Series C Preferred and the Series B Preferred, the “Preferred Stock”), and the Common Stock Holders are the holders of issued and outstanding shares of Common Stock of the Company, par value $0.001 each (“Common Stock”); and

 

WHEREAS, the Company and certain stockholders of the Company are parties to that certain Amended and Restated Investors’ Rights Agreement dated February 11, 2015 (the “Prior Investors’ Rights Agreement”); and

 

WHEREAS, the requisite parties to the Prior Investors’ Rights Agreement wish to amend and restate in its entirety the Prior Investors’ Rights Agreement by entering into this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows:

 

1.

Affirmative Covenants.

 

1.1          Delivery of Financial Statements. The Company shall deliver to each of the Preferred Holders:

 

1.1.1     As soon as practicable, but in any event within one hundred and twenty (120) days after the end of each fiscal year of the Company, an audited consolidated balance sheet of the Company as of the end of such year, and consolidated statements of income and statements of cash flow of the Company for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, United States dollar-denominated, prepared in accordance with United States generally accepted accounting principles (“GAAP”), audited by a “Big 4” firm of Independent Certified Public Accountants, and accompanied by an opinion of such firm which opinion shall state that such balance sheet and statements of income and cash flow have been prepared in accordance with GAAP applied on a basis consistent with that of the preceding fiscal year, and present fairly and accurately the financial position of the Company as of their date, and that the audit by such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards;

 

1.1.2     As soon as practicable, but in any event within forty-five (45) days after the end of each quarter of each fiscal year, an unaudited but reviewed consolidated balance sheet of the Company as at the end of each such period and unaudited but reviewed consolidated statements of (i) income and (ii) cash flow of the Company for such period and for the period from the beginning of the current fiscal year to the end of such quarterly period, setting forth in each case in comparative form the figures for the corresponding period of the previous fiscal year, all in reasonable detail, United States dollar-denominated and certified by the chief financial officer (or if none, by the chief executive officer) of the Company, that such financial statements were prepared in accordance with GAAP applied on a basis consistent with that of preceding periods and, except as otherwise stated therein, fairly present the financial position of the Company as of their date subject to (x) there being no footnotes contained therein and (y) changes resulting from customary year-end audit adjustments, and all reviewed by a “Big 4” firm of Independent Certified Public Accountants;

 

1.1.3     As soon as practicable, but in any event within forty-five (45) days after the end of each calendar quarter, information on key metrics of the Company, as described more fully and in the form set forth on Exhibit 1.1.3 attached hereto;

 

1.1.4     As soon as practicable, but in any event within thirty (30) days after the end of each month, a report containing a summary of the financial and business status of the Company in a form determined by the Company’s Board of Directors (the “Board”);

 

1.1.5     As soon as practicable, but in any event within thirty (30) days after the end of each calendar year, a detailed capitalization table, on a fully-diluted basis, setting forth all authorized and all issued and outstanding capital stock of the Company, showing all legally and beneficially owned securities on a stockholder by stockholder basis, together with any details of any unissued, unexercised or unvested options or warrants, and detailing any share transfers since the delivery of the previous share capitalization table, if any; and

1.1.6     The Annual Plan (as defined below), at least thirty (30) days prior to the beginning of each fiscal year covered by such Annual Plan.

 

1.2          For the avoidance of doubt, the foregoing obligations set forth in this Section 1.1 are independent of those set forth under those certain Management Rights Letters between the Company and certain Preferred Holders.

 

1.3          Additional Information.

 

1.3.1     The Company will permit the authorized representatives of (i) Index Ventures Growth II (Jersey), L.P. and/or its Affiliates (as defined below) (collectively, “Index”) for so long as Index holds at least two million (2,000,000) shares, as adjusted for any stock splits, recapitalizations, stock dividends or the like) of the Company’s issued and outstanding capital stock (ii) Susquehanna Growth Equity Fund IV, LLLP and/or its Affiliates (collectively, “SGE”) for so long as SGE holds at least two million (2,000,000) shares, as adjusted for any stock splits, recapitalizations, stock dividends or the like) of the Company’s issued and outstanding capital stock, and (iii) each other Preferred Holder, who, at such time, is the record holder of at least five percent (5%) of the issued and outstanding shares of the Company (on an as-converted basis) (each, an “Entitled Holder”), full and free access, at all reasonable times, and upon reasonable notice, to any of the properties of the Company, including its books and records, and to discuss its affairs, finances and accounts with the Company’s officers and auditor, for any purpose whatsoever. In addition, the Company will inform each Entitled Holder: (a) immediately upon the happening of any event likely to have a significant impact upon the Company or its business, of such event and its implications; and (b) with reasonable promptness, such other information and data with respect to the Company, as the Entitled Holders may from time to time reasonably request. This Section 1.3 shall not be in limitation of any rights which the Preferred Holders or the directors designated by the Preferred Holders may have under applicable law.

 

1.3.2     The Company will provide to HarbourVest Partners, L.P. and/or its Affiliates (collectively, “HarbourVest”) and SGE with reasonable promptness, such monthly financial reports, other information and data with respect to the Company as HarbourVest and SGE may from time to time reasonably request about the business and operations of the Company including, but not limited to, such information as is reasonably requested by HarbourVest and SGE in order to withhold tax or to file tax returns and reports or to furnish information to any of its partners with respect to the Company.

 

1.4          Accounting. The Company will maintain and cause each of its Subsidiaries (as defined herein) to maintain a system of accounting established and administered in accordance with GAAP consistently applied, and will set aside on its books and cause each of its operating Subsidiaries to set aside on its books all such proper reserves as shall be required by GAAP. For purposes of this Section 1.4 and Section 2 below, “Subsidiary” means any corporation or entity at least a majority of whose voting securities are at the time owned by the Company, or by one or more Subsidiaries, or by the Company and one or more Subsidiaries.

 

1.5          Proprietary Information and Non-Competition Agreements. The Company will not employ, or continue to employ, any person who will have access to confidential information with respect to the Company and its operations unless such person has executed and delivered a Proprietary Information and Non-Competition Agreement to the satisfaction (as to substance and form) of the Board.

1.6          Annual Plan. The management of the Company shall establish annually an operating plan and budget for the Company (the “Annual Plan”), in consultation with the Board. The Annual Plan shall be subject to the approval of the Board and shall be delivered to the Preferred Holders pursuant to Section 1.1.4.

 

1.7          Confidentiality. The Preferred Holders agree, severally and not jointly, that any information obtained pursuant to Sections 1.1, 1.2, 1.3 and 1.6, will not be disclosed without the prior written consent of the Company; provided that, in connection with periodic reports to their stockholders, partners or prospective partners, the Preferred Holders may, without first obtaining such written consent, make general statements, not containing technical or other confidential information, regarding the nature and progress of the Company’s business; provided further, that the Preferred Holders may provide summary information regarding the Company’s financial information in their reports to their respective stockholders, partners or prospective partners, but may not annex to such reports the full financial information to be provided hereunder by the Company and, provided further, that any Preferred Holder may disclose such information to any Affiliate, partner, prospective partner, member, stockholder, or wholly owned subsidiary of such Preferred Holder (or any employee or representative of any of the foregoing) in the ordinary course of business, provided the recipient is bound by or there is an understanding that there is a confidentiality obligation with respect to such information (including, for the avoidance of doubt, by virtue of being a party to this Agreement); provided however, that in the event that a Preferred Holder is required to annex financial information obtained pursuant to Sections 1.1, 1.2, 1.3 or 1.6 to such reports, such Preferred Holder shall exert its reasonable efforts to avoid annexing such financial information, in a manner consistent with applicable law and practice, but to the extent that its efforts are unsuccessful, such Preferred Holder shall be entitled to annex such financial information to such reports.

 

1.8          Employee Stock. Unless otherwise approved by the Board, all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following twelve (12)    months of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Section 3.11. In addition, unless otherwise approved by the Board, the Company shall retain a “right of first refusal” on employee transfers until an IPO (as defined below) and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock.

 

1.9          Intellectual Property Agreements. The Company will enter into such agreements and take such other action as is necessary to ensure that all Intellectual Property (as defined in that certain Series G Preferred Stock Purchase Agreement of even date herewith, among the Company and certain parties included therein, and all agreements ancillary thereto (the “Series G Purchase Agreement”), created by any current employee or consultant of the Company within the scope of his or her engagement or employment with the Company is assigned to the Company and is solely and exclusively owned by the Company.

1.10          Termination of Rights. The Company’s obligations under Sections 1.1, 1.2, 1.3, 1.4, 1.5, 1.6, 1.8 and 1.9 shall terminate and shall be of no further force or effect upon the closing of the Company’s initial underwritten public offering of its Common Stock pursuant to an effective registration statement under the United States Securities Act of 1933, as amended (the “Securities Act”) or equivalent law of another jurisdiction (an “IPO”).

 

2.            Preemptive Rights. If the Company or a Subsidiary proposes to issue, offer or sell any equity securities of the Company or a Subsidiary, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities (collectively, “New Securities”), the Company or the Subsidiary, as the case may be, shall first offer such New Securities to the persons and entities listed on Schedule 9 attached hereto (collectively, the “Investors”), who shall be entitled to purchase their pro-rata portion of the New Securities (assuming the conversion into Common Stock of all then outstanding shares of Preferred Stock). An Investor’s pro rata portion shall be the ratio of the number of shares of the Company’s Common Stock (assuming the conversion into Common Stock of all then outstanding shares of Preferred Stock) held by such Investor as of the date of the Offer Notice (as defined below), to the sum of the total number of outstanding shares of Common Stock held by all stockholders of the Company (assuming the conversion into Common Stock of all then outstanding shares of Preferred Stock) as of the date of the Offer Notice (the “Pro Rata Portion”) and such portion of over allotment share, as described below, except that with respect to Yaron Galai, the Common Stock issued to him prior to the date of this Agreement (and any Common Stock to be issued upon exercise of options) shall not be taken into consideration when calculating his Pro Rata Portion. Each Investor shall be entitled to apportion the preemptive rights set forth in this Section 2 among itself and its Affiliates in any such proportions it deems appropriate in its sole discretion. Such preemptive rights shall be subject to the following provisions:

 

2.1          Offer Notice. The Company shall give notice (the “Offer Notice”) to each Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

2.2          Notification to Company. By notification to the Company within ten (10) days after the Offer Notice is delivered to the Investors, each Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to its Pro Rata Portion of New Securities. The Company shall promptly, in writing, inform each Investor that purchases all the New Securities available to it (each, a “Fully -Exercising Investor”) of any other Investor’s failure to do likewise. During the 5-day period commencing after receipt of such information, each Fully-Exercising Investor shall be entitled to obtain that portion of the New Securities for which Investors were entitled to subscribe but which were not subscribed for by the Investors that is equal to the non-purchasing stockholder’s portion, pro-rata according to the respective total number of shares of Common Stock (treating all Preferred Stock as if fully converted) owned by the other stockholders exercising their right of over-allotment. Any remaining unsubscribed portion of the New Securities that are not elected to be purchased by the Investors, may, during the ninety (90) day period following the expiration of the ten day period or the additional 5-day period described above, as applicable, be offered by the Company to any person or entity at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice.

2.3          Written Agreement. The parties hereby agree that the terms and conditions of any sale pursuant to this Section 2 will be memorialized in, and governed by, a written purchase and sale agreement between the Company and the relevant Investors, with customary terms and provisions for such a transaction, and the parties further covenant and agree to enter into such an agreement as a condition precedent to any sale or other transfer pursuant to this Section 2. Any such agreement will be negotiated in good faith by the relevant parties thereto and with any third party purchasing New Securities. The closing of the purchase of the New Securities by the Investors and any third party offeree shall take place concurrently at a date and time agreed upon by all parties thereto. The Company may, at any time, choose to revoke its offer of New Securities to the Investors or any third party offeree and the Investors shall have no right to purchase any New Securities from the Company, subject to any agreements subsequently entered into relating to the purchase of such New Securities.

 

2.4          Revival of Offer. If the Company has not sold the New Securities within said ninety (90) day period, or if such agreement is not consummated (i.e., an initial closing has not taken place) within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Investors in accordance with this Section 2.

 

2.5          Exceptions. Notwithstanding anything to the contrary contained herein, the provisions of this Section 2 shall not be applicable to a strategic financing by the Company in an amount up to $10,000,000 on terms mutually agreeable to the Company, Susquehanna Growth Equity Fund IV, LLLP, HarbourVest Partners, L.P. Index Ventures Growth II (Jersey), L.P., Lightspeed Venture Partners VII, L.P., Viola Ventures III, L.P. and Gemini Israel IV, L.P. Furthermore, the rights in this Section 2 shall not be applicable to New Securities that do not constitute Additional Shares of Common (as defined in the Amended Certificate (as defined below)).

 

2.6          Termination. This Section 2 shall terminate and be of no further force or effect immediately before the consummation of an IPO; in addition and regardless of the consummation of an IPO, this Section 2 will terminate and be of no further force or effect with respect to each Investor and its Affiliates whose aggregate holdings in the Company are less than two percent (2%) of the Common Stock on an as-converted and fully diluted basis.

 

3.           Registration. The following provisions govern the registration of the Company’s securities:

 

3.1          Definitions. As used herein, the following terms have the following meanings:

 

“Affiliate” means, with respect to any individual or entity, an individual or entity that, directly or indirectly, controls, is controlled by or is under common control with such individual or entity, including, without limitation, any general partner, managing member, manager, member, officer or director of such entity or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, shares the same management or advisory company with, or is otherwise affiliated with such individual or entity.

“Amended Certificate” means the Company’s then-current Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State.

 

“Business Day” means any day that is not a Saturday or Sunday or any other day on which the New York Stock Exchange or the Nasdaq Stock Market are closed for trading.

 

“Common Holder” means any holder of outstanding Common Registrable Shares or any assignee thereof in accordance with Section 3.10 of this Agreement.

 

“Common Registrable Shares” means all shares of Common Stock issued by the Company to the Founders or any assignee thereof in accordance with Section 3.10 of this Agreement.

 

“Form S-3” means Form S-3 under the Securities Act, as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Securities and Exchange Commission (“SEC”) which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

“Holder” means any holder of outstanding Registrable Shares who is a party to this agreement or any assignee thereof in accordance with Section 3.10 of this Agreement.

 

“Initiating Holders” means Holders holding more than thirty-five percent (35%) of the Registrable Shares.

 

“Register”, “registered” and “registration” refer to a registration effected by filing a registration statement in compliance with the Securities Act and the declaration or ordering by the Commission of effectiveness of such registration statement, or the equivalent actions under the laws of another jurisdiction.

 

“Registrable Shares” means all shares of Common Stock issuable upon conversion of the Preferred Stock, all shares of Common Stock issued by the Company in respect of such shares, all shares of Common Stock held by G+J and all shares of Common Stock that the Preferred Holders may hereafter purchase pursuant to their preemptive rights (including any over-allotment rights) or rights of first refusal, or shares of Common Stock issued on conversion or exercise of other securities so purchased or in exchange for or in replacement of, such securities; provided, however, that the following shall not be considered Registrable Shares: (i) any share of Common Stock that could be sold by the holder thereof pursuant to Rule 144(b)(1) promulgated under the Securities Act if such securities then held by such Holder constitute (x) prior to the expiration of any “lock-up agreement” entered into with the underwriters of the IPO, less than one percent (1%) of the Company’s outstanding equity securities, and (y) after such time, less than five percent (5%) of the Company’s outstanding equity securities, (ii) any share of Common Stock that has previously been registered under an effective registration statement filed pursuant to the Securities Act and disposed of in accordance with such registration statement, (iii) any share of Common Stock that has otherwise previously been sold to the public, and (iv) any share of Common Stock sold by a Holder in a transaction in which such Holder’s rights are not assigned in accordance with the provisions of Section 3.10. For the avoidance of any doubt, Common Stock issued to Yaron Galai prior to the date of this Agreement (and any Common Stock to be issued upon exercise of options) shall not be considered as Registrable Shares.

3.2          Incidental Registration.

 

3.2.1          Notice of Registration. Other than in connection with a request for registration pursuant to Section 3.3 or 3.4 of this Agreement, if at any time the Company, including if the Company qualifies as a well-known seasoned issuer (within the meaning of Rule 405 under the Securities Act) (a “WKSI”), proposes to file (i) a prospectus supplement to an effective shelf registration statement (a “Shelf Registration Statement”), or (ii) a registration statement (other than (x) a Shelf Registration Statement for a delayed or continuous offering pursuant to Rule 415 under the Securities Act, or (y) a registration statement relating solely to employee benefit plans or a corporate reorganization), in either case, for the sale of Common Stock or securities convertible into or exercisable for Common Stock for its own account, or for the benefit of the holders of any of its securities other than the Holders, to an underwriter on a firm commitment basis for reoffering to the public or in a “bought deal” or “registered direct offering” with one or more investment banks (subsections (i) and (ii), collectively, a “Piggy-Back Underwritten Offering”), then as soon as practicable but not less than fifteen (15) days prior to the filing of (a) any preliminary prospectus supplement relating to such Piggy-Back Underwritten Offering pursuant to Rule 424(b) under the Securities Act, (b) any prospectus supplement relating to such Piggy-Back Underwritten Offering pursuant to Rule 424(b) under the Securities Act (if no preliminary prospectus supplement is used) or (c) such registration statement, as the case may be, the Company shall give notice of such proposed Piggy-Back Underwritten Offering to the Holders and the Common Holders and such notice (a “Piggyback Notice”) shall offer the Holders and the Common Holders the opportunity to include in such Piggy-Back Underwritten Offering such number of Registrable Shares or Common Registrable Shares as each such Holder or Common Holder may request in writing. Each such Holder or Common Holder shall then have ten (10) days after receiving such Piggyback Notice to request in writing to the Company inclusion of Registrable Shares or Common Registrable Shares in the Piggy-Back Underwritten Offering, except that such Holder or Common Holder shall have two (2) Business Days after such Holder or Common Holder confirms receipt of the notice to request inclusion of Registrable Shares or Common Registrable Shares in the Piggy Back Underwritten Offering in the case of a “bought deal”, “registered direct offering” or “overnight transaction” where no preliminary prospectus is used. Upon receipt of any such request for inclusion from a Holder or a Common Holder received within the specified time, the Company shall use its reasonable best efforts to include in the applicable Piggy-Back Underwritten Offering Holders’ Registrable Shares or the Common Holders’ Common Registrable Shares requested to be included on the terms set forth in this Agreement. Prior to the commencement of any “road show” in the case of an offering in which a preliminary prospectus is used and prior to the signing of the underwriting agreement in the case of any other offering, each Holder or Common Holder shall have the right to withdraw its request for inclusion of its Registrable Shares or Common Registrable Shares in any registration by giving written notice to the Company of its request to withdraw and such withdrawal shall be irrevocable and, after making such withdrawal, such Holder or Common Holder shall no longer have any right to include Registrable Shares or Common Registrable Shares in the Piggy-Back Underwritten Offering as to which such withdrawal was made.

3.2.2     Company Not Qualifying as a WKSI. If the Company does not qualify as a WKSI, (i) the Company shall give each Holder or Common Holder fifteen (15) days’ notice prior to filing a Shelf Registration Statement and, upon the written request of any Holder or Common Holder, received by the Company within ten (10) days of such notice to the Holder, the Company shall include in such Shelf Registration Statement a number of Ordinary Shares equal to the aggregate number of Registrable Shares or Common Registrable Shares requested to be included without naming any requesting Holder or Common Holder as a selling shareholder and including only a generic description of the holder of such securities (the “Undesignated Registrable Shares”), (ii) the Company shall not be required to give notice to any Holder or Common Holder in connection with a filing pursuant to Section 3.2.1 unless such Holder or Common Holder provided such notice to the Company pursuant to this Section 3.2.2 and included Undesignated Registrable Shares in the Shelf Registration Statement related to such filing, and (iii) at the written request of a Holder or a Common Holder given to the Company more than seven (7) days before the date specified in writing by the Company as the Company’s good faith estimate of a launch of a Piggy-Back Underwritten Offering (or such shorter period to which the Company, in its sole discretion, consents), the Company shall use its reasonable best efforts to effect the registration of any of the Holders’ or Common Holders’ Undesignated Registrable Shares so requested to be included and shall file a post-effective amendment or, if available, a prospectus supplement to a Shelf Registration Statement to include such Undesignated Registrable Shares as any Holder or Common Holder may request, provided that (a) the Company is actively employing its reasonable best efforts to effect such Piggy-Back Underwritten Offering; and (b) the Company shall not be required to effect a post-effective amendment more than two (2) times in any twelve (12) month period.

 

The Company shall have the right to terminate or withdraw any registration or offering initiated by it under this Section 3.2 before the effective date of such registration or the completion of such offering, whether or not any Holder or Common Holder has elected to include Registrable Shares or Common Registrable Shares in such registration or offering. The expenses of such withdrawn registration or offering shall be borne by the Company in accordance with Section 3.6.

 

3.2.3     Underwriting. The right of the Holders and Common Holders to participate in a Piggy-Back Underwritten Offering pursuant to this Section 3.2 shall be conditioned upon the Holders and the Common Holders proposing to distribute their securities through such underwriting (together with the Company and the other Holders distributing their securities through such underwriting, if any) and entering into an underwriting agreement in customary form with the managing underwriter selected for such underwriting in accordance with the provisions of Section 3.5 below. Notwithstanding any other provision of this Section 3.2, if the managing underwriter advises the Company in writing, in its sole discretion, that marketing factors require a limitation of the number of shares to be registered under such registration, then the amount of Registrable Shares or Common Registrable Shares to be so sold shall be allocated (i) first, to the securities the Company proposes to sell, (ii) second, among the Holders of Registrable Shares, pro rata to the Registrable Shares held by the holders of Registrable Shares, (iii) third, among the Common Holders of Common Registrable Shares, pro rata to the Common Registrable Shares held by the holders of Common Registrable Shares and (iv) fourth, other securities, if any, requested to be included in such registration pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders; provided, however, that in any event, all Registrable Shares requested to be included in the Piggy-Back Underwritten Offering must be included in such registration prior to any other shares of the Company, including Common Registrable Shares (with the exception of shares to be issued by the Company to the public), and further provided that, notwithstanding anything to the contrary herein, the aggregate amount of Registrable Shares, which shall have the right to participate in any proposed Piggy-Back Underwritten Offering following the IPO shall not be reduced below twenty-five percent (25%) of the aggregate amount of securities included in such offering.

3.3          Demand Registration.

 

3.3.1       Request for Registration.

 

(a)          At any time beginning six (6) months following the date of the final prospectus for an IPO and until the fifth anniversary thereafter, the Initiating Holders may request in writing that all or part of the Registrable Shares held by such requesting Initiating Holders shall be registered under the Securities Act. Any such demand must request the registration of shares with an anticipated gross aggregate offering price of at least $5,000,000.

 

(b)          Within ten (10) days after receipt of any such request, the Company shall give written notice of such request to the other Holders and the Common Holders and shall include in such registration all Registrable Shares held by all such Holders and all Common Registrable Shares held by Common Holders who wish to participate in such demand registration and provide the Company with written requests for inclusion therein within fifteen (15) days after the receipt of the Company’s notice.

 

(c)          Thereupon, the Company shall use its reasonable commercial efforts to effect the registration of all Registrable Shares and Common Registrable Shares as to which it has received requests for registration for trading on the securities exchange specified in the request for registration; provided, however, that the Company shall not be required to effect any registration under this Section 3.3:

 

(1)          within a period of one hundred and eighty (180) days following the effective date of a previous registration pursuant to this Section 3.3 or pursuant to Section 3.2, provided the Holders were eligible to participate in such previous registration pursuant to Section 3.2;

 

(2)          If at the time of the request from the Initiating Holders the Company gives notice within thirty (30) days of such request that it is engaged in preparation of a registration statement or prospectus supplement, as the case may be, for a firm underwritten registered public offering (for which the registration statement or prospectus supplement will be filed within ninety (90) days) in which the Holder may include Registrable Shares pursuant to Section 3.2 above (subject to underwriting limitations provided under subsection 3.2.3);

(3)         more than twice under this Section 3.3, provided that a registration shall not be counted for purposes of this subsection until such time as the applicable registration statement has been declared effective by the SEC and maintained for the period specified in Section 3.8.1 hereunder; or

 

(4)         in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

 

The Company shall be entitled to include shares of Common Stock for sale for its own account in any registration pursuant to this Section 3.3 subject to the approval of the holders of a majority of the Registrable Shares held by the Initiating Holders.

 

3.3.2          Underwriting. If the Initiating Holders intend to distribute the Registrable Shares covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to subsection 3.3.1 and the Company shall include such information in the written notice referred to in paragraph 3.3.1. The underwriter will be selected in accordance with the provisions of Section 3.5 below. In such event, the right of the Holders and the Common Holders to include securities in such registration shall be conditioned upon such Holders’ and Common Holders’ participation in such underwriting and the inclusion of such Holders’ securities in the underwriting (unless otherwise mutually agreed by the holders of a majority of the Registrable Shares held by the Initiating Holders), to the extent provided herein. The Holders and Common Holders proposing to distribute their securities through such underwriting shall (together with the Company), enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 3.3, if the managing underwriter advises the Holders and Common Holders in writing, in its sole discretion, that marketing factors require a limitation of the number of shares to be underwritten, then the amount of Registrable Shares or Common Registrable Shares to be so sold shall be allocated (i) first, among the Holders of Registrable Shares pro rata to the Registrable Shares held by the holders of Registrable Shares, (ii) second, among Common Holders of Common Registrable Shares, pro rata to the Common Registrable Shares held by the holders of Common Registrable Shares and (iii) third, pro rata among holders of other securities (other than Registrable Shares or Common Registrable Shares), if any, requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of shares requested to be registered by such holders (the “Other Registrable Shares”) desiring to participate in such registration on the basis of the amount of such Other Registrable Shares initially proposed to be registered by such other shareholders; provided, however, that in any event all Registrable Shares must be included in such registration prior to any other shares of the Company, including Common Registrable Shares.

3.4          Form S-3 Registration.

 

3.4.1          Request for Registration. In case the Company shall receive from any Holder or Holders (the “Form S-3 Initiating Holders”), a written request or requests (a “Form S-3 Request Notice”) that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Shares owned by such Holder or Holders, then, subject to the conditions of this Section 3.4, the Company will give written notice of the proposed registration within twenty (20) days after receipt of any such Form S-3 Request Notice to all other Holders, and include in such registration all Registrable Shares held by all such Holders who wish to participate in such registration and who have provided the Company with written notice requests for inclusion therein within fifteen (15) days after the receipt of the Company’s notice. Subject to the terms hereof, the Company will use its reasonable best efforts to effect such registration as soon as practicable. All written requests from any Holder or Holders to effect a registration on Form S-3 pursuant to this Section 3.4 shall indicate whether such Holder(s) intend to effect an offering promptly following effectiveness of the registration statement or whether, pursuant to Section 3.8.1, they intend for the registration statement to remain effective so that they may effect the offering on a delayed basis (a “Shelf Request”). Notwithstanding the foregoing, the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 3.4.1 (i) if Form S-3 is not available for such offering by the Holders; (ii) within ninety (90) days of the effective date of a registration statement filed pursuant to Section 3.3 or this Section 3.4.1, (iii) within ninety (90) days of a Piggy-Back Underwritten Offering in which the Form S-3 Initiating Holders had an opportunity to participate pursuant to the provisions of Section 3.2 and from which no more the twenty percent (20%) of the Registrable Shares of the Form S-3 Initiating Holders that were requested to be included were excluded pursuant to Section 3.2.3, (iv) if the Company gives notice within fifteen (15) days of the request from the Form S-3 Initiating Holders that it is engaged in preparation of a registration statement or prospectus supplement, as the case may be, for a firm underwritten registered public offering (for which the registration statement or prospectus supplement will be filed within ninety (90) days) in which the Form S-3 Initiating Holders may include Registrable Shares pursuant to Section 3.2 above (subject to underwriting limitations provided under subsection 3.2.3), (v) if the aggregate price to the public of the shares to be registered is less than $1,000,000 (one million U.S. dollars); and (vi) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

 

3.4.2          Shelf Request. In the event a Form S-3 is filed pursuant to a Shelf Request, upon a written request (a “Form S-3 Demand Notice”) from any Holder or Holders (the “Form S-3 Takedown Holders”) that is entitled to sell securities pursuant to such Form S-3 without filing a post-effective amendment that the Company effect an offering with respect to Registrable Shares (a “Takedown”), the Company will, as soon as practicable, (x) deliver a notice (a “Takedown Notice”) relating to the proposed Takedown to all other Holders who are named or are entitled to be named as a selling shareholder in such Form S-3 without filing a post-effective amendment thereto and (y) promptly (and in any event not later than twenty (20) days after receiving such request) supplement the prospectus included in the Shelf Registration Statement as would permit or facilitate the sale and distribution of all or such portion of the Form S-3 Takedown Holders’ Registrable Shares as are specified in such request together with the Registrable Shares requested to be included in such Takedown by any other Holder(s) who notify the Company in writing within ten (10) Business Days after receipt of such notice from the Company. Notwithstanding the foregoing, the Company shall not be obligated to effect a Takedown (i) unless the Registrable Shares requested to be offered pursuant to such Takedown have an anticipated aggregate price to the public (net of any underwriting discounts and commissions) of not less than $1,000,000 (one million U.S. dollars), (ii) if the Company has within the twelve (12) month period preceding the date of such request already effected two (2) Takedowns under this Section 3.4.2, (iii) within 90 days of the effective date of a registration statement filed pursuant to Section 3.3 or, if the filing pursuant to Section 3.4.1 included an underwritten, pursuant to Section 3.4.1, (iv) within 90 days of a Piggy-Back Underwritten Offering in which the Holder or Holders submitting the Takedown Notice had an opportunity to participate pursuant to the provisions of Section 3.2 and from which no more the twenty percent (20%) of the Registrable Shares of the Form S-3 Takedown Holders that were requested to be included were excluded pursuant to Section 3.2.3 or (y)   within ninety (90) days of effecting a previous Takedown under this Section 3.4.2, or (v) if the Company gives notice within fifteen (15) days of the Form S-3 Demand Notice that it is engaged in preparation of a registration statement or prospectus supplement, as the case may be, for a firm underwritten registered public offering (for which the registration statement or prospectus supplement will be filed within ninety (90) days) in which the Form S-3 Takedown Holders may include Registrable Shares pursuant to Section 3.2 above (subject to underwriting limitations provided under subsection 3.2.3), in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

3.5          Designation of Underwriter.

 

(a)          In the case of any registration effected pursuant to Section 3.3, the underwriter, if any, will be selected by the Initiating Holders holding the majority of Registrable Shares and approved by the Company, which approval shall not be unreasonably withheld.

 

(b)          In the case of any registration initiated by the Company or a registration initiated under Section 3.4, the Company shall have the right to designate the managing underwriter in any underwritten offering.

 

3.6          Expenses. All expenses incurred in connection with any registration, filing or qualification, pursuant to Sections 3.2, 3.3 and 3.4, including without limitation all federal and “blue sky” registration, filing and qualification fees, printer’s and accounting fees, and fees and disbursements of counsel for the Company as well as one counsel for the Holders selected by the holders of a majority of the Registrable Shares of the Holders participating in such registration, filing or qualification shall be borne by the Company; provided, however, that each of the Holders participating in such registration shall bear or pay its pro rata portion of discounts or commissions payable to any underwriter and the fees and expenses of any additional advisors for such Holder (except as otherwise provided for herein).

3.7          Indemnities. In the event of any registered offering of Common Stock pursuant to this Section 3 (for the purposes of this Section 3.7, the Common Holders shall also be referred to as “Holders”):

 

3.7.1     The Company will indemnify and hold harmless, to the fullest extent permitted by law, any Holder and any underwriter for such Holder, and each person, if any, who controls the Holder or such underwriter, from and against any and all losses, damages, claims, liabilities, joint or several, costs and expenses (including any amounts paid in any settlement effected with the Company’s consent) to which the Holder or any such underwriter or controlling person may become subject under applicable law or otherwise, insofar as such losses, damages, claims, liabilities (or actions or proceedings in respect thereof), costs or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the registration statement or included in the prospectus, as amended or supplemented, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they are made, not misleading, and the Company will reimburse the Holder, such underwriter and each such controlling person of the Holder or the underwriter, promptly upon demand, for any reasonable legal or any other expenses incurred by them in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with such loss, claim, damage, liability, action or proceeding; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing by a Holder, such underwriter or such controlling persons in writing specifically for inclusion therein; provided, further, that this indemnity shall not be deemed to relieve any underwriter of any of its due diligence obligations; provided, further, that the indemnity agreement contained in this subsection 3.7.1 shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the selling stockholder, the underwriter or any controlling person of the selling stockholder or the underwriter, and regardless of any sale in connection with such offering by the selling stockholder. Such indemnity shall survive the transfer of securities by a selling stockholder.

 

 

3.7.2     Each Holder participating in a registration hereunder will indemnify and hold harmless the Company, any underwriter for the Company, and each person, if any, who controls the Company or such underwriter, from and against any and all losses, damages, claims, liabilities, costs or expenses (including any amounts paid in any settlement effected with the selling stockholder’s consent) to which the Company or any such controlling person and/or any such underwriter may become subject under applicable law or otherwise, insofar as such losses, damages, claims, liabilities (or actions or proceedings in respect thereof), costs or expenses arise out of or are based on (i) any untrue or alleged untrue statement of any material fact contained in the registration statement or included in the prospectus, as amended or supplemented, or (ii) the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, and each such Holder will reimburse the Company, any underwriter and each such controlling person of the Company or any underwriter, promptly upon demand, for any reasonable legal or other expenses incurred by them in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with such loss, claim, damage, liability, action or proceeding; in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in strict conformity with written information furnished by such Holder specifically for inclusion therein. The foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement (or alleged untrue statement) or omission (or alleged omission) made in the preliminary prospectus but eliminated or remedied in the amended prospectus at the time the registration statement becomes effective or in the Final Prospectus, such indemnity agreement shall not inure to the benefit of (i) the Company and (ii) any underwriter, if a copy of the Final Prospectus was not furnished to the person or entity asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Securities Act; provided, further, that this indemnity shall not be deemed to relieve any underwriter of any of its due diligence obligations; provided, further, that the indemnity agreement contained in this subsection 3.7.2 shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Holders. In no event shall the liability of a Holder exceed the net proceeds from the offering received by such Holder.

3.7.3     Promptly after receipt by an indemnified party pursuant to the provisions of Sections 3.7.1 or 3.7.2 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of said Section 3.7.1 or 3.7.2, promptly notify the indemnifying party of the commencement thereof; but the omission to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder except to the extent the indemnifying party is prejudiced as a result thereof. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any action include both the indemnified party and the indemnifying party and there is a conflict of interests which would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified party or parties shall have the right to select one separate counsel to participate in the defense of such action on behalf of such indemnified party or parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of said Sections 3.7.1 or 3.7.2 for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed counsel in accordance with the provision of the preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action and within 15 days after written notice of the indemnified party’s intention to employ separate counsel pursuant to the previous sentence, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

 

3.7.4     In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) an indemnified party, exercising rights under this Agreement, makes a claim for indemnification pursuant to Section 3.7.1 or 3.1.2 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 3.7 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such indemnified party in circumstances for which indemnification is provided under this Section 3.7; then, and in each such case, the Company and such indemnified party will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such Holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Shares offered by and sold under the registration statement bears to the public offering price of all securities offered by and sold under such registration statement, and the Company and other selling Holders are responsible for the remaining portion; provided, however, that, in any such case: (A) no such Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Shares offered and sold by such Holder pursuant to such registration statement; (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation; and (C) no Holder shall be required to contribute any amount in excess of the amount such Holder would have been required to indemnify if indemnification had been applicable in accordance with its terms.

3.8          Obligations of the Company. Whenever required under this Section 3 to effect the registration of any Registrable Shares (including for the purpose of this Section 3.8 only, the Common Registrable Shares), the Company shall, as expeditiously as possible (for the purposes of this Section 3.8, the Common Holders shall also be referred to as “Holders”):

 

3.8.1     prepare and file with the SEC a registration statement with respect to such Registrable Shares and use its reasonable commercial efforts to cause such registration statement to become effective, and, upon the request of the holders of a majority of the Registrable Shares registered thereunder, keep such registration statement effective for a period of up to nine (9)  months or, if sooner, until the distribution contemplated in the Registration Statement has been completed; provided, however, such nine (9)-month period shall be extended by the length of time that the Holders are required to cease distribution of the Registrable Shares pursuant to Section 3.8.5 or Section 3.9 below, if applicable.

 

3.8.2     prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Shares covered by such registration statement.

 

3.8.3     furnish to the Holders participating in such registration such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Shares owned by them.

 

3.8.4     in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

 

3.8.5     notify each holder of Registrable Shares covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. Upon receipt of a notification under this Section 3.8.5 such Holders shall immediately cease distributing the Registrable Shares covered by such registration statement.

3.8.6     cause all Registrable Shares registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed.

 

3.8.7     provide a transfer agent and registrar for all Registrable Shares registered pursuant hereunder and a CUSIP number for all such Registrable Shares, in each case not later than the effective date of such registration.

 

3.8.8     use its commercially reasonable efforts to cause to be furnished, at the request of any Holder requesting registration of Registrable Shares pursuant to this Section 3, on the date that such Registrable Shares are delivered to the underwriters for sale in connection with a registration pursuant to this Section 3, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, if required by the Holder, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Shares; provided that the delivery of any “10b-5 statement” and opinion may be conditioned on the prior or concurrent delivery of a comfort letter pursuant to subsection (ii) hereof and (ii) a comfort letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Shares subject to each such Holder to whom the comfort letter is addressed providing a customary representation letter to the independent registered public accounting firm of the Company in form and substance reasonably satisfactory to such accountant.

 

3.9          Deferral of Filing or Suspension of use of Registration Statement. Notwithstanding any other provision of this Agreement, the Company may postpone the filing of any registration statement, or suspend the use of a registration statement or prospectus, up to two (2)  times in any 12-month period for up to an aggregate of ninety (90) days during such 12-month period if the Company shall furnish to the relevant Holders a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed or used at such time. During such periods of deferral or suspension, the Company shall not sell securities for its own account or that of any other shareholder, in each case, pursuant to a registration statement filed under the Securities Act, other than a registration statement on Form S-8; provided, however, the Company shall be permitted to file one or more Shelf Registration Statements.

3.10          Assignment of Registration Rights. Any of the Holders or Common Holders may assign its rights to cause the Company to register shares pursuant to this Section 3 to a transferee of no less than 200,000 Registrable Shares or Common Registrable Shares (in each case, as adjusted for any stock split, stock dividend, recapitalization or similar event), including but not limited to any Affiliate of such Holder or Common Holder; provided, however, that no transferee may be assigned any of the foregoing rights unless the Company is given a written notice by the assigning and transferring party (not later than the time of such assignment and transfer) stating the name and address of the transferee and identifying the securities of the Company as to which the rights in question are being assigned and transferred; and provided further that any such transferee shall undertake in advance and in writing to be bound by this Agreement and shall receive such assigned rights subject to all the terms and conditions of this Agreement.

 

3.11          Lock-Up. In any registration of the Company’s shares each Holder and Common Holder agrees that any sales of shares of the Company may be subject to a “lock-up” period restricting such sales (including the making of any short sale of, loan, grant any option for the purchase of, or otherwise disposition of any such shares) for such period not to exceed (a) in case of an IPO – 180 days following the effective date of the registration statement for such IPO; or (b) in case of an underwritten offering thereafter – 90 days from the date of the final prospectus for such other offering. If the event that FINRA Rule 2711(f)(4) applies to an offering of Company securities, notwithstanding the foregoing, if (i) during the last seventeen (17) days of the one hundred eighty (180)-day restricted period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (ii) prior to the expiration of the one hundred eighty (180)-day restricted period, the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the one hundred eighty (180)-day period, the restrictions imposed by this Section 3.11 shall continue to apply until the expiration of the eighteen (18)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. Each Holder and Common Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter that are consistent with the foregoing or that are necessary to give further effect thereto. The obligations described in this Section 3.11 shall not apply to a registration relating solely to employee benefit plans on Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such lock up period described above. Notwithstanding anything in this Section 3.11 to the contrary, the foregoing provisions of this Section 3.11 (1) shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, (2) shall only be applicable where all officers and directors and, in the case of an IPO, all one percent (1%) stockholders are similarly bound, and (3) shall not prevent transfers to the Holders’ direct or indirect affiliates, including without limitation such Holder’s direct and indirect stockholders, members, other equityholders, limited or general partners, beneficiaries (if the Holder is a trust) and such Holder’s direct and indirect subsidiaries, or to any investment fund or other entity controlled or managed by, or under the common control or management with, such Holder, provided that such transferee agrees to be bound in writing by the restrictions set forth in the lock-up agreement and provided further that any such transfer shall not involve a disposition for value.

 

3.12          Public Information. At all times after the earlier of the close of business on such date as (a) a registration statement filed by the Company under the Securities Act becomes effective, (b) the Company registers a class of securities under Section 12 of the United States Securities Exchange Act of 1934, as amended, or any federal statute or code which is a successor thereto (the “Exchange Act”), or (c) the Company issues an offering circular meeting the requirements of Regulation A under the Securities Act, the Company shall make and keep publicly available and available to the Preferred Holders pursuant to Rule 144 under the Securities Act (“Rule 144”), such information as is necessary to enable the Preferred Holders to make sales of Registrable Stock pursuant to Rule 144. The Company shall comply with the current public information requirements of Rule 144 and shall furnish thereafter to any Preferred Holder, upon request, a written statement executed by the Company that it has complied with the reporting requirements of Rule 144 and such other information as may be reasonably requested in availing any Preferred Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration.

3.13          Foreign Offerings. The provisions of this Section 3 shall apply, mutatis mutandis, to any registration of the securities of the Company outside of the United States.

 

3.14          Information by Holder. The Holders and/or Common Holders included in any registration shall furnish to the Company such information regarding such Holder and/or Common Holder, the Registrable Shares and/or Common Registrable Shares held by them and the distribution proposed by such Holder and/or Common Holder as the Company may reasonably request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 3. If any Holder or Common Holder does not provide any reasonably requested information within ten (10) business days of such written request, the Company is permitted to not register such Holder’s securities without penalty.

 

3.15          Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least fifty percent (50%) of the Registrable Shares, as one class on an as converted basis, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Shares of the Holders that are included, or (ii) to demand registration of any securities held by such holder or prospective holder which could result in such registration statement being declared effective prior to the fifth anniversary of the Company’s IPO; provided, however, that the Company may without such consent enter into an agreement with any holder or prospective holder of any securities of the Company related to the filing of a resale shelf registration statement to register shares issued to such holder or prospective holder in an acquisition, if and only if such resale shelf registration statement does not permit underwritten offerings and the rights of Holders hereunder are not adversely impacted.

 

3.16          Piggyback Registration. If, in connection with an IPO the Company provides piggy-back registration rights for the account of a security holder or holders (other than an employee benefit plan or plans) then the Company shall provide each of the Preferred Holders (on pro rata basis with the other Preferred Holders based on each Preferred Holder’s percentage ownership) with the same piggy-back registration rights subject to the same terms, conditions and limitations.

4.

Miscellaneous.

 

4.1          Further Assurances. Each of the parties hereto shall perform such further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the parties as reflected thereby.

 

4.2          Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware excluding that body of law pertaining to conflict of law. The parties hereto agree to submit to the jurisdiction of the United States federal and state courts of the State of Delaware with respect to the breach or interpretation of this Agreement or the enforcement of any and all rights, duties, liabilities, obligations, powers, and other relations between the parties arising under this Agreement.

 

4.3          Successors and Assigns; Assignment. Except as otherwise expressly limited herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto.

 

4.4          Entire Agreement; Amendment and Waiver. This Agreement and the Schedules hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matters hereof and thereof. This Agreement supersedes in its entirety the Prior Investors’ Rights Agreement, and such Prior Investors’ Rights Agreement is hereby terminated and of no further force or effect. Any term of this Agreement may be amended and the observance of any term hereof may be waived (either prospectively or retroactively and either generally or in a particular instance) only with the written consent of (i) the Company, and (ii) prior to an IPO, the holders of more than fifty percent (50%) of the issued and outstanding Preferred Stock (together as a single class and on an as-converted basis) and, after an IPO, the Holders of more than fifty percent (50%) of the Registrable Shares, provided, however, anything in the foregoing notwithstanding: (A) should such waiver or amendment change the rights or privileges granted to a particular stockholder or class or series of stockholders, in a manner adverse and different from other stockholders (such more adversely affected shareholders, a “Discriminated Class”), then such waiver or amendment shall be subject to the written approval of the stockholder/s who are the owners of record of a majority of the issued and outstanding shares of such Discriminated Class (voting together as a single class), and (B) any right or limitation provided for the express benefit of a specifically named party to this Agreement may not be amended or waived without the consent of such party. Any amendment or waiver adopted with the applicable foregoing consents shall be binding upon all parties to this Agreement. The Company shall give prompt notice of any amendment hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment or waiver.

 

4.5          Notices, etc. All notices and other communications required or permitted hereunder to be given to a party to this Agreement shall be in writing and shall be transmitted via facsimile or email or mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed to such party’s address as set forth below:

 

if to the Preferred G Holders: to the addresses set forth in Schedule 1

 

with a copy to:

 

Yigal Arnon & Co.

22 J. Rivlin Street

Jerusalem 94240, Israel

Facsimile: +972 (2) 623-9236

Attn: Yarom Romem, Adv.

E-mail: yaromr@arnon.co.il

if to the Preferred F Holders: to the addresses set forth in Schedule 2

 

with a copy to:

 

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Facsimile: 212-909-6836

Attn: David P. Iozzi

Email: dpIozzi@debevoise.com

 

and to:

 

Amit, Pollak, Matalon & Co.

Nitsba Tower, 18th Fl.

17 Yitzhak Sadeh St.

Tel-Aviv 67775 Israel

Tel. +972 3 5689018 ext. 148

Fax. +972 3 5689017

Attn: Daniel Marcus, Adv.

 

if to the Preferred D Holders: to the addresses set forth in Schedule 3

 

with a copy (which shall not constitute notice) to:

 

Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, CA 94025

Attn: Anthony McCusker, Esq.

 

and to:

 

Meitar, Liquornik, Geva & Leshem, Brandwein

16 Abba Hillel Silver Rd.

Ramat Gan 52506, Israel

Facsimile: +972 (3) 610-3111

Attn: Asaf Harel, Adv.

Email: aharel@meitar.com

and to:

 

Shenhav & Co. Law Offices

4 Ha’nechoshet St.,

Tel Aviv 69710, Israel

Facsimile: +972 (3) 611-0788

Attn: Shmulik Atias, Adv.

Email: shmulik@shenhavlaw.co.il

 

if to the Preferred C Holders: to the addresses set forth in Schedule 4

 

with a copy to:

 

Meitar, Liquornik, Geva & Leshem, Brandwein

16 Abba Hillel Silver Rd.

Ramat Gan 52506, Israel

Facsimile: +972 (3) 610-3111

Attn: Asaf Harel, Adv.

Email: aharel@meitar.com

 

if to the Preferred B Holders: to the addresses set forth in Schedule 5

 

with a copy to:

 

Meitar, Liquornik, Geva & Leshem, Brandwein

16 Abba Hillel Silver Rd.

Ramat Gan 52506, Israel

Facsimile: +972 (3) 610-3111

Attn: Asaf Harel, Adv.

Email: aharel@meitar.com

 

if to the Preferred A Holders: to the addresses set forth in Schedule 6

 

with a copy to:

 

Barak S. Platt

Yigal Arnon & Co.

1 Azrieli Center

Tel Aviv 67021 Israel

Facsimile: (972-3) 608-7714

 

if to the Common Stock Holders: to the addresses set forth in Schedule 7

 

if to the Additional Common Stock Holders: to the addresses set forth in Schedule 8

 

if to the Company:

Michael J. Kistler

Outbrain Inc.

39 West 13th Street NY, NY 10011

Facsimile: (917) 591-5856

Email: mkistler@outbrain.com

with a copy to:

 

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

Tel: (212) 407-4937

Facsimile: (212) 656-1076

Attn: Lloyd L. Rothenberg

Email: lrothenberg@loeb.com

 

if to G+J: to the addresses set forth in Schedule 10

 

or such other address with respect to a party as such party shall notify each other party in writing as above provided. Any notice sent in accordance with this Section 4.5 shall be effective (i) if mailed, seven (7) business days after mailing, (ii) if sent by messenger, upon delivery, and (iii) if sent via facsimile or email, upon transmission and electronic confirmation of receipt or (if transmitted and received on a non-business day) on the first business day following transmission and electronic confirmation of receipt.

 

4.6          Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power, or remedy accruing to any party upon any breach or default under this Agreement, shall be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative.

 

4.7          Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

 

4.8          Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument.

4.9          Aggregation of Stock. Other than with respect to rights, limitations and obligations pursuant to this Section 3 hereof, (i) all shares of Preferred Stock and shares of Common Stock, as the case may be, held or acquired by Affiliates or other affiliated entities or persons of a Preferred Holder or a Common Stock Holder, as the case may be, shall be aggregated together for the purpose of determining the availability of any rights under this Agreement, and (ii)     for the purpose of this Section 4.9 “affiliated entities or persons” shall mean with respect to any entity or person, its Permitted Transferee (as defined in the Amended and Restated Stockholders’ Agreement of even date between the Company and certain stockholders of the Company).

 

[Signature Page to Follow]

IN WITNESS WHEREOF the parties have signed this Amended and Restated Investors’ Rights Agreement as of the date first hereinabove set forth.

 

	OUTBRAIN INC.
	By:	/s/ Yaron Galai
		Name: Yaron Galai
		Title: CEO
	/s/ Yaron Galai
	YARON GALAI
	/s/ Ori Lahav
	ORI LAHAV

 

Signature page to IRA

IN WITNESS WHEREOF the parties have signed this Amended and Restated Investors’ Rights Agreement as of the date first hereinabove set forth.

SUSQUEHANNA GROWTH EQUITY FUND IV, LLLP
By:	Susquehanna Growth Equity, LLC, its authorized agent
By:	/s/ Amir
	Name:  Amir
	Title:    Goldman
HARBOURVEST PARTNERS IX-VENTURE FUND L.P.
By:	HarbourVest IX-Venture Associates L.P., its General Partner
By:	HarbourVest IX-Venture Associates LLC, its General Partner
By:	HarbourVest Partners, LLC, its Managing Member
By:	/s/ Peter B. Lipson
	Name:  Peter B. Lipson
	Title:    Managing Director
HARBOURVEST/NYSTRS CO-INVEST FUND L.P.
By:	HIPEP VI Select Associates L.P., its General Partner
By:	HIPEP VI Select Associates LLC, its General Partner
By:	HarbourVest partners, LLC, its Managing Member
By:	/s/ Peter B. Lipson
	Name:  Peter B. Lipson
	Title:    Managing Director
LIGHTSPEED VENTURE PARTNERS VII L.P.
By:	Lightspeed General Partner VII, L.P., its General Partner
By:	Lightspeed Ultimate General Partner VII, Ltd., its General Partner
By:	/s/ Ravi Mhatre
	Name:   Ravi Mhatre
	Title:

 

Signature Page to IRA

VIOLA VENTURES, III L.P.
By:	Viola 3 Ltd., its General Partner
By:	[ILLEGIBLE]	[ILLEGIBLE]
	Name:
	Title:
GEMINI ISRAEL IV L.P.
GEMINI ISRAEL IV (ANNEX FUND) L.P.
By:	Gemini Associates IV L.P., its General Partner
By:	Gemini Associates IV G.P., its General Partner
By:	/s/ Yossi Sela	/s/ Menashe Ezra
	Name: Yossi Sela	Menashe Ezra
	Title:   Managing Partner	Managing Partner
By:	/s/ Yossi Sela	/s/ Menashe Ezra
	Name: Yossi Sela	Menashe Ezra
	Title:   Managing Partner	Managing Partner
GEMINI PARTNERS INVESTORS IV L.P.
GEMINI PARTNERS INVESTORS IV (ANNEX FUND) L.P.
By:	Gemini Israel Funds IV Ltd., its General Partner
By:	/s/ Yossi Sela	/s/ Menashe Ezra
	Name: Yossi Sela	Menashe Ezra
	Title:   Managing Partner	Managing Partner
By:	/s/ Yossi Sela	/s/ Menashe Ezra
	Name: Yossi Sela	Menashe Ezra
	Title:   Managing Partner	Managing Partner

 

Signature Page to IRA

INDEX VENTURES GROWTH II (JERSEY), L.P. INDEX VENTURES GROWTH II PARALLEL ENTREPRENEUR FUND (JERSEY), L.P.
By:	Index Venture Growth Associates II Limited, its Managing General Partner
By:	/s/ N. T. Greenwood
	Name:  N. T. Greenwood
	Title:    Director
By:	/s/ I J Henderson
	Name:  I J Henderson
	Title:    Director
YUCCA (JERSEY) SLP
By:	Elian Employee Benefit Services Limited as Authorized Signatory of Yucca (Jersey) SLP in its capacity as administrator of the Index Co-Investment Scheme
By:	/s/ David Middleton	/s/ Luke Aubert
	Name: David Middleton	Luke Aubert
	Title: Authorised Signatories
RH INTERNET II LLC
By:
	Name:
	Title:
VINTAGE INVESTMENT PARTNERS V (CAYMAN), L.P.
VINTAGE INVESTMENT PARTNERS V (ISRAEL), L.P.
By:	Vintage Investment Partners 5, L.P., its General Partner
By:	Vintage Fund 5 Ltd., its General Partner
By:
	Name:
	Title:

 

Signature Page to IRA

MICHEL CROUHY
MICHAL EDELSTYN (BY SIMON EDELSTYN BY PROXY)
ZOHAR GILON
LEON RECANATI
PROVIDENT FUND OF THE EMPLOYEES OF THE HEBREW UNIVERSITY OF JERUSALEM LTD.
By:
	Name:
	Title:
MTS INVESTMENTS INC.
By:
	Name:
	Title:
STARTIFY (1992) LTD. (FKA SIGMA INVESTMENTS 1992 LTD.)
By:
	Name:
	Title:

 

Signature Page to IRA

LOEB & LOEB LLP
By:
	Name:
	Title:
GRUNER + JAHR GMBH
By:
	Name:
	Title:

 

Signature Page to IRA

Dan Galai		Mickey Kertesz
Ziv Kop		Efrat Perez
Ilan Lior		Amir Lahav
Hanan Salinger		Dalit Lahav
Rani Nelken		Isaschar Kurt
Eytan Galai		Rotem Doron
Uri Galai		Ester Shabtai
Noam Galai		Doron Levin

 

Signature Page IRA

SCHEDULE 1

 

THE PREFERRED G HOLDERS

 

SUSQUEHANNA GROWTH EQUITY FUND IV, LLLP
c/o Susquehanna Growth Equity, LLC

401 City Ave.

Bala Cynwyd, PA 19004

Attention: General Counsel

 

Schedule 1 to IRA

SCHEDULE 2

 

THE PREFERRED F HOLDERS

 

HARBOURVEST PARTNERS L.P. c/o HarbourVest Partners, LLC One Financial Center 44th Floor Boston MA 02111 Attn: Tiffany Obenchain Tel +1 617 348 3707 Fax +1 617 350 0305   with a copy (which shall not constitute notice) to:   Debevoise & Plimpton LLP 919 Third Avenue New York, NY 10022 Facsimile: 212-909-6836 Attn: David P. Iozzi Email: dpIozzi@debevoise.com   VIOLA VENTURES, III L.P. Delta House 16 Abba Eben Avenue Herzeliya 46725 Israel Attn: Michal Cohen Tel: +972-9-9720400 Fax: +972-9-9720401 Email:Michalc@Violaventures.com   GEMINI ISRAEL IV L.P. GEMINI PARTNERS INVESTORS IV L.P. GEMINI ISRAEL IV (Annex Fund) L.P. GEMINI PARTNERS INVESTORS IV (Annex Fund) L.P. 11 Hamenofim Street Herzlia Pituach Israel   LIGHTSPEED VENTURE PARTNERS VII, L.P. 2200 Sand Hill Road, Suite 100 Menlo Park, CA 94025 USA   INDEX VENTURES GROWTH II (JERSEY), L.P. INDEX VENTURES GROWTH II PARALLEL ENTREPRENEUR FUND (JERSEY), L.P.   Index Venture Growth Associates II Limited 5th Floor 44 Esplanade St Helier Jersey JE1 3FG Channel Islands Attention: Gemma Harries   with a copy (which shall not constitute notice) to:   Index Venture Management S.A. 2 rue de Jargonnant 1207 Geneva Switzerland Fax: +41 22 737 0099 Attention: André Dubois   YUCCA (JERSEY) SLP Intertrust Employee Benefit Services Limited 44 Esplanade St Helier Jersey JE4 9WG Channel Islands Attention: Sarah Earles   with a copy to:   Index Venture Management S.A. 2 rue de Jargonnant 1207 Geneva Switzerland Fax: +41 22 737 0099 Attention: André Dubois

 

Schedule 2 to IRA

Leon Recanati 27 Yoav St., 690811, Israel Fax: +972-9-9701866   RH INTERNET II LLC c/o Tigris Group Inc. 535 Madison Avenue, 12th Floor New York, New York 10022 USA Email: ashapiro@tigris.com Attn: Andrew M. Shapiro, General Counsel   With a copy to:   Rhodium Ltd 91 Medinat Hayehudim St. Herzeliya Pituach 46140 Email: yaron@rhodium.co.il Attn: Yaron Kniajer, Managing Director & CFO   Zohar Gilon Okeanos Hotel 50 Ramat Yam St., Herzliya Pituach 46851 Israel Tel: +972-9-9543555   Vintage Investment Partners V (Israel), L.P. Vintage Investment Partners V (Cayman), L.P. Ackerstein Towers, Bldg D 10th Floor 12 Abba Eban Avenue Herzliya Pituach, 46120 Israel   with a copy (which shall not constitute notice) to:   Amit, Pollak, Matalon & Co. Nitsba Tower, 18th Fl. 17 Yitzhak Sadeh St. Tel-Aviv 67775 Israel Tel. +972 3 5689018 ext. 148 Fax. +972 3 5689017 Attn: Daniel Marcus, Adv.

Aba Hilel 14A, Ramat – Gan MTS Investments Inc. C\O Mutualart Inc. 298 Fifth Ave. NY, NY 10001 USA

 

Schedule 2 to IRA (Cont’d)

SCHEDULE 3

 

THE PREFERRED D HOLDERS

 

VIOLA VENTURES, III L.P. Delta House 16 Abba Eben Avenue Herzeliya 46725 Israel Attn: Michal Cohen Tel: +972-9-9720400 Fax: +972-9-9720401 Email:Michalc@Violaventures.com   LIGHTSPEED VENTURE PARTNERS VII, L.P. 2200 Sand Hill Road, Suite 100 Menlo Park, CA 94025 USA   INDEX VENTURES GROWTH II (JERSEY), L.P. Index Venture Growth Associates II Limited 5th Floor 44 Esplanade St Helier Jersey JE1 3FG Channel Islands Attention: Gemma Harries   INDEX VENTURES GROWTH II PARALLEL ENTREPRENEUR FUND (JERSEY), L.P. Index Venture Growth Associates II Limited 5th Floor 44 Esplanade St Helier

 

Jersey JE1 3FG Channel Islands Attention: Gemma Harries   YUCCA (JERSEY) SLP Intertrust Employee Benefit Services Limited 44 Esplanade St Helier Jersey JE4 9WG Channel Islands Attention: Sarah Earles   with a copy to:   Index Venture Management S.A. 2 rue de Jargonnant 1207 Geneva Switzerland Fax: +41 22 737 0099 Attention: André Dubois   Zohar Gilon Okeanos Hotel 50 Ramat Yam St., Herzliya Pituach 46851 Israel Tel: +972-9-9543555   Michal Edelstyn 30 Bathgate Road, Wimbledon, London, SW19 5PJ

 

Schedule 3 to IRA

SCHEDULE 4

 

THE PREFERRED C HOLDERS

 

Name and Address:

 

VIOLA VENTURES, III L.P. Delta House 16 Abba Eben Avenue Herzeliya 46725 Israel Attn: Michal Cohen Tel: +972-9-9720400 Fax: +972-9-9720401 Email:Michalc@Violaventures.com   Leon Recanati 27 Yoav St., 690811, Israel Fax: +972-9-9701866 RH Internet II LLC c/o Tigris Group Inc. 535 Madison Avenue, 12th Floor New York, New York 10022 USA Email: ashapiro@tigris.com Attn: Andrew M. Shapiro, General Counsel   With a copy to:   Rhodium Ltd 91 Medinat Hayehudim St. Herzeliya Pituach 46140 Email: yaron@rhodium.co.il Attn: Yaron Kniajer, Managing Director & CFO   LIGHTSPEED VENTURE PARTNERS VII, L.P. 2200 Sand Hill Road, Suite 100 Menlo Park, CA 94025 USA

 

GEMINI ISRAEL IV (ANNEX FUND) L.P. GEMINI PARTNERS INVESTORS IV (ANNEX FUND) L.P. 11 Hamenofim Street Herzlia Pituach Israel   PROVIDENT FUND OF THE EMPLOYEES OF THE HEBREW UNIVERSITY OF JERUSALEM LTD. High-Tech Village 2\2 Givat Ram Jerusalem   MTS Investments Inc. C\O Mutualart Inc. 298 Fifth Ave. NY, NY 10001 USA   Michel Crouhy 41 Flying Cloud Course Corle Madera, CA 94925   Zohar Gilon Okeanos Hotel 50 Ramat Yam St., Herzliya Pituach 46851 Israel Tel: +972-9-9543555   Yaron Galai 200 Rector Pl. NY, NY 10280   Michal Edelstyn 30 Bathgate Road, Wimbledon, London, SW19 5PJ

 

Schedule 4 to IRA

SCHEDULE 5

 

THE PREFERRED B HOLDERS

 

Name and Address:

 

VIOLA VENTURES, III L.P. Delta House 16 Abba Eben Avenue Herzeliya 46725 Israel Attn: Michal Cohen Tel: +972-9-9720400 Fax: +972-9-9720401 Email:Michalc@Violaventures.com   Leon Recanati 27 Yoav St., 690811, Israel Fax: +972-9-9701866   LIGHTSPEED VENTURE PARTNERS VII, L.P. 2200 Sand Hill Road, Suite 100 Menlo Park, CA 94025 USA   GEMINI ISRAEL IV L.P. GEMINI PARTNERS INVESTORS IV L.P. 11 Hamenofim Street Herzlia Pituach Israel

 

RH Internet II LLC c/o Tigris Group Inc. 535 Madison Avenue, 12th Floor New York, New York 10022 USA Email: ashapiro@tigris.com Attn: Andrew M. Shapiro, General Counsel   With a copy to:   Rhodium Ltd 91 Medinat Hayehudim St. Herzeliya Pituach 46140 Email: yaron@rhodium.co.il Attn: Yaron Kniajer, Managing Director & CFO   Zohar Gilon Okeanos Hotel 50 Ramat Yam St., Herzliya Pituach 46851 Israel Tel: +972-9-9543555   Michel Crouhy 41 Flying Cloud Course Corle Madera, CA 94925   Yaron Galai 200 Rector Pl. NY, NY 10280

 

Schedule 5 to IRA

SCHEDULE 6

 

THE PREFERRED A HOLDERS

 

Preferred A

 

Name and Address

 

GEMINI ISRAEL IV L.P. 

GEMINI PARTNERS INVESTORS IV L.P.

11 Hamenofim Street

Herzlia Pituach

Israel

 

LIGHTSPEED VENTURE PARTNERS VII, L.P.

2200 Sand Hill Road, Suite 100

Menlo Park, CA 94025

USA

 

Leon Recanati

27 Yoav St.,

690811, Israel

Fax: +972-9-9701866

 

PROVIDENT FUND OF THE EMPLOYEES OF THE HEBREW UNIVERSITY OF JERUSALEM LTD.

High-Tech Village 2\2

Givat Ram Jerusalem

FAX: +972-2-6586779

 

Michel Crouhy

41 Flying Cloud Course

Corle Madera, CA 94925

 

Schedule 6 to IRA

SCHEDULE 7

 

THE COMMON STOCKHOLDERS

 

9-9701866

 

Sigma Investments (1992) Ltd.

Aba Hilel 14A, Ramat – Gan

 

MTS Investments Inc.

C\O Mutualart Inc.

298 Fifth Ave. NY, NY 10001

USA

 

Schedule 7 to IRA

SCHEDULE 8

 

ADDITIONAL COMMON STOCKHOLDERS

 

Name and Address

 

Dan Galai 20a Harav Berlin St. Jerusalem, Israel   Ziv Kop 85 Medinat Hayehudim, Hertzlia   Ilan Lior 11 Menachem Begin St., Ramat Gan 52681, Israel   Hanan Salinger 11 Menachem Begin St., Ramat Gan 52681, Israel   Loeb & Loeb 345 Park Av, NY, NY 10154-1895   Mickey Kertesz Verburg 6, Tel Aviv, 64289   Rani Nelkin 53 Standish St., Cambridge MA 02138 USA   Eytan Galai 20 Burla St., Jerusalem, Israel   Uri Galai 2 Oush St., Jerusalem, Israel   Noam Galai 142 E 33rd St. APT 2C. NY, NY 10016   Isaschar Kurt 8 Mania Shochat St., Holon, Israrel   Doron Levin 4 Hanegba St., Zichron Yaacov, Israel   Efrat Perez Tachkemoni 6\2 Pardes Hana 63714

 

Amir Lahav Moshav Moledet D.N. Gilboa, Israel   Dalit Lahav Kibutz Nachsholim D.N. Hof Viola 30815   Ester Shabtai Tsuntz 20, Tel Aviv   Rotem Doron

 

Schedule 8 to IRA

SCHEDULE 9

 

THE INVESTORS

 

Leon Recanati

 

Lightspeed Venture Partners VII, L.P.

 

Gemini Israel IV L.P.

 

Gemini Partners Investors IV L.P.

 

Gemini Israel IV (Annex Fund) L.P.

 

Gemini Partners Investors IV (Annex Fund) L.P.

 

Provident Fund of the Employees of the Hebrew University of Jerusalem Ltd.

 

Michel Crouhy

 

Sigma Investments (1992) Ltd.

 

MTS Investments Inc.

 

Viola Ventures, III L.P.

 

RH Internet II LLC

 

Zohar Gilon

 

Yaron Galai

 

Michal Edelstyn

 

Index Ventures Growth II (Jersey), L.P.

 

Index Ventures Growth II Parallel Entrepreneur Fund (Jersey), L.P.

 

Yucca (Jersey) SLP

 

Vintage Investment Partners V (Israel), L.P.

 

Vintage Investment Partners V (Cayman), L.P.

 

HarbourVest Partners, L.P.

 

Susquehanna Growth Equity Fund IV, LLLP

 

Gruner + Jahr GmbH

 

Schedule 9 to IRA

Schedule 10

 

G+J

 

Name and address:

 

Gruner + Jahr GmbH

Am Baumwall 11

20459 Hamburg

Germany

 

With a copy to:

 

Bertelsmann SE & Co. KGaA

Attn.: Dr. Michael Kronenburg

Carl-Bertelsmann-Str. 270

33311 Gütersloh, Germany

Fax: +49 5241 80642820

Email: michael.kronenburg@bertelsmann.de

EXHIBIT 1.1.3

 

Key Metrics

 

Metric Reports Required by Partnership and Definition of Defined Terms

 

Metric			Definition
Employees at end of quarter (eoq)		•	Full time employee (FTE) equivalent
		•	How many people are working in the business, both permanent and temporary (including part time)
Net Revenues		•	Income that the business generates
Operating Costs		•	Net Revenues - EBITDA
EBITDA		•	Earnings before interests, tax, depreciation, amortization
Operating cash Burn / generation during the quarter		•	Cash at hand current period – Cash at hand previous period +/- non operational cash outflow or inflow (financing, investing)
Cash at hand - eoq		•	Net cash position:
			Cash at bank
			Plus short term assets (under 6 months)
			Less short term debt (under 6 months)

 

Schedule to be filled by the company
	QX
FTE
Net Revenues
Operating Costs
EBITDA
Operating cash burn/generation
Cash at hand

 

Schedule 9 to IRA

 

Exhibit 4.3

 

AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT

 

THIS AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT (this “Agreement”) is made and entered into as of December 24th, 2020 (the “Effective Date”) by and among Outbrain Inc. a Delaware corporation (the “Company”); Yaron Galai and Ori Lahav (each a “Founder” and together, the “Founders”); the holders of shares of Common Stock and Series E Preferred Stock of the Company listed on Schedule 1 attached hereto (together with the Founders, each a “Common Stockholder” and collectively, the “Common Stockholders”); the holders of shares of the Series A Preferred Stock of the Company listed on Schedule 2 attached hereto (each a “Preferred A Stockholder” and together, the “Preferred A Stockholders”), the holders of shares of the Series B Preferred Stock of the Company listed on Schedule 3 attached hereto (each a “Preferred B Stockholder” and together, the “Preferred B Stockholders”), the holders of shares of the Series C Preferred Stock of the Company listed on Schedule 4 attached hereto (each a “Preferred C Stockholder” and together, the “Preferred C Stockholders”) and the holders of shares of the Series D Preferred Stock of the Company listed on Schedule 5 attached hereto (each a “Preferred D Stockholder” and together, the “Preferred D Stockholders” and the holders of shares of the Series F Preferred Stock of the Company listed on Schedule 6 attached hereto (each a “Preferred F Stockholder” and together, the “Preferred F Stockholders” and the holders of shares of the Series G Preferred Stock of the Company listed on Schedule 7 attached hereto (each a “Preferred G Stockholder” and together, the “Preferred G Stockholders”) and the holder of shares of Common Stock listed on Schedule 9 attached hereto (together with its Affiliates “G+J” and together with the Preferred G Stockholders, the Preferred F Stockholders, Preferred D Stockholders, the Preferred C Stockholders, the Preferred B Stockholders and the Preferred A Stockholders, the “Preferred Stockholders”) (the Founders, the Common Stockholders and the Preferred Stockholders are referred to collectively as the “Stockholders”).

 

RECITALS

 

WHEREAS, the Preferred Stockholders include the holders of all of the issued and outstanding shares of Series G Preferred Stock of the Company par value $0.001 each (the “Series G Preferred”), Series F Preferred Stock of the Company par value $0.001 each (the “Series F Preferred”), Series D Preferred Stock of the Company par value $0.001 each (the “Series D Preferred”), Series C Preferred Stock of the Company par value $0.001 each (the “Series C Preferred”), Series B Preferred Stock of the Company, par value $0.001 each (the “Series B Preferred”) and Series A Preferred Stock of the Company, par value $0.001 each (the “Series A Preferred”, and together with the Series G Preferred, Series F Preferred, the Series D Preferred the Series C Preferred and the Series B Preferred, the “Preferred Stock”), and the Common Stockholders are the holders of issued and outstanding shares of Common Stock of the Company, par value $0.001 each (“Common Stock”); and

 

WHEREAS, the Company and certain Stockholders are parties to that certain Stockholders’ Agreement dated February 11, 2015 (the “Prior Stockholders’ Agreement”); and

 

WHEREAS, the parties to the Prior Stockholders’ Agreement wish to amend and restate in its entirety the Prior Stockholders’ Agreement by entering into this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows:

 

1.

Definitions.

 

1.1          All capitalized terms used and not otherwise defined herein shall have the meanings given them in the Series G Preferred Stock Purchase Agreement dated as of February 11th, 2015 by and among the Company and the Purchasers (as defined therein).

 

1.2          An “Affiliate” shall mean, with respect to any individual or entity, an individual or entity that, directly or indirectly, controls, is controlled by or is under common control with such individual or entity, including, without limitation, any general partner, managing member, manager, member, officer or director of such entity or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, shares the same management or advisory company with, or is otherwise affiliated with such individual or entity.

 

1.3          The “Amended Certificate” means the Company’s then-current Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State.

 

1.4          A “Deemed Liquidation” shall have the meaning set forth in the Amended Certificate.

 

1.5          An “IPO” means the closing of the Company’s initial underwritten public offering of its Common Stock pursuant to an effective registration statement under the United States Securities Act of 1933, as amended, or equivalent law of another jurisdiction.

 

1.6          A “Permitted Transferee” shall mean (A) with regards to any Preferred Stockholder or holder of Series E Preferred Stock, any Affiliate of such Stockholder or if such Stockholder is a partnership, any partners, former partners or affiliated partnerships managed by the same manager or managing partner or management company, or managed by an entity controlling, controlled by, or under common control with, such manager or managing partner or management company; and (B) with regards to all Stockholders, (i) any corporation or other entity wholly owned by such Stockholder, (ii) a trustee, spouse, child, brother, sister or other member of such Stockholder’s immediate family (other than pursuant to any decree of divorce, separate maintenance, any property settlement, any separation agreement or other agreement with spouse (except for bona fide estate planning purposes)), (iii) in the event of the Stockholder’s death or permanent disability, the Stockholder’s personal representative, (iv) the Stockholder’s trustee or immediate family member for estate planning purposes, or (vii) transfers by RH Internet II LLC and/or Leon Recanati to Rhodium Ltd. or its Affiliates.

 

1.7          A “Qualified IPO” shall have the meaning set forth in the Amended Certificate.

 

1.8          A “Right of First Refusal Holder’s Pro Rata Share” shall mean the quotient for each Right of First Refusal Holder obtained by dividing (i) the sum of (x) the number of shares of Common Stock then held by such Right of First Refusal Holder (as defined below), plus (y) the number of shares of Common Stock issuable upon conversion of the Preferred Stock, then held by such Right of First Refusal Holder by (ii) the sum of (a) the total number of shares of Common Stock then held by all Right of First Refusal Holders, plus (b) the number of shares of Common Stock issuable upon conversion of all then outstanding Preferred Stock held by all Right of First Refusal Holders, except that with respect to Yaron Galai, the Common Stock issued to him prior to February 11, 2015 (including Common Stock to be issued upon exercise of options) shall not be taken into consideration when calculating his pro rata share.

1.9           “Series E Preferred Stock” shall mean shares of the Company’s Series E Preferred Stock, par value $0.001 per share.”

 

2.

Right of First Refusal.

 

(a)              Until an IPO, in the event that any stockholder of the Company (each a “Selling Stockholder”) proposes to sell, assign, transfer, pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or in any way encumber (each of the foregoing being referred to as a “Disposition”) any of his or its shares of capital stock of the Company (“Shares”) (including any Disposition during such Selling Stockholder’s lifetime or upon such Selling Stockholder’s death by will or intestacy) to any person or entity, other than the Company, which is not at such time a Permitted Transferee of such Selling Stockholder, such Selling Stockholder shall give each person and entity listed on Schedule 8 attached hereto (a “Right of First Refusal Holder”) written notice stating: (a) the Selling Stockholder’s intention to make a Disposition of such Shares; (b) the name of the proposed third party purchaser (the “Third Party”); (c) the number of Shares subject to such Disposition to the Third Party; and (d) the price, terms and conditions of the proposed Disposition to the Third Party. Each Right of First Refusal Holder shall have fifteen (15) days from the date of receipt of any such notice to agree to purchase all or any part of the Right of First Refusal Holder’s Pro Rata Share of such Shares, for the price and upon the terms and conditions specified in the notice, by giving written notice to such Selling Stockholder stating therein the number of Shares to be purchased. If any Right of First Refusal Holder fails to provide a notice that it agrees to purchase its full Right of First Refusal Holder’s Pro Rata Share within such fifteen (15) day period, the Selling Stockholder selling such Shares will give the Right of First Refusal Holders who did so agree (the “Electing Stockholders”) notice of the number of Shares which were not subscribed for. Each Electing Stockholder shall have seven (7) days from the date of such notice to provide notice that it agrees to purchase all or any part of the Right of First Refusal Holder’s Pro Rata Share with respect to the Shares not purchased by such other Right of First Refusal Holders. For purposes of the second election under this Section 2(a), shares held by Right of First Refusal Holders other than Electing Stockholders shall be excluded from the denominator in the definition of a “Right of First Refusal Holder’s Pro Rata Share”, set forth in Section 1.8(ii).

 

(b)              In the event that the Right of First Refusal Holder(s) fail to agree to purchase all of the Shares subject to the proposed Disposition within the fifteen (15) day and seven (7) day periods specified above, such Selling Stockholder shall have sixty (60) days thereafter to make a Disposition of all of the Shares subject to such proposed Disposition to the Third Party (as specified in the notice pursuant to Section 2(a)), at the price and upon terms and conditions no more favorable to the Third Party than specified in the notice provided to the Right of First Refusal Holders pursuant to Section 2(a) above. In the event that such Selling Stockholder has not made a Disposition of all of the Shares to the Third Party within the sixty (60) day period, such Selling Stockholder shall not thereafter make a Disposition of any Shares without first offering such Shares to the Right of First Refusal Holders in the manner provided above.

(c)              The right of first refusal afforded hereunder to the Right of First Refusal Holders may not be assigned by any Right of First Refusal Holders to, and exercised by, any other person or entity. Notwithstanding any provision in this Section 2 to the contrary, any Preferred Stockholder which chooses to exercise the right of first refusal set forth in this Section 2 may designate as purchasers under such right itself or its partners or Affiliates in such proportions as it deems appropriate.

 

(d)             Notwithstanding the foregoing, with respect to any stockholder which is a venture capital fund, the following transfers (but not any subsequent transfers) of any shares of capital stock of the Company held by such stockholder shall not be subject to the right of first refusal and the above provisions of this Section 2: (i) any transfer which is a part of the transfer of a significant portion of a portfolio of investments of such venture capital fund, (ii) any transfer to the investors of such venture capital fund in connection with the dissolution of such venture capital funds, (iii) a transfer resulting solely from a regulatory or tax constraint applicable to such venture capital fund or any of the partners of such fund and (iv) any transfer to an Affiliate of such venture capital fund.

 

(e)              Notwithstanding the foregoing, with respect to Leon Recanati, the following transfers (but not any subsequent transfers) of any shares of capital stock of the Company held by him shall not be subject to the right of first refusal and the above provisions of this Section 2: (i) any transfer which is a part of the transfer of a significant portion of Leon Recanati’s portfolio of investments, made by Leon Recanati personally, in high-tech and similar venture backed companies, and (ii) a transfer resulting solely from a regulatory or tax constraint applicable to Leon Recanati.

 

(f)               Notwithstanding the foregoing, with respect to RH Internet II LLC and Sigma Investments (1992) Ltd. the following transfers (but not any subsequent transfers) of any shares of capital stock of the Company held by it shall not be subject to the right of first refusal and the above provisions of this Section 2: (i) any transfer which is a part of the transfer of a significant portion of a portfolio of investments of such company, (ii) any transfer to the investors of such company in connection with the dissolution of such company, and (iii) a transfer resulting solely from a regulatory or tax constraint applicable to such company.

 

(g)              Notwithstanding the foregoing, with respect to Ziv Kop, the following transfers (but not any subsequent transfers) of any shares of capital stock of the Company held by him shall not be subject to the right of first refusal and the above provisions of this Section 2: (i) any transfer which is a part of the transfer of a significant portion of Ziv Kop’s portfolio of investments, made by Ziv Kop personally, in high-tech and similar venture backed companies, and (ii) a transfer resulting solely from a regulatory or tax constraint applicable to Ziv Kop.

 

(h)              Notwithstanding the foregoing, transfers of any shares of capital stock of the Company held by each of Leon Recanati, Ziv Kop and RH Internet II LLC, between themselves, shall not be subject to the right of first refusal and the above provisions of this Section 2.

 

(i)               Notwithstanding anything to the contrary in this Section 2, any transfer by any stockholder to its Permitted Transferee, shall be made subject only to such Permitted Transferee agreeing in writing concurrently with such transfer, to assume all of the obligations of such transferring stockholder under all agreements involving the Company and to which such stockholder is a party and/or by which it is bound (excluding employment and consultancy agreements).

(j)               The Company’s equity based plans and all other issuances of Company’s securities will include provisions that subject all shares issuable under such plans or other issuances to the right of first refusal provisions under this Section 2.

 

3.

Prohibited Stock Sales.

 

3.1           Prior to the earlier of (a) an IPO, or (b) a Deemed Liquidation, the Founders shall not make a Disposition of all or any of their shares in the capital stock of the Company, of any class or series, or any rights thereto, now owned or hereafter acquired (such shares and rights are hereinafter collectively referred to as the “Securities”) except in accordance with Section 2, this Section 3 and Section 4.

 

3.2           Notwithstanding Section 3.1 above, beginning January 12, 2011, each Founder may make Dispositions of up to 6.25 percent (6.25%) of his Securities in the Company during any twelve-month period; provided, however, that until the earlier of the closing of (a) an IPO or (b) a Deemed Liquidation, no Founder make a Disposition of more than 25 percent (25%) of his shares.

 

3.3           Notwithstanding the foregoing, the restrictions set forth in this Section 3 shall cease to apply to a Founder upon the written consent of the Preferred Stockholders holding more than fifty percent (50%) of the Company’s then issued and outstanding Preferred Stock (on an as converted basis) and/or upon the death or permanent disability of such Founder.

 

4.

Co-Sale.

 

4.1           Without derogating from the provisions of Sections 2 and 3 above, until an IPO, the following shall apply with respect to any Disposition by a Founder, other than any Disposition made in compliance with Section 3.2 above, which Disposition shall not be subject to the provisions of this Section 4.

 

4.2           Should a Founder or any of his Permitted Transferees (a “Co-Sale Offeree”), receive one or more bona fide offers (a “Purchase Offer”), from any person or entity (the “Third Party”) to purchase from such Co-Sale Offeree some or all of the stock held by such Co-Sale Offeree (the “Offered Shares”), which Purchase Offer: (i) the Co-Sale Offeree intends to accept; and (ii) is not in breach of the Co-Sale Offeree’s restrictions set forth in Section 3 above, then (i) Index Ventures Growth II (Jersey), L.P. and/or its Affiliates (collectively, “Index”) for so long as Index holds at least two million (2,000,000) shares (as adjusted for any stock splits, recapitalizations, stock dividends or the like) of the Company’s issued and outstanding capital stock; (ii) Susquehanna Growth Equity Fund IV, LLLP and/or its Affiliates (collectively, “SGE”) for so long as SGE holds at least two million (2,000,000) shares (as adjusted for any stock splits, recapitalizations, stock dividends or the like) of the Company’s issued and outstanding capital stock; and (iii) each other holder of at least five percent (5%), or in the case of HarbourVest Partners, L.P. and its Affiliates, G+J and SGE at least two percent (2%) in the aggregate, of the Company’s issued and outstanding capital stock (on an as-converted basis) (each, a “Qualified Holder”) shall have the right to participate in the Co-Sale Offeree’s sale of the Offered Shares, in accordance with this Section 4, pursuant to the specified terms and conditions of such Purchase Offer.

4.3           Upon receipt of a Purchase Offer, the Co-Sale Offeree shall promptly notify all of the Qualified Holders in writing of the name and address of the Third Party and the terms and conditions of such Purchase Offer (the “Co-Sale Notice”). Each Qualified Holder shall be entitled, upon written notice to the Co-Sale Offeree within fifteen (15) days after receipt of the Co-Sale Notice (the “Participation Notice”), to sell to the Third Party up to that number of the shares of capital stock of the Company owned by such Qualified Holder (the “Equity Shares”) determined by multiplying the total number of Offered Shares times a fraction the numerator of which is the number of shares of Common Stock owned by such Qualified Holder (assuming for the purposes of this section, the conversion of all Preferred Stock into Common Stock) and the denominator of which is the total number of shares of Common Stock owned by all of the Qualified Holders and the selling Co-Sale Offeree (assuming, for purposes of this section, the conversion of all Preferred Stock into Common Stock). Such Participation Notice shall indicate, subject to the terms of this section, the number of shares of capital stock of the Company that such Qualified Holder undertakes to transfer to the Third Party, provided that such Participation Notice will include one or more duly executed stock power representing such Qualified Holder’s stock to be sold free and clear of all liens. To the extent one or more of the Qualified Holders exercises such right in accordance with the terms and conditions set forth below, the number of Securities that the Co- Sale Offeree may sell pursuant to such Purchase Offer shall be correspondingly reduced. At the closing of the sale of Co-Sale Securities to the Third Party, the Co-Sale Offeree shall transfer his shares to the Third Party only if the Third Party concurrently therewith purchases, on the same terms and conditions specified in the Co-Sale Notice, all of the shares of capital stock of the Company as to which Participation Notices have been delivered.

 

4.4           Notwithstanding any provision in this Section 4 to the contrary, any Preferred Stockholder which chooses to exercise the right of co-sale set forth in this Section 4 may designate as sellers under such right itself or its partners or Affiliates in such proportions as it deems appropriate.

 

4.5           In the event that any Co-Sale Offeree should make a Disposition of any securities in contravention of this Section 4, the Qualified Holders may proceed to protect and enforce their rights by suit in equity or by action at law, whether for the specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in furtherance of the exercise of any power granted in this Agreement, or to enforce any other legal or equitable right of the Qualified Holders or to take one or more of such actions.

5.

Exempted Transfers.

 

Notwithstanding the foregoing or anything to the contrary herein, in addition to the exceptions to the transfer restrictions set forth in Section 2, the provisions of Section 2 shall not apply (i) with respect to shares of Common Stock held by any of Leon Recanati, MTS Investments, Inc., Sigma Investments (1992) Ltd., Provident Fund of the Employees of the Hebrew University of Jerusalem Ltd., Michel Crouhy, Gemini Israel IV L.P., Gemini Israel IV (Annex Fund) L.P., Gemini Partners Investors IV L.P., Gemini Partners Investors IV (Annex Fund) L.P., Lightspeed Venture Partners VII, L.P., SGE, Index or G+J and (ii) with respect to the Preferred Stock, in each case with regard to a pledge of capital stock that creates a mere security interest in such capital stock, provided that the pledgee thereof agrees in writing in advance to be bound by and comply with all applicable provisions of this Agreement to the same extent as if it were the pledgor making such pledge. In addition, the provisions of Sections 2, 3 and 4 shall not apply upon a Disposition of capital stock by the holder made for bona fide tax planning purposes, either during his lifetime or on death by will or intestacy to his spouse, child (natural or adopted), or any other direct lineal descendant of the holder (or his spouse) (all of the foregoing collectively referred to as “family members”), or any other relative/person approved by the Board of Directors of the Company, or any custodian or trustee of any trust, corporation partnership, limited liability company or other entity for the benefit of, or the ownership interests of which are owned wholly by, the holder or any such family members; provided that the holder shall deliver prior written notice to the Preferred Stockholders of such pledge, gift or transfer and such shares of capital stock shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such issuance, deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as a party (but only with respect to the securities so transferred to the transferee).

 

6.

Bring-Along Rights.

 

6.1           Until an IPO, and subject to the voting rights set forth in the Amended Certificate, in the event a third party offers to purchase all or substantially all of the issued capital stock and/or assets of the Company in one transaction or a series of related transactions or otherwise effect a Deemed Liquidation (the “Purchase Offer”), then, in the event that Stockholders holding more than fifty percent (50%) of the Company’s then issued and outstanding share capital, which majority shall also include Preferred Stockholders holding more than fifty percent (50%) of the Company’s then issued and outstanding Preferred Stock (on an as-converted basis), agree to accept the Purchase Offer (each of the above mentioned Preferred Stockholders agreeing to accept the Purchase Offer shall be referred to as a “Drag Along Stockholder”), then, provided that the Purchase Offer received all necessary consents in accordance with the Company’s Amended and Restated Certificate of Incorporation:

 

(i)          at every meeting of the stockholders of the Company called with respect to any of the following, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of the Company with respect to any of the following, each of the other stockholders of the Company (the “Remaining Holders”) shall vote all shares of capital stock of the Company that such Remaining Holder then holds or for which such Remaining Holder otherwise then has voting power: (A) in favor of approval of the Purchase Offer and any matter that could reasonably be expected to facilitate the Purchase Offer, and (B) against any proposal for any recapitalization, merger, sale of assets or other business combination (other than the Purchase Offer) between the Company and any person or entity other than the party or parties to the Purchase Offer or any other action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the definitive agreement(s) related to the Purchase Offer or which could result in any of the conditions to the Company’s obligations under such agreement(s) not being fulfilled;

(ii)         if the Purchase Offer is structured as (A) a merger, consolidation or sale of assets, each Remaining Holder shall waive any dissenters’ rights or similar rights in connection with such merger, consolidation or sale of assets, or (B) a sale of stock, each Remaining Holder shall agree to sell all of the Shares and rights to acquire shares of capital stock of the Company held by such Remaining Holder on the terms and conditions approved by the Drag Along Stockholders; and

 

(iii)        each Remaining Holder shall take all necessary actions in connection with the consummation of the Purchase Offer as requested by the Company or the Drag Along Stockholders and shall, if requested by the Drag Along Stockholders, execute and deliver any agreements prepared in connection with such Purchase Offer which agreements are executed by the Drag Along Stockholders.

 

(b)           Each Remaining Holder hereby grants to the Chief Executive Officer of the Company an irrevocable proxy, coupled with an interest, effective upon a failure or a refusal by any such Remaining Holder to vote its Shares in accordance herewith, within 30 days of the receipt of notice of the Purchase Offer, to vote all of such Remaining Holder’s Shares and to take such other actions to the extent reasonably necessary to carry out the provisions of this Section 6 in the event of any breach or imminent breach of this Section 6. The Company and all of its stockholders each agree and acknowledge that: (i) monetary damages would not adequately compensate an injured party for the breach of this Section 6 by any party; (ii) this Section 6 shall be specifically enforceable; and (iii) any breach or threatened breach of this Section 6 shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach. In the event that any party hereto who is a stockholder of the Company fails to surrender its stock certificate in connection with the consummation of such Purchase Offer, such certificate shall be deemed automatically canceled and the Company shall be authorized to issue a new certificate in the name of the third party purchaser that made the Purchase Offer (or such other person as is requested by the purchaser) and the Company’s Board of Directors shall be authorized to establish an escrow account into which the consideration for such canceled shares shall be deposited and to appoint a trustee to administer such account.

 

6.2           The proceeds of the Purchase Offer shall be distributed pursuant to Article IV(B)(2) of the Amended Certificate.

 

6.3           The Company’s equity based plans and all other issuances of Company’s securities will include provision that subject all shares issuable under such plans or other issuances to the provisions of this Section 6.

 

6.4           The provisions of Section 2, 3 and 4 shall not apply to a sale of shares in accordance with this Section 6.

 

6.5           Notwithstanding the foregoing, a Remaining Stockholder will not be required to comply with this Section 6 in connection with any Purchase Offer unless:

 

(a)            any representations and warranties to be made by such Remaining Stockholder in connection with the Purchase Offer are limited to representations and warranties related to authority, ownership and the ability to convey title to the shares of capital stock of the Company held by such Remaining Stockholder, including but not limited to representations and warranties that (i) the Remaining Stockholder holds all right, title and interest in and to the shares of capital stock of the Company such Remaining Stockholder purports to hold, free and clear of all liens and encumbrances, (ii) the obligations of the Remaining Stockholder in connection with the transaction have been duly authorized, if applicable, (iii) the documents to be entered into by the Remaining Stockholder have been duly executed by the Remaining Stockholder and delivered to the acquirer and are enforceable against the Remaining Stockholder in accordance with their respective terms and (iv) neither the execution and delivery of documents to be entered into in connection with the transaction, nor the performance of the Remaining Stockholder’s obligations thereunder, will cause a breach or violation of the terms of any agreement, law or judgment, order or decree of any court or governmental agency;

(b)           the Remaining Stockholder shall not be liable for the inaccuracy of any representation or warranty made by any other person or entity in connection with the Purchase Offer, other than the Company (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any Stockholder of any of identical representations, warranties and covenants provided by all Stockholders);

 

(c)           the liability for indemnification, if any, of such Remaining Stockholder in connection with the Purchase Offer and for the inaccuracy of any representations and warranties made by the Company or its Stockholders in connection with such Purchase Offer, is several and not joint with any other person or entity (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any Stockholder of any of identical representations, warranties and covenants provided by all Stockholders), and subject to the provisions of the Amended Certificate related to the allocation of the escrow, is pro rata in proportion to, and does not exceed, the amount of consideration paid to such Remaining Stockholder in connection with such Purchase Offer;

 

(d)           liability shall be limited to such Remaining Stockholder’s applicable share (determined based on the respective proceeds payable to each Stockholder in connection with such Purchase Offer in accordance with the provisions of the Amended Certificate) of a negotiated aggregate indemnification amount that applies equally to all Stockholders but that in no event exceeds the amount of consideration otherwise payable to such Remaining Stockholder in connection with such Purchase Offer, except with respect to claims related to fraud by such Remaining Stockholder, the liability for which need not be limited as to such Remaining Stockholder;

(e)           upon the consummation of the Purchase Offer, (i) each holder of each class or series of the Company’s stock will receive the same form of consideration for their shares of such class or series as is received by other holders in respect of their shares of such same class or series of stock, (ii) each holder of a series of Preferred Stock will receive the same amount of consideration per share of such series of Preferred Stock as is received by other holders in respect of their shares of such same series, (iii) each Common Stockholder will receive the same amount of consideration per share of Common Stock or Series E Preferred Stock, as applicable, as is received by other Common Stockholders in respect of their shares of Common Stock or shares of Series E Preferred Stock, as applicable, and (iv) the aggregate consideration receivable by all holders of the Preferred Stock and Common Stock shall be allocated among the holders of Preferred Stock and Common Stock (assuming for this purpose that the Purchase Offer is a Deemed Liquidation) in accordance with Article IV (B)(2) of the Amended Certificate in effect immediately prior to the Purchase Offer; provided, however, that, notwithstanding the foregoing, if the consideration to be paid in exchange for the shares of capital stock of the Company held by the Common Stockholders or the Preferred Stockholders, as applicable, pursuant to this Subsection 6.5(e) includes any securities and due receipt thereof by any Common Stockholder or Preferred Stockholder would require under applicable law (x) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities or (y) the provision to any Common Stockholder or Preferred Stockholder of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the Securities Act of 1933, as amended, the Company may cause to be paid to any such Common Stockholder or Preferred Stockholder in lieu thereof, against surrender of the shares of capital stock of the Company held by the Common Stockholder or Preferred Stockholder, as applicable, which would have otherwise been sold by such Common Stockholder or Preferred Stockholder, an amount in cash equal to the fair value (as determined in good faith by the Company) of the securities which such Common Stockholder or Preferred Stockholder would otherwise receive as of the date of the issuance of such securities in exchange for the shares of capital stock of the Company held by such Common Stockholder or Preferred Stockholder, as applicable;

 

(f)            subject to clause (e) above, requiring the same form of consideration to be available to the holders of any single class or series of capital stock, if any holders of any capital stock of the Company are given an option as to the form and amount of consideration to be received as a result of the Purchase Offer, all holders of such capital stock will be given the same option; provided, however, that nothing in this Section 6.5(f) shall entitle any holder to receive any form of consideration that such holder would be ineligible to receive as a result of such holder’s failure to satisfy any condition, requirement or limitation that is generally applicable to the Company’s Stockholders; and

 

(g)           G+J shall not be required to agree to (i) a release of claims except in its capacity as a stockholder of the Company, or (ii) any non-competition restriction and, with respect to any non-solicitation, no hire, or other restrictive covenant, the Company shall use commercially reasonable efforts, taking into account G+J’s commercial requirements, to obtain an exemption for G+J; provided, however, such limitation shall not be deemed to limit, terminate or otherwise impair the Company’s ability to enforce its rights pursuant to Section 24 of that certain Share Purchase Agreement dated February 25, 2019 by and among G+J, the Company and the other persons named therein to the extent the rights set forth in such section were in effect immediately prior to the closing of such Purchase Offer.

7.

Composition of the Board.

 

7.1           Until the consummation of a Qualified IPO, the Company’s Board of Directors shall consist of up to nine (9) members, who shall be appointed as follows:

 

(a)            The holders of a majority of the Company’s issued and outstanding Common Stock and Series E Preferred Stock, voting together as a single class (and not including any series of Preferred Stock that are convertible into Common Stock except for the Series E Preferred Stock), shall be entitled to elect two (2) directors of the Company, who shall be nominated by the Founders, but (with respect to each Founder) only for so long as he owns securities in the Company (in the event that the Founders do not own securities in the Company, the Company’s Board of Directors shall name such nominees) (the “Common Director”);

 

(b)            The holders of Preferred Stock, voting together as a single class, shall have the right to appoint six (6) directors, to be designated: one (1) by Viola Ventures III, L.P., one (1) by Lightspeed Venture Partners VII, L.P., one (1) by Gemini Israel IV L.P., one (1) by Leon Recanati, one (1) by Index and one (1) by SGE; provided that, immediately prior to the effectiveness of the registration statement for the Company’s IPO, SGE shall cause the director appointed by it to resign from the Board of Directors pursuant to the pre-signed letter of resignation delivered to the Company on the date hereof, which will become effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. SGE shall no longer have the right to appoint a director after such time; and

 

(c)            So long as G+J continues to hold capital stock of the Company that represents at least 5% of the issued and outstanding shares of stock of the Company on a fully diluted basis G+J shall be entitled to designate one (1) member of the Board of Directors.

 

7.2           Until the consummation of a Qualified IPO each of (i) the Common Stockholders (voting together as a single class), (ii) the Preferred A Stockholders (on an as converted basis, voting together as a single class), (iii) HarbourVest Partners L.P. (“HarbourVest”), (iv) Viola Ventures III, L.P., (v) Index and (vi) to the extent that G+J holds capital stock of the Company that represents less than 5% but at least 2% of the issued and outstanding shares of stock of the Company on a fully diluted basis, G+J, shall each be entitled to appoint a non-voting observer to the Company’s Board of Directors (the “Observer”) (provided however, that the Company shall not be required to pay any expenses of an Observer, other than the Observer appointed by HarbourVest, in connection with such Observer’s participation in a meeting of the Company’s Board of Directors and, provided further, that each such Observer shall, as a condition precedent to attending a meeting of the Company’s Board of Directors and/or receiving any materials from the Company, execute a confidentiality agreement as approved by the Company). The Company shall provide to each Observer that has signed a confidentiality agreement as approved by the Company the same materials provided to each of the members of the Company’s Board of Directors, provided the Company may withhold some or all of such materials if the Board of Directors, in its reasonable discretion, determines that such materials are particularly sensitive and confidential.

 

7.3           Each committee of the Company’s Board of Directors shall include at least two of the directors appointed by the holders of Preferred Stock. No powers conferred to the Company’s Board of Directors may be delegated to any of its committees (each a “Committee”) without the prior written consent of at least two of the directors appointed by the holders of Preferred Stock. Notwithstanding the foregoing, no powers may be delegated to any Committee if the effect of such delegation is to adversely affect the board approval rights held by the Preferred Stockholders.

7.4           Each party to this Agreement agrees that it shall vote all shares of the Company it holds or otherwise has the power to vote (including, without limitation, any Common Stock obtained upon the conversion of Preferred Stock and all shares acquired after the date of this Agreement) to ensure election or removal of the Company’s directors in accordance with the provisions of this Section 7. Any director may only be removed and replaced as set forth in Section 7.1. A resolution regarding the filling of vacancies, and replacement and removal of directors may be adopted in a meeting of the relevant class or by a written consent of the relevant class, in each case, by a majority vote.

 

7.5           The right of a specific stockholder, to designate the members of the Company’s Board of Directors as specified above, shall remain in effect as long as such stockholder and/or its Affiliates owns shares of the Company. Except as otherwise set forth above, in the event that any such stockholder and/or its Affiliates no longer hold shares in the Company, the applicable board member shall be appointed by the applicable class, without any right or obligation to vote for a specific designee.

 

7.6           The Company will take all steps necessary to ensure that: (i) those holders entitled to appoint member(s) to the Board of Directors of the Company shall also be entitled to appoint directors, in the same number and under the same conditions, to the Board of Directors of each subsidiary of the Company; and (ii) that the veto rights and special majority requirements for taking certain actions as set forth in Section 4 of Article IV of the Amended Certificate, also apply to any such action or resolution of a subsidiary.

 

7.7           The Company shall reimburse the members of the Board of Directors, and the observer appointed by HarbourVest, for all out of pocket expenses (including travel expenses) incurred as directors, or as an observer in the case of HarbourVest, of the Company (i) with respect to participation in Board meetings, in accordance with a policy to be adopted by the Board of Directors, and (ii) with respect to other expenses, if such expenses have been approved in advance by the Company.

 

7.8           Indemnification Matters. The Company hereby acknowledges that certain directors including any director appointed by G+J (each a “Fund Director”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the holders of the Company’s Common Stock, Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series F Preferred and Series G Preferred, as applicable, and certain of their affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Fund Director are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Fund Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Fund Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Fund Director to the extent legally permitted and as required by the Amended Certificate or Bylaws of the Company (or any agreement between the Company and such Fund Director), without regard to any rights such Fund Director may have against the Fund Indemnitors, and (c) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of any such Fund Director with respect to any claim for which such Fund Director has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Fund Director against the Company.

8.             Changes in Stock. If, from time to time during the term of this Agreement (a) there is a dividend of any security, stock split or other change in the character or amount of any of the outstanding securities of the Company or (b) there is any consolidation or merger immediately following which stockholders of the Company hold more than fifty percent (50%) of the voting equity securities of the surviving corporation, then, in such event, any and all new, substituted or additional securities or other property to which any stockholder is entitled by reason of his ownership of the Shares shall be immediately subject to the provisions of this Agreement and be included in the word “Shares” and “Securities” for all purposes of this Agreement with the same force and effect as the Shares and Securities presently subject to this Agreement and with respect to which such securities or property were distributed.

 

9.             Legends. All certificates representing any Shares subject to the terms of this Agreement shall have endorsed thereon a legend to substantially the following effect:

 

“THE SALE, PLEDGE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT BY AND AMONG THE HOLDER HEREOF, THE COMPANY AND CERTAIN OTHER STOCKHOLDERS OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS.”

 

10.           Transfer of Stock. The Company shall not (a) permit any transfer on its books of any Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement or (b) treat as owner of such Shares or accord the right to vote as owner or to pay any dividends to any transferee to whom such Shares shall have been sold or transferred in violation of any of the provisions set forth in this Agreement.

 

11.           Strategic Stand-Still. Except in connection with the sale of all or substantially all of the Company’s issued capital stock or any other Deemed Liquidation, no Stockholder shall transfer, any securities of the Company or grant any right with respect to such securities (any such action, a “Grant”), to a strategic investor, as determined by a majority of the Company’s Board of Directors (any such investor, including affiliates and/or other parties acting in concert with it, a “Strategic Investor”), if following such Grant, the Strategic Investor will hold (beneficially or of record) or have the right to acquire or the right to vote or direct the vote of, securities of the Company which constitute, or are convertible into, in the aggregate, more than 20% of the Company’s capital stock, unless the holders of at least sixty-six percent (66%) of the Preferred Stock (on an as converted basis, voting together as a single class) have provided their prior written consent to such Grant (the “Written Consent”), and then, only on the terms and conditions set forth in the Written Consent. The Written Consent shall also be required for any additional Grant to a Strategic Investor which has already received a Written Consent with respect to a prior Grant.

12.          Termination. The provisions of Sections 9 through 11 shall terminate upon an IPO, and this Agreement shall terminate upon the closing of a Qualified IPO.

 

13.          Miscellaneous.

 

13.1        Further Assurances. Each of the parties hereto shall perform such further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the parties as reflected thereby.

 

13.2        Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware excluding that body of law pertaining to conflict of law. The parties hereto agree to submit to the jurisdiction of the United States federal and state courts of the State of Delaware with respect to the breach or interpretation of this Agreement or the enforcement of any and all rights, duties, liabilities, obligations, powers, and other relations between the parties arising under this Agreement.

 

13.3        Successors and Assigns; Assignment. Except as otherwise expressly limited herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto.

 

13.4        Entire Agreement; Amendment and Waiver. This Agreement and the Schedules hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matters hereof and thereof, and amend and restate in its entirety the Prior Stockholders’ Agreement. Any term of this Agreement may be amended and the observance of any term hereof may be waived (either prospectively or retroactively and either generally or in a particular instance) only with the written consent of (i) the Company, and (ii) the holders of more than fifty percent (50%) of the issued and outstanding Preferred Stock (on an as converted basis, together as a single class) which are held by parties to this Agreement, provided, however, (a) should such waiver or amendment change the rights or privileges granted to a particular stockholder or class or series of stockholders, in a manner adverse and different from other stockholders (such more adversely affected stockholders, a “Discriminated Class”), then such waiver or amendment shall be subject to the written approval of the stockholder/s who are the owners of record of a majority of the issued and outstanding shares of such Discriminated Class voting together as a single class, and (b) any right or limitation provided for the express benefit of a specifically named party to this Agreement may not be amended or waived without the consent of such party. Further, Sections 6.2 and 6.5(e)(iv) and this sentence may not be amended or waived (i) as long as any originally issued shares of Series G Preferred remains outstanding, without the written consent of the owners of record of at least fifty-one percent (51%) of the outstanding shares of Series G Preferred, (ii) as long as any of the originally issued shares of Series F Preferred remain outstanding, without the written consent of the holders of at least fifty-one percent (51%) of the outstanding shares of Series F Preferred, and (iii) as long as any of the originally issued shares of Series D Preferred remain outstanding, without the written consent of the holders of at least sixty percent (60%) of the outstanding shares of Series D Preferred. Any amendment or waiver adopted with the applicable foregoing consents shall be binding upon all parties to this Agreement.

 

13.5        Notices, etc. All notices and other communications required or permitted hereunder to be given to a party to this Agreement shall be in writing and shall be telecopied or mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed to such party’s address as set forth below:

if to the Preferred B Stockholders or the Preferred C Stockholders or the Preferred D Stockholders or the Preferred F Stockholders or the Preferred G Stockholders to the addresses set forth in Schedule 3 or Schedule 4 or Schedule 5 or Schedule 6 or Schedule 7, as applicable:

 

with a copy (which shall not constitute notice) to:

 

Yigal Arnon & Co.

22 J. Rivlin Street

Jerusalem 94240, Israel

Facsimile: +972 (2) 623-9236

Attn: Yarom Romem, Adv.

E-mail: yaromr@arnon.co.il

 

with a copy (which shall not constitute notice) to:

 

Meitar, Liquornik, Geva & Leshem, Brandwein

16 Abba Hillel Silver Rd.

Ramat Gan 52506, Israel

Facsimile: +972 (3) 610-3656

Attn: Asaf Harel, Adv.

E-mail: aharel@meitar.com

 

and to:

 

Shenhav & Co. Law Offices

4 Ha’nechoshet St.,

Tel Aviv 69710, Israel

Facsimile: +972 (3) 611-0788

Attn: Shmulik Atias, Adv.

E-mail: shmulik@shenhavlaw.co.ilshmulik@shenhavlaw.co.il

 

and to:

 

Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, CA 94025

Attn: Anthony McCusker, Esq.

 

and to:

 

Amit, Pollak, Matalon & Co. 

Nitsba Tower, 18th Fl. 

17   Yitzhak Sadeh St. 

Tel-Aviv 67775 Israel 

Tel. +972 3 5689018 ext. 148

Fax. +972 3 5689017

Attn: Daniel Marcus, Adv.

 

if to the Preferred A Stockholders: to the addresses set forth in Schedule 2

with a copy to:

 

Barak S. Platt

Yigal Arnon & Co.

1 Azrieli Center

Tel Aviv 67021 Israel

Facsimile: (972-3) 608-7714

 

if to the Common Holders: to the addresses set forth in Schedule 1

 

if to the Company:

 

Michael J. Kistler

Outbrain Inc.

39 West 13^th Street NY, NY 10011

Facsimile: (917) 591-5856

 

and to:

 

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

Tel.: 212 407-4937

Facsimile: 212 656-1076

Attn: Lloyd L. Rothenberg

 

if to G+J to the addresses set forth on Schedule 9.

 

or such other address with respect to a party as such party shall notify each other party in writing as above provided. Any notice sent in accordance with this Section 13.5 shall be effective (i) if mailed, seven (7) business days after mailing, (ii) if sent by messenger, upon delivery, and (iii) if sent via telecopier, upon transmission and electronic confirmation of receipt or (if transmitted and received on a non-business day) on the first business day following transmission and electronic confirmation of receipt.

 

13.6        Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party upon any breach or default under this Agreement, shall be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative.

13.7         Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

 

13.8         Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument.

 

13.9         Additional Parties. Notwithstanding anything to the contrary contained herein, if shares of Series E Preferred Stock are issued on or after the date hereof or additional Common Stock are issued after the date hereof pursuant to exercise of Awards under the Company’s 2007 Omnibus Securities and Incentive Plan (as such term is defined therein) or pursuant to exercise of warrants, any holder of such Series E Preferred Stock or purchaser of Common Stock shall become a party to this Agreement by executing a Joinder Agreement, substantially in the form attached hereto as Exhibit A, and thereafter shall be deemed a “Common Stockholder” for all purposes hereunder, and Schedule I to this Agreement shall be updated to reflect the addition of such “Common Stockholder”.

 

13.10      Aggregation of Stock. All Preferred Stock or Common Stock, as the case may be held or acquired by a stockholder and its Permitted Transferee(s), and Leon Recanati and RH Internet II LLC, shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Stockholders’ Agreement as of the date set forth above.

 

	OUTBRAIN INC.
	By:	/s/ Yaron Galai
		Name:  Yaron Galai
		Title:    CEO
	/s/ Yaron Galai
	YARON GALAI
	/s/ Ori Lahav
	ORI LAHAV

 

Signature page to SHA

IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Stockholders’ Agreement as of the date set forth above.

 

SUSQUEHANNA GROWTH EQUITY FUND IV, LLLP
By:	Susquehanna Growth   Equity,   LLC,   its authorized   agent
By:	/s/ Amir
	Name:   Amir
	Title:   Goldman
HARBOURVEST PARTNERS IX-VENTURE FUND L.P.
By:	HarbourVest IX-Venture Associates L.P., its General Partner
By:	HarbourVest IX-Venture Associates LLC, its General Partner
By:	HarbourVest Partners, LLC, its Managing Member
By:	/s/ Peter B. Lipson
	Name: Peter B. Lipson
	Title:   Managing Director
HARBOURVEST/NYSTRS CO-INVEST FUND L.P.
By:	HIPEP VI Select Associates L.P., its General Partner
By:	HIPEP VI Select Associates LLC, its General Partner
By:	HarbourVest partners, LLC, its Managing Member
By:	/s/ Peter B. Lipson
	Name: Peter B. Lipson
	Title:   Managing Director
LIGHTSPEED VENTURE PARTNERS VII L.P.
By:	Lightspeed General Partner VII, L.P., its General Partner
By:	Lightspeed Ultimate General Partner VII, Ltd., its General Partner
By:	/s/ Ravi Mhatre
	Name: Ravi Mhatre
	Title:

 

Signature page to SHA

VIOLA VENTURES, III L.P.
By:	Viola 3 Ltd., its General Partner
By:	[ILLEGIBLE]	[ILLEGIBLE]
	Name:
	Title:
GEMINI ISRAEL IV L.P. GEMINI ISRAEL IV (ANNEX FUND) L.P.
By:	Gemini Associates IV L.P., its General Partner
By:	Gemini Associates IV G.P., its General Partner
By:	/s/ Yossi Sela	/s/ Menashe Ezra
	Name: Yossi Sela	Menashe Ezra
	Title:  Managing Partner	Managing Partner
By:	/s/ Yossi Sela	/s/ Menashe Ezra
	Name: Yossi Sela	Menashe Ezra
	Title:  Managing Partner	Managing Partner

 

GEMINI PARTNERS INVESTORS IV L.P. GEMINI PARTNERS INVESTORS IV (ANNEX FUND) L.P.
By:	Gemini Israel Funds IV Ltd., its General Partner
By:	/s/ Yossi Sela	/s/ Menashe Ezra
	Name: Yossi Sela	Menashe Ezra
	Title:  Managing Partner	Managing Partner
By:	/s/ Yossi Sela	/s/ Menashe Ezra
	Name: Yossi Sela	Menashe Ezra
	Title:  Managing Partner	Managing Partner

Signature page to SHA

INDEX VENTURES GROWTH II (JERSEY), L.P.
INDEX VENTURES GROWTH II PARALLEL ENTREPRENEUR FUND (JERSEY), L.P.
By:	Index Venture Growth Associates II Limited, its Managing General Partner
By:	/s/ N.T. Greenwood
	Name: N.T. Greenwood
	Title: Director
By:	/s/ I J Henderson
	Name: I J Henderson
	Title: Director

 

YUCCA (JERSEY) SLP
By:	Elian Employee Benefit Services Limited as Authorized Signatory of Yucca (Jersey) SLP in its capacity as administrator of the Index Co-Investment Scheme
By:	/s/ David Middleton	/s/ Luke Aubert
	Name: David Middleton	Luke Aubert
	Title: Authorised Signatories

 

RH INTERNET II LLC
By:
	Name:
	Title:
VINTAGE INVESTMENT PARTNERS V (CAYMAN), L.P.
VINTAGE INVESTMENT PARTNERS V (ISRAEL), L.P.
By:	Vintage Investment Partners 5, L.P., its General Partner
By:	Vintage Fund 5 Ltd., its General Partner
By:
	Name:
	Title:

Signature page to SHA

MICHEL CROUHY
MICHAL EDELSTYN (by Simon Edelstyn by Proxy)
ZOHAR GILON
LEON RECANATI

PROVIDENT FUND OF THE EMPLOYEES OF THE HEBREW UNIVERSITY OF JERUSALEM LTD.
By:
	Name:
	Title:
MTS INVESTMENTS INC.
By:
	Name:
	Title:
STARTIFY (1992) LTD. (FKA SIGMA INVESTMENTS 1992 LTD.)
By:
	Name:
	Title
LOEB & LOEB LLP
By:
	Name:
	Title:

Signature page to SHA

GRUNER + JAHR GMBH
By:
	Name:
	Title:

Signature page to SHA

Dan Galai		Mickey Kertesz
Ziv Kop		Efrat Perez
Ilan Lior		Amir Lahav
Hanan Salinger		Dalit Lahav
Rani Nelken		Isaschar Kurt
Eytan Galai		Rotem Doron
Uri Galai		Ester Shabtai
Noam Galai		Doron Levin

Signature page to SHA

SCHEDULE 1

 

THE COMMON STOCKHOLDERS

 

Name and Address

Dan Galai

20a Harav Berlin St.

Jerusalem, Israel

Ziv Kop

85 Medinat Hayehudim,

Hertzlia

Ilan Lior

11 Menachem Begin St.,

Ramat Gan 52681, Israel

Hanan Salinger

11 Menachem Begin St.,

Ramat Gan 52681, Israel

Loeb & Loeb

345 Park Ave,

NY, NY 10154-1895

Mickey Kertesz

Verburg 6, Tel Aviv,

64289

Rani Nelkin

53 Standish St.,

Cambridge MA 02138

USA

Eytan Galai

20 Burla St., Jerusalem,

Israel

Uri Galai

2 Oush St., Jerusalem,

Israel

 

Noam Galai

142 E 33rd St. APT 2C.

NY, NY 10016

Isaschar Kurt

8 Mania Shochat St.,

Holon, Israrel

Doron Levin

4 Hanegba St.,

Zichron

Yaacov, Israel

Efrat Perez

Tachkemoni 6\2 Pardes

Hana 63714

Amir Lahav

Moshav Moledet D.N.

Gilboa, Israel

Dalit Lahav

Kibutz Nachsholim D.N.

Hof Viola 30815

Ester Shabtai

Tsuntz 20, Tel Aviv

Rotem Doron

Sigma Investments (1992)

Ltd.

Aba Hilel 14A, Ramat –

Gan

MTS Investments Inc.

C\O Mutualart Inc.

298 Fifth Ave. NY, NY 1

0001

USA

 

Series E Preferred Holders

(Visual Revenue merger)

Lerer Media Ventures, L.P.

Lerer Ventures II, L.P.

KIMA Ventures

NYC Seed, LLC

SV Angel III, LP

Fabrice Grinda

Tim Holbech

Ariel Lebowits

K. Fonager Holdings ApS

TFG Holding ApS

Tobias Peggs

John Batdorf

Serendipity Investments,

S.L.

C. Taylor Greene

Dennis Mortensen

IA Venture Strategies

Fund II, L.P.

IA Venture Strategies II

 

Schedule 1 to SHA

Side Fund, L.P.

SoftBank Capital Technology New York Fund, L.P.

G&H Partners

Original 8 ApS

Charles Holbech

Tejaswi Nadahalli

Alex Poon

Schedule 1 to SHA

SCHEDULE 2

 

THE PREFERRED A STOCKHOLDERS

 

Name and Address

 

GEMINI ISRAEL IV L.P.

GEMINI PARTNERS INVESTORS IV L.P.

11 Hamenofim Street

Herzlia Pituach 

Israel

 

LIGHTSPEED VENTURE PARTNERS VII, L.P.
2200 Sand Hill Road, Suite 100
Menlo Park, CA 94025
USA

 

Leon Recanati
27 Yoav St.,
690811, Israel
Fax: +972-9-9701866

 

PROVIDENT FUND OF THE EMPLOYEES OF THE HEBREW UNIVERSITY OF JERUSALEM LTD. High-Tech Village 2\2
Givat Ram Jerusalem
FAX: +972-2-6586779

 

Michel Crouhy

Clinton St.

Brooklyn, NY 11201 USA

 

Schedule 2 to SHA

SCHEDULE 3

 

THE PREFERRED B STOCKHOLDERS

 

Name and Address:

VIOLA VENTURES, III L.P.

Delta House

16 Abba Eben Avenue

Herzeliya 46725

Israel

Attn: Michal Cohen

Tel: +972-9-9720400

Fax: +972-9-9720401

Email:Michalc@Violaventures.comMichalc@Violaventures.com

LIGHTSPEED    VENTURE    PARTNERS VII, L.P.

2200 Sand Hill Road, Suite 100

Menlo Park, CA 94025

USA

GEMINI ISRAEL IV L.P.

GEMINI PARTNERS INVESTORS IV L.P.

11 Hamenofim Street

Herzlia Pituach

Israel

Michel Crouhy

160 Clinton St.

Brooklyn, NY 11201 USA

Zohar Gilon

28 Shalva Street

Herzliya Pituach

46705 Israel

Yaron Galai

200 Rector Pl.

NY, NY 10280

Leon Recanati

27 Yoav St.,

690811, Israel

Fax: +972-9-9701866

RH INTERNET II LLC

c/o Tigris Group Inc.

535 Madison Avenue, 12th Floor

New York, New York 10022

USA

Email:

ashapiro@tigris.comashapiro@tigris.com

Attn: Andrew M. Shapiro, General Counsel

With a copy to:

Rhodium Ltd

Medinat Hayehudim St.

Herzeliya Pituach 46140

Email:

yaron@rhodium.co.ilyaron@rhodium.co.il

Attn: Yaron Kniajer, Managing Director &

CFO

 

Schedule 3 to SHA

SCHEDULE 4

 

THE PREFERRED C STOCKHOLDERS

 

Name and Address:

VIOLA VENTURES, III L.P.

Delta House

16 Abba Eben Avenue

Herzeliya 46725

Israel

Attn: Michal Cohen

Tel: +972-9-9720400

Fax: +972-9-9720401

Email:Michalc@Violaventures.comMichalc@Violaventures.com

Leon Recanati

27 Yoav St.,

690811, Israel

Fax: +972-9-9701866

RH INTERNET II LLC

c/o Tigris Group Inc.  535 Madison Avenue, 12th Floor

New York, New York 10022 USA

Email:

ashapiro@tigris.comashapiro@tigris.com

Attn: Andrew M. Shapiro, General Counsel

With a copy to:

Rhodium Ltd

Medinat Hayehudim St.

Herzeliya Pituach 46140

Email:

yaron@rhodium.co.ilyaron@rhodium.co.il

Attn: Yaron Kniajer, Managing Director & CFO

LIGHTSPEED VENTURE PARTNERS VII, L.P.

2200 Sand Hill Road, Suite 100

Menlo Park, CA 94025

USA

 

GEMINI ISRAEL IV (ANNEX FUND) L.P.

GEMINI PARTNERS INVESTORS IV (ANNEX FUND) L.P.

11 Hamenofim Street

Herzlia Pituach

Israel

PROVIDENT FUND OF THE EMPLOYEES OF THE HEBREW UNIVERSITY OF JERUSALEM LTD.

High-Tech Village 2\2

Givat Ram Jerusalem

MTS Investments Inc.

C\O Mutualart Inc.

298 Fifth Ave. NY, NY 10001

USA

Michel Crouhy

160 Clinton St. Brooklyn, NY 11201 USA

 

Zohar Gilon

28 Shalva Street

Herzliya Pituach

Israel

Yaron Galai

200 Rector Pl.

NY, NY 10280

Michal Edelstyn

30 Bathgate Road,

Wimbledon,

London,

SW19 5PJ

 

Schedule 4 to SHA

SCHEDULE 5

 

THE PREFERRED D STOCKHOLDERS

 

Name and Address:

VIOLA VENTURES, III L.P.

Delta House

16 Abba Eben Avenue

Herzeliya 46725

Israel

Attn: Michal Cohen

Tel: +972-9-9720400

Fax: +972-9-9720401

Email:Michalc@Violaventures.comMichalc@Violaventures.com

LIGHTSPEED VENTURE PARTNERS VII, L.P.

2200 Sand Hill Road, Suite 100

Menlo Park, CA 94025

USA

INDEX VENTURES GROWTH II (JERSEY), L.P.

Index Venture Growth Associates II Limited

5th Floor

44 Esplanade

St Helier

Jersey JE1 3FG

Channel Islands

Attention: Gemma Harries

INDEX VENTURES GROWTH II

PARALLEL ENTREPRENEUR FUND (JERSEY), L.P.

5th Floor

44 Esplanade

St Helier

Jersey JE1 3FG

Channel Islands

Attention: Gemma Harries

YUCCA (JERSEY) SLP

Intertrust Employee Benefit Services Limited

44 Esplanade

St Helier

Jersey JE4 9WG

Channel Islands

Attention: Sarah Earles

with a copy to:

Index Venture Management S.A.

2 rue de Jargonnant

Geneva

Switzerland

Fax: +41 22 737 0099

Attention: André Dubois

Zohar Gilon

28 Shalva Street

Herzliya Pituach

46705 Israel

Michal Edelstyn

30 Bathgate Road,

Wimbledon,

London,

SW19 5PJ

 

Schedule 5 to SHA

SCHEDULE 6

 

THE PREFERRED F STOCKHOLDERS

 

Name and address:

HARBOURVEST PARTNERS IX-VENTURE FUND L.P.

HARBOURVEST/NYSTRS CO-INVEST FUND L.P.

c/o HarbourVest Partners, LLC

One Financial Center

Floor

Boston MA 02111

Attn: Tiffany Obenchain

Tel +1 617 348 3707

Fax +1 617 350 0305

with a copy (which shall not constitute notice) to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Facsimile: 212-909-6836

Attn: David P. Iozzi

E-mail:

dpIozzi@debevoise.comdpIozzi@debevoise.com

VIOLA VENTURES, III L.P.

Delta House

16 Abba Eben Avenue

Herzeliya 46725

Israel

Attn: Michal Cohen

Tel: +972-9-9720400

Fax: +972-9-9720401

Email:Michalc@Violaventures.com

GEMINI ISRAEL IV L.P.

GEMINI PARTNERS INVESTORS IV L.P.

GEMINI ISRAEL IV (Annex Fund) L.P.

GEMINI PARTNERS INVESTORS IV

(Annex Fund) L.P.

11 Hamenofim Street

Herzlia Pituach

Israel

LIGHTSPEED VENTURE PARTNERS VII, L.P.

2200 Sand Hill Road, Suite 100

Menlo Park, CA 94025

USA

INDEX VENTURES GROWTH II (JERSEY), L.P.

INDEX VENTURES GROWTH II PARALLEL ENTREPRENEUR FUND (JERSEY), L.P.

5th Floor

44 Esplanade

St Helier

Jersey JE1 3FG

Channel Islands

Attention: Gemma Harries

with a copy (which shall not constitute notice) to:

Index Venture Management S.A.

2 rue de Jargonnant

1207 Geneva

Switzerland

Fax: +41 22 737 0099

Attention: André Dubois

YUCCA (JERSEY) SLP

Intertrust Employee Benefit Services Limited

44 Esplanade

St Helier

Jersey JE4 9WG

Channel Islands

Attention: Sarah Earles

 

Schedule 6 to SHA

with a copy to:

Index Venture Management S.A.

2 rue de Jargonnant

Geneva

Switzerland

Fax: +41 22 737 0099

Attention: André Dubois

Leon Recanati

27 Yoav St.,

690811, Israel

Fax: +972-9-9701866

RH INTERNET II LLC

c/o Tigris Group Inc.

535 Madison Avenue, 12th Floor

New York, New York 10022

USA

Email:

ashapiro@tigris.comashapiro@tigris.com

Attn: Andrew M. Shapiro, General Counsel

With a copy to:

Rhodium Ltd

91 Medinat Hayehudim St.

Herzeliya Pituach 46140

Email:

yaron@rhodium.co.ilyaron@rhodium.co.il

Attn: Yaron Kniajer, Managing Director & CFO

Zohar Gilon

Okeanos Hotel

50 Ramat Yam St.

Herzliya Pituach

Israel

Tel: +972-9-9543555

Vintage Investment Partners V (Israel), L.P.

Vintage Investment Partners V (Cayman), L.P.

Ackerstein Towers, Bldg D 10th Floor

12 Abba Eban Avenue

Herzliya Pituach, 46120 Israel

with a copy (which shall not constitute notice) to:

Amit, Pollak, Matalon & Co.

Nitsba Tower, 18th Fl.

17 Yitzhak Sadeh St.

Tel-Aviv 67775 Israel

Tel. +972 3 5689018 ext. 148

Fax. +972 3 5689017

Attn: Daniel Marcus, Adv.

MTS Investments Inc.

C\0 Mutualart Inc.

298 Fifth Avenue

NY, NY 10001

 

Schedule 6 to SHA (Cont’d)

SCHEDULE 7

 

THE PREFERRED G STOCKHOLDERS

 

Name and address:

Susquehanna Growth Equity Fund IV, LLLP 

c/o Susquehanna Growth Equity, LLC 

401 City Ave. 

Bala Cynwyd, PA 19004 

Attention: General Counsel

 

Schedule 7 to SHA

SCHEDULE 8

 

RIGHT OF FIRST REFUSAL HOLDERS

 

SUSQUEHANNA GROWTH EQUITY FUND IV, LLLP 

GEMINI ISRAEL IV L.P. 

GEMINI PARTNERS INVESTORS IV L.P. 

LIGHTSPEED VENTURE PARTNERS VII, L.P. 

Leon Recanati 

PROVIDENT FUND OF THE EMPLOYEES OF THE HEBREW UNIVERSITY OF JERUSALEM LTD. 

Michel Crouhy 

VIOLA VENTURES, III L.P. 

RH Internet II LLC 

Zohar Gilon 

Yaron Galai 

GEMINI ISRAEL IV (ANNEX FUND) L.P. 

GEMINI PARTNERS INVESTORS IV (ANNEX FUND) L.P. 

MTS Investments Inc. 

Michel Crouhy 

Michal Edelstyn 

INDEX VENTURES GROWTH II (JERSEY), L.P. 

INDEX VENTURES GROWTH II PARALLEL ENTREPRENEUR FUND (JERSEY), L.P. 

YUCCA (JERSEY) SLP 

HARBOURVEST PARTNERS IX-VENTURE FUND L.P. 

HARBOURVEST/NYSTRS CO-INVEST FUND L.P. 

Vintage Investment Partners V (Israel), L.P. 

Vintage Investment Partners V (Cayman), L.P. 

Gruner + Jahr GmbH

 

Schedule 8 to SHA

SCHEDULE 9

 

G+J

 

Name and address:

 

Gruner + Jahr GmbH
Am Baumwall 11
20459 Hamburg
Germany

 

With a copy to:

 

Bertelsmann SE & Co. KGaA 

Attn.: Dr. Michael Kronenburg 

Carl-Bertelsmann-Str. 270 

33311 Gütersloh, Germany 

Fax: +49 5241 80642820 

Email: michael.kronenburg@bertelsmann.de

 

Schedule 9 to SHA

Exhibit A

 

JOINDER AGREEMENT

 

In reference to the Amended and Restated Stockholders’ Agreement made as of ____________, 2019, among Outbrain Inc., a Delaware corporation (the “Company”) and the other parties named therein (the “Agreement”):

 

WHEREAS, [according to the Company’s 2007 Omnibus Securities and Incentive Plan each Holder (as such term is defined therein)] / [pursuant to that certain Warrant Agreement between the Company and the Holder (as such term is defined therein), the Holder] is required to enter and be bound by the terms of the Agreement; and

 

WHEREAS, the Holder named herein has acquired shares of the Company, and has received a copy of the Agreement and desires to join in and agrees to be bound by the terms and provisions thereto, and the Company desires to grant to the Holder certain rights and obligations in accordance with the Agreement (as it may be duly amended from time to time).

 

NOW THEREFORE, the parties hereto hereby agree as follows:

 

1.       Upon the execution of this instrument, the Holder, whose details are set forth in Section 2 hereof, shall become a party to the Agreement (as it may be duly amended from time to time) and shall for all purposes be deemed to be a Common Stockholder thereunder and subject to all of the obligations of a Common Stockholder set forth therein.2. Name of Holder:

 

Address for notices:

 

Fax:

 

E-mail:

 

IN WITNESS WHEREOF each of the parties has executed this instrument as of ____________________ , _____  in one or more counterparts.

 

[HOLDER]			OUTBRAIN INC.
By:			By:
	Name: Title:			Name: Title:

 

Exhibit A to SHA

 

Exhibit 4.4

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

WARRANT TO PURCHASE STOCK

 

Company: Outbrain Inc., a Delaware corporation

Number of Shares: As set forth in Paragraph A below

Type/Series of Stock: Common Stock, $0.001 par value per share

Warrant Price: $4.50 per Share, subject to adjustment

Issue Date: November 20, 2014 

Expiration Date: November 19, 2024        See also Section 5.1(b). 

Credit Facility: This Warrant to Purchase Stock (“Warrant”) is issued in connection with that certain Mezzanine Loan and Security Agreement of even date herewith between Silicon Valley Bank and the Company (as amended and/or modified and in effect from time to time, the “Loan Agreement”).

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (together with any successor or permitted assignee or transferee of this Warrant, “Holder”) is entitled to purchase up to such number of fully paid and non-assessable shares of the above-stated Type/Series of Stock (the “Class”) of the above-named company (the “Company”) as determined pursuant to Paragraph A below, at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.

 

A.           Number of Shares. This Warrant shall be exercisable for the Initial Shares, plus the Additional Shares, if any (collectively, and as may be adjusted from time to time in accordance with the provisions hereof, the “Shares”).

 

(1)           Initial Shares. As used herein, “Initial Shares” means 137,500 shares of the Class, subject to adjustment from time to time in accordance with the provisions of this Warrant.

 

(2)           Additional Shares. On the date (if any) that the Term B Loan Advance (as defined in the Loan Agreement) is made to the Company, this Warrant automatically shall become exercisable for an additional 100,000 shares of the Class (the “Additional Shares”), subject to adjustment from time to time in accordance with the provisions of this Warrant, including, without limitation, adjustments in respect of events occurring prior to the date, if any, on which this Warrant becomes exercisable for the Additional Shares.

 

SECTION 1. EXERCISE.

 

1.1           Method of Exercise. Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise as set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

1.2         Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:

 

X = Y(A-B)/A

 

where:

 

X =

the number of Shares to be issued to the Holder;

 

Y =

the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

 

A =

the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

 

B =

the Warrant Price.

 

1.3         Fair Market Value. If shares of the Class are then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be the closing price or last sale price of a share of the Class reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If shares of the Class are not then traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

 

1.4         Delivery of Certificate and New Warrant. Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

 

1.5         Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

1.6           Treatment of Warrant Upon Acquisition of Company.

 

(a)           Acquisition. For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

 

(b)           Treatment of Warrant at Acquisition. In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), and the fair market value of one Share as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall automatically be deemed to be exercised on a cashless basis pursuant to Section 1.2 above as to all Shares effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition. In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as of the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise. In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.

 

(c)           Upon the closing of any Acquisition other than a Cash/Public Acquisition, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

 

(d)           As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in a Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.

SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1         Stock Dividends. Splits. Etc. If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in additional shares of the Class or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

 

2.2         Reclassification, Exchange. Combinations or Substitution. Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations, substitutions, replacements or other similar events.

 

2.3         No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

 

2.4         Notice/Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

 

SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1         Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder as follows:

 

(a)             The initial Warrant Price referenced on the first page of this Warrant is not greater than the fair market value of a share of the Class as determined by the most recently completed valuation, approved by the Company’s Board of Directors, of the Company’s stock for purposes of its compliance with Section 409A of the Internal Revenue Code of 1986, as amended.

(b)           All Shares which may be issued upon the exercise of this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class and other securities as will be sufficient to permit the exercise in full of this Warrant.

 

(c)           The Company’s capitalization table attached hereto as Schedule 1 is true and complete, in all material respects, as of the Issue Date.

 

3.2         Notice of Certain Events. If the Company proposes at any time to:

 

(a) declare any dividend or distribution upon the outstanding shares of the Class, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

 

(b) offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

 

(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class;

 

(d) effect an Acquisition or to liquidate, dissolve or wind up; or

 

(e) effect its initial, underwritten offering and sale of its securities to the public pursuant to an effective registration statement under the Act (the “IPO”);

 

then, in connection with each such event, the Company shall give Holder:

 

(1) in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any;

 

(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice); and

 

(3) with respect to the IPO, at least seven (7) Business Days prior written notice of the date on which the Company proposes to file its registration statement in connection therewith.

The Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

 

SECTION 4. REPRESENTATIONS. WARRANTIES OF THE HOLDER.

 

The Holder represents and warrants to the Company as follows:

 

4.1           Purchase for Own Account. This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

 

4.2           Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

 

4.3           Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities. Holder has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

 

4.4           Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

4.5           The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof 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 Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

4.6           No Voting Rights. Holder, as a holder of this Warrant, will not have any voting rights until the exercise of this Warrant.

SECTION 5. MISCELLANEOUS.

 

5.1           Term; Automatic Cashless Exercise Upon Expiration.

 

(a)           Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.

 

(b)           Automatic Cashless Exercise upon Expiration. In the event that, upon the Expiration Date, the fair market value of one Share as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares issued upon such exercise to Holder.

 

5.2           Legends. Each certificate evidencing Shares shall be imprinted with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO SILICON VALLEY BANK DATED NOVEMBER 20, 2014, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

5.3           Compliance with Securities Laws on Transfer. This Warrant and the Shares issued upon exercise of this Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to SVB Financial Group (Silicon Valley Bank’s parent company) or any other affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.

 

5.4           Transfer Procedure. After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its parent company, SVB Financial Group, By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the Shares issued upon exercise of this Warrant to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will give the Company notice of the portion of the Warrant and/or Shares being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee other than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant and shall make the representations in Section 4 hereof. Notwithstanding any contrary provision herein, at all times prior to the IPO, Holder may not, without the Company’s prior written consent, transfer this Warrant or any portion hereof, or any Shares issued upon any exercise hereof, to any person or entity who directly competes with the Company, except in connection with an Acquisition of the Company by such a direct competitor.

5.5         Notices. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3^rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the First Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 

SVB Financial Group
Attn: Treasury Department
3003 Tasman Drive, HC 215
Santa Clara, CA 95054
Telephone: (408) 654-7400
Facsimile: (408) 988-8317
Email address: derivatives@svb.com

 

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

 

Outbrain Inc.
Attn: Chief Financial Officer
39 West 13^th Street, 3^rd Floor
New York, NY 10011  

Telephone:
Facsimile:
Email:

 

and

 

Outbrain Inc.
Attn: Michael Kistler
39 West 13^th Street, 3^rd Floor
New York, NY 10011
Telephone: 212 353-5898
Facsimile:
Email: mkistler@outbrain.com

 

With a copy (which shall not constitute notice) to:

 

Loeb & Loeb LLP
Attn: Lloyd Rothenberg
345 Park Ave
New York, New York 10154
Telephone: 212 407-4937
Facsimile: 212 407-4990 

Email: lrothenberg@Ioeb.com

5.6           Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

5.7           Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

5.8           Counterparts: Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

5.9           Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

 

5.10         Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

5.11         Business Days. “Business Day” is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed.

 

[Remainder of page left blank intentionally]
[Signature page follows]

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above. 

“COMPANY”
OUTBRAIN INC.
By:	/s/  Yaron Galai
Name:		Yaron Galai
		(Print)
Title:		CEO
“HOLDER”
SILICON VALLEY BANK
By:	/s/ Brendan P. Quinn
Name:		Brendan P. Quinn
		(Print)
Title:		VP

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.            The undersigned Holder hereby exercises its right to purchase ___________ shares of the Common/Series _______ Preferred [circle one] Stock of ______________ (the “Company”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

 

¨

check in the amount of $_______ payable to order of the Company enclosed herewith

 

¨

Wire transfer of immediately available funds to the Company’s account

 

¨

Cashless Exercise pursuant to Section 1.2 of the Warrant

 

¨

Other [Describe] _________________________________________

 

2.            Please issue a certificate or certificates representing the Shares in the name specified below: 

	Holder’s Name
	(Address)

 

3.            By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof. 

	HOLDER:
	By:
	Name:
	Title:
	(Date):

SCHEDULE 1

 

Company Capitalization Table

 

See attached

OUTBRAIN CAP TABLE

 

Period End		30-Sep-14
Shareholders		Common Stock			Series A			Series B			Series C			Series D			Series E			Series F			Total Preferred Stock			Total			% Outstanding Shares Ownership			% Fully Diluted Ownership
Founders
Ori Lahav		959,163			-			-			-			-			-			-			-			959,163			1.66	%		1.32	%
Yaron Galai		5,000,000			-			182,072			44,392			-			-			-			226,454			5,226,454			9.05	%		7.17	%
Incorporation Shareholders
Amir Lahav		75,000			-			-			-			-			-			-			-			75,000			0.13	%		0.10	%
Dalit Lahav		15,498			-			-			-			-			-			-			-			15,498			0.03	%		0.02	%
Dan Galai		1,000,000			-			-			-			-			-			-			-			1,000,000			1.73	%		1.37	%
Doron Levin		100,000			-			-			-			-			-			-			-			100,000			0.17	%		0.14	%
Efrat Peretz		47,233			-			-			-			-			-			-			-			47,233			0.08	%		0.06	%
Ester Shabtai		90,498			-			-			-			-			-			-			-			90,498			0.16	%		0.12	%
Eytan Galai		150,000			-			-			-			-			-			-			-			150,000			0.26	%		0.21	%
llan Lior		100,000			-			-			-			-			-			-			-			100,000			0.17	%		0.14	%
Isaschar Kurt		200,000			-			-			-			-			-			-			-			200,000			0.35	%		0.27	%
Loeb & Loeb LLP		100,000			-			-			-			-			-			-			-			100,000			0.17	%		0.14	%
Mickey Kertesz		50,000			-			-			-			-			-			-			-			50,000			0.09	%		0.07	%-
Noam Galai		100,000			-			-			-			-			-			-			-			100,000			0.17	%		0.14	%-
Rani Nelken		89,375			-			-			-			-			-			-			-			89,375			0.15	%		0.12	%
Salinger & Co.		125,000			-			-			-			-			-			-			-			125,000			0.22	%		0.17	%
Uri Galai		100,000			-			-			-			-			-			-						100,000			0,17	%		0.14	%
Ziv Kop		250,000			-			-			-			-			-			-						250,000			0.43	%		0.34	%
Other Early Shareholders
Leon Recanati		1,892,593			691,976			364,144			529,973			-			-			74,543			1,660,636			3,553,229			6.15	%		4.88	%
Michel Crouhy		182,963			50,860			134,357			89,771			-			-			-			274,988			457,951			0.79	%		0.63	%
Mikhal Edelstyn		-			-			-			90,000			10,050			-			-			100,050			100,050			0.17	%		0.14	%
MTS Investments Inc.		343,056			-			-			83,645			-			-			100,000			183,645			526,701			0.91	%		0.72	%
Provident Fund of the Employees of the Hebrew University of Jerusalem Ltd.		343,056			95,285			-			106,879			-			-			-			202,164			545,220			0.94	%		0.75	%
Sigma P.C.M. Ltd.		74,517			-			-						-			-			-			-			74,517			0.13	%		0.10	%
Zohar Gilon					-			182,072			44,393			25,300			-			44,726			296,491			296,491			0.51	%		0.41	%
Consultants
David Rosenblatt		50,000			-			-			-			-			-			-			-			50,000			0.09	%		0.07	%
Jack Haire		50,000			-			-			-			-			-			-			-			50,000			0.09	%		0.07	%
Kevin Fortuna		100,000			-			-			-			-			-			-			-			100,000			0.17	%		0.14	%
Kevin Fortuna (AKF Partners)		100,000			-			-			-			-			-			-			-			100,000			0.17	%		0.14	%
Vivek Shah		82,539			-			-			-			-			-			-			-			82,539			0.14	%		0.11	%
Venture Capital Groups
Carmel Ventures, III LP.		-			-			7,282,880			1,784,105			814,239			-			298,174			10,179,398			10,179,398			17.62	%		13.97	%
Gemini		914,815			2,834,053			2,603,211			1,589,920			-			-			372,717			7,399,901			8,314,716			14.39	%		11.41	%
Harbourvest		-			-			-			-			-			-			2,415,207			2,415,207			2,415,207			4.18	%		3.31	%
Index		649,548			279,840			-			-			2,931,262			-			298,174			3,509,276			4,158,824			7.20	%		5.71	%
Lightspeed Venture Partners VII, LP.		914,815			3,113,893			2,603,211			1,624,637			1,954,175			-			447,261			9,743,177			10,657,992			18.45	%		14.62	%
RH Internet II LLC		-			-			1,213,813			489,732			-			-			596,347			2,299,892			2,299,892			3.98	%		3.16	%
Vintage		-			-			-			-						-			670,891			670,891			670,891			1.16	%		0.92	%
Visual Revenue Shareholders		42,708			-			-			-			-			1,080,197			-			1,080,197			1,122,905			1.94	%		1.54	%
Current and Former Employees		3,246,579			-			-			-			-			-			-			-			3,246,579			5.62	%		4.45	%
Common Stock and Preferred Stock		17,538,956			7,065,907			14,565,760			6,477,447			5,735,026			1,080,197			5,318,040			40,242,377			57,781,333			100.00	%		79.28	%
		-			-			-			-			-			-			-			-			-
Slock Options Outstanding																										11,935,419						16.38	%
Warrants Outstanding Under the Plan																										35,000						0.05	%
Warrants Outstanding Outside of the Plan																										480,852						0.66	%
Stock Awards, RSAs, RSUs Unvested																										1,250,000						1.72	%
SARs																										25,952						0.04	%
Shares Available for Issuance Under Option Plan																										1,373,052						1.88	%
Grand Total		17,538,956			7,065,907			14,565,760			6,477,447			5,735,026			1,080,197			5,318,040			40,242,377			72,881,608			100.00	%		100.00	%

 

Exhibit 4.5

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

WARRANT TO PURCHASE STOCK

 

Company: Outbrain Inc., a Delaware corporation

Number of Shares: As set forth in Paragraph A below

Type/Series of Stock: Common Stock, $0.001 par value per share

Warrant Price: $4.50 per Share, subject to adjustment

Issue Date: November 20, 2014

Expiration Date: November 19, 2024

See also Section 5.l(b).

Credit Facility: This Warrant to Purchase Stock (“Warrant”) is issued in connection with that certain Mezzanine Loan and Security Agreement of even date herewith between Silicon Valley Bank and the Company (as amended and/or modified and in effect from time to time, the “Loan Agreement”) and the participation therein of WestRiver Mezzanine Loans, LLC pursuant to an arrangement among Silicon Valley Bank, WestRiver Management, LLC and WestRiver Mezzanine Loans, LLC.

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, WESTRIVER MEZZANINE LOANS, LLC (together with any successor or permitted assignee or transferee of this Warrant, “Holder”) is entitled to purchase up to such number of fully paid and non-assessable shares of the above-stated Type/Series of Stock (the “Class”) of the above-named company (the “Company”) as determined pursuant to Paragraph A below, at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.

 

A.           Number of Shares. This Warrant shall be exercisable for the Initial Shares, plus the Additional Shares, if any (collectively, and as may be adjusted from time to time in accordance with the provisions hereof, the “Shares”).

 

(1)        Initial Shares. As used herein, “Initial Shares” means 137,500 shares of the Class, subject to adjustment from time to time in accordance with the provisions of this Warrant.

 

(2)        Additional Shares. On the date (if any) that the Term B Loan Advance (as defined in the Loan Agreement) is made to the Company, this Warrant automatically shall become exercisable for an additional 100,000 shares of the Class (the “Additional Shares”), subject to adjustment from time to time in accordance with the provisions of this Warrant, including, without limitation, adjustments in respect of events occurring prior to the date, if any, on which this Warrant becomes exercisable for the Additional Shares.

SECTION 1. EXERCISE.

 

1.1       Method of Exercise. Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise as set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

 

1.2       Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:

 

X= Y(A-B)/A

 

where:

 

X =

the number of Shares to be issued to the Holder;

 

Y =

the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

 

A =

the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

 

B =

the Warrant Price.

 

1.3       Fair Market Value. If shares of the Class are then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be the closing price or last sale price of a share of the Class reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If shares of the Class are not then traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

 

1.4       Delivery of Certificate and New Warrant. Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

 

1.5       Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount. 

1.6        Treatment of Warrant Upon Acquisition of Company.

 

(a)        Acquisition. For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

 

(b)       Treatment of Warrant at Acquisition. In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), and the fair market value of one Share as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall automatically be deemed to be exercised on a cashless basis pursuant to Section 1.2 above as to all Shares effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition. In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as of the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise. In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.

 

(c)        Upon the closing of any Acquisition other than a Cash/Public Acquisition, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

 

(d)       As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in a Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition. 

SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1       Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in additional shares of the Class or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

 

2.2        Reclassification, Exchange, Combinations or Substitution. Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations, substitutions, replacements or other similar events.

 

2.3        No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

 

2.4        Notice/Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment. 

SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1       Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder as follows:

 

(a)       The initial Warrant Price referenced on the first page of this Warrant is not greater than the fair market value of a share of the Class as determined by the most recently completed valuation, approved by the Company’s Board of Directors, of the Company’s stock for purposes of its compliance with Section 409A of the Internal Revenue Code of 1986, as amended.

 

(b)       All Shares which may be issued upon the exercise of this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class and other securities as will be sufficient to permit the exercise in full of this Warrant.

 

(c)       The Company’s capitalization table attached hereto as Schedule 1 is true and complete, in all material respects, as of the Issue Date.

 

3.2       Notice of Certain Events. If the Company proposes at any time to:

 

(a)       declare any dividend or distribution upon the outstanding shares of the Class, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

 

(b)       offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

 

(c)       effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class;

 

(d)       effect an Acquisition or to liquidate, dissolve or wind up; or

 

(e)       effect its initial, underwritten offering and sale of its securities to the public pursuant to an effective registration statement under the Act (the “IPO”);

 

then, in connection with each such event, the Company shall give Holder:

 

(1) in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any;

 

(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice); and 

(3) with respect to the IPO, at least seven (7) Business Days prior written notice of the date on which the Company proposes to file its registration statement in connection therewith.

 

The Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

 

SECTION 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.

 

The Holder represents and warrants to the Company as follows:

 

4.1       Purchase for Own Account. This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

 

4.2       Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

 

4.3       Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities. Holder has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

 

4.4       Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

4.5       The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof 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 Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

4.6       No Voting Rights. Holder, as a holder of this Warrant, will not have any voting rights until the exercise of this Warrant. 

SECTION 5. MISCELLANEOUS.

 

5.1        Term; Automatic Cashless Exercise Upon Expiration.

 

(a)        Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.

 

(b)       Automatic Cashless Exercise upon Expiration. In the event that, upon the Expiration Date, the fair market value of one Share as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares issued upon such exercise to Holder.

 

5.2       Legends. Each certificate evidencing Shares shall be imprinted with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO WESTRIVER MEZZANINE LOANS, LLC DATED NOVEMBER 20, 2014, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

5.3       Compliance with Securities Laws on Transfer. This Warrant and the Shares issued upon exercise of this Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder, provided that such affiliate is an “accredited investor” as defined in Regulation D promulgated under the Act.

 

5.4       Transfer Procedure. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, Holder may transfer all or part of this Warrant or the Shares issued upon exercise of this Warrant to any transferee, provided, however, in connection with any such transfer, Holder will give the Company notice of the portion of the Warrant and/or Shares being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant and shall make the representations in Section 4 hereof. Notwithstanding any contrary provision herein, at all times prior to the IPO, Holder may not, without the Company’s prior written consent, transfer this Warrant or any portion hereof, or any Shares issued upon any exercise hereof, to any person or entity who directly competes with the Company, except in connection with an Acquisition of the Company by such a direct competitor. 

5.5       Notices. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3^rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 

WestRiver Mezzanine Loans, LLC 

c/o Chief Financial Officer 

3720 Carillon Point 

Kirkland, Washington 98033-7455 

Attention: Trent Dawson 

Telephone: (425) 952-3951 

Email: tdawson @westrivermgmt.com

 

With a copy (which shall not constitute notice) to:

 

Perkins Coie LLP

1201 Third Avenue, Suite 4800 

Seattle, Washington 98101-3099 

Attention: David C. Clarke 

Telephone: (206) 359-8612 

Email: dclarke@perkinscoie.com

 

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

 

Outbrain Inc. 

Attn: Chief Financial Officer 

39 West 13^th Street, 3^rd Floor 

New York, NY 10011 

Telephone:

Facsimile:

Email:

 

and

 

Outbrain Inc. 

Attn: Michael Kistler 

39 West 13^th Street, 3^rd Floor 

New York, NY 10011

Telephone: 212 353-5898 

Facsimile: 

Email: mkistler@outbrain.com

With a copy (which shall not constitute notice) to:

 

Loeb & Loeb LLP

Attn: Lloyd Rothenberg 

345 Park Ave 

New York, New York 10154 

Telephone: 212 407-4937 

Facsimile: 212 407-4990 

Email: lrothenberg@loeb.com

 

5.6       Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

5.7       Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

5.8       Counterparts; Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

5.9       Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

 

5.10     Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

5.11     Business Days. “Business Day” is any day that is not a Saturday, Sunday or a day on which WestRiver Mezzanine Loans, LLC is closed.

 

[Remainder of page left blank intentionally]

[Signature page follows] 

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

 

“COMPANY”
OUTBRAIN INC.
By:	/s/ Yaron Galai

 

Name:	Yaron Galai
	(Print)

Title:

CEO

 

“HOLDER”
WESTRIVER MEZZANINE LOANS, LLC
By:	Loan Manager, LLC, its
	Managing Member
By:	/s/ Erik J. Anderson
	Erik J. Anderson, Manager

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.             The undersigned Holder hereby exercises its right to purchase_________ shares of the Common/Series______ Preferred [circle one] Stock of _____________________(the “Company”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

 

¨	check in the amount of $__________ payable to order of the Company enclosed herewith
¨	Wire transfer of immediately available funds to the Company’s account
¨   ¨	Cashless Exercise pursuant to Section 1.2 of the Warrant   Other [Describe] ______________________________________________

 

2.             Please issue a certificate or certificates representing the Shares in the name specified below:

 

	Holder’s Name
	(Address)

 

3.             By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.

 

HOLDER:

 

By:

 

Name:

 

Title:

 

(Date):

SCHEDULE 1

 

Company Capitalization Table

 

See attached 

OUTBRAIN CAP TABLE

 

Period End		30-Sep-14
Shareholders		Common Stock			Series A			Series B			Series C			Series D			Series E			Series F			Total Preferred Stock			Total			% Outstanding Shares Ownership				% Fully Diluted Ownership
Founders
Ori Lahav			959,163			-			-			-			-			-			-			-			959,163			1.66	%			1.32	%
Yaron Galai			5,000,000			-			182,072			44,392			-			-			-			226,464			5,226,454			9.05	%			7.17	%
Incorporation Shareholders
Amir Lahav			75,000			-			-			-			-			-			-			-			75,000			0.13	%			0.10	%
Dalit Lahav			15,498			-			-			-			-			-			-			-			15,498			0.03	%			0.02	%
Dan Galai			1,000,000			-			-			-			-			-			-			-			1,000,000			1.73	%			1.37	%
Doron Levin			100,000			-			-			-			-			-			-			-			100,000			0.17	%			0.14	%
Efrat Peretz			47,233			-			-			-			-			-			-			-			47,233			0.08	%			0.06	%
Ester Shabtal			90,498			-			-			-			-			-			-			-			90,498			0.16	%			0.12	%
Eytan Galai			150,000						-			-			-			-			-			-			150,000			0.26	%			0.21	%
lian Licir			100,000			-			-			-			-			-			-			-			100,000			0.17	%			0.14	%
IsascharKurt			200,000			-			-			-			-			-			-			-			200,000			0.35	%			0.27	%
Loeb & Loeb LLP			100,000			-			-			-			-			-			-			-			100,000			0.17	%			0.14	%
Mickey Kertesz			50,000			-			-			-			-			-			-			-			50,000			0.09	%			0.07	%
Noam Galai			100,000																								100,000			0.17	%			0.14	%
Rani Netken			89,375			-			-			-			-			-			-			-			89,375			0.15	%			0.12	%
Salinger & Co.			125,000			-			-			-			-			-			-			-			125,000			0.22	%			0.17	%
Uri Galai			100,000			-			-			-			-			-			-			-			100,000			0.17	%			0.14	%
Ziv Kop			250,000			-			-			-			-			-			-			-			250,000			0.43	%			0.34	%
Other  Early Shareholders
Leon Recanati			1,892,593			691,976			364,144			529,973			-			-			74,543			1,660,636			3,553,229			6.15	%			4.88	%
Michel Crouhy			182,963			50,860			134,357			89,771			-			-			-			274,988			457,951			0.79	%			0.63	%
Mikhal Edelstyn			-			-			-			90,000			10,050			-			-			100,050			100,050			0.17	%			0.14	%
MTS Investments Inc.			343,056			-			-			83,645			-			-			100,000			183,645			526,701			0.91	%			0.72	%
Provident  Fund of the  Employees of the  Hebrew University of JerusaTem Ltd.			343,056			95,285			-			106,879			-			-			-			202.164			545,220			0.94	%			0.75	%
Sigma P.C.M. Ltd.			74,517			-			-			-			-			-			-			-			74,517			0.13	%			0.10	%
Zohar Gilon			-			-			182,072			44,393			25,300						44,726			296,491			296,491			0.51	%			0.41	%
Consultants
David Rosenblatt			50,000			-			-			-			-			-			-			-			50,000			0.09	%			0.07	%
Jack Haire			50,000			-			-			-			-			-			-			-			50,000			0.09	%			0.07	%
Kevin Fortuna			100,000			-			-			-			-			-			-			-			100,000			0.17	%			0.14	%
Kevin Fortuna  (AKF Partners)			100,000			-			-			-			-			-			-			-			100,000			0.17	%			0.14	%
Vivek Shah			82,539			-			-			-			-			-			-			-			82,539			0.14	%			0.11	%
Venture capital Groups
Carmel Ventures, III LP.			-			-			7,282,880			1,784,105			814,239			-			298,174			10,179,398			10,179,398			17.62	%			13.97	%
Gemini			914,815			2,834,053			2,603,211			1,589,920			-			-			372,717			7,399,901			8,314,716			14.39	%			11.41	%
Harbauivest			-			-			-			-			-			-			2.415,207			2,415,207			2,415,207			4.18	%			3.31	%
Index			649,548			279,840			-			-			2,931,262			-			298,174			3,509,276			4,158,824			7.20	%			5.71	%
Ughtspeed Venture Partners VII, LP.			914,815			3,113,893			2,603,211			1,624,637			1,954,175			-			447,261			9,743,177			10,657,992			18.45	%			14.62	%
RH Internet II LLC			-			-			1,213,813			489,732			-			-			596,347			2,299,892			2,299,892			3.98	%			3.16	%
Vintage			-			-			-			-			-			-			670,891			670,891			670,891			1.16	%			0.92	%
Visual Revenue Shareholders			42,708			-			-			-			-			1,080,197						1,080,197			1,122,905			1.94	%			1.54	%
Current and Former Employees			3,246,579			-			-			-			-			-			-			-			3,246,579			5.62	%			4.45	%
Common Stock and Preferred Stock			17,533,956			7,065,907			14,565,760			6,477,447			5,735,026			1,080,197			5,318,040			40,242,377			57,781,333			100.00	%			79.28	%
Stock Options outstanding																											11,935,419							16.38	%
Wanants Outstanding Under the Plan																											35,000							0.05	%
Warrants Outstanding Outside of the Plan																											480,852							0.65	%
Stock Awards,  RSAs, RSUs Unvested																											1,250,000							1.72	%
SARs																											25,952							0.04	%
Shares Available for Issuance Under Option  Plan																											1,373,052							US%
Grand Total			17,538,956			7,065,907			14,565,760			6,477,447			5,735,026			1,080,197			5,318,040			40,242,377			72,881,608			100.00	%			100.00	%

 

Exhibit 4.6

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

WARRANT TO PURCHASE STOCK

 

Company: Outbrain Inc., a Delaware corporation

Number of Shares: 82,500¹, subject to adjustment

Type/Series of Stock: Common Stock, $0.001 par value per share

Warrant Price: $4.87¹ per Share, subject to adjustment

Issue Date: September 29, 2016

Expiration Date: September 29, 2026              See also Section 5.l (b).

Credit Facility: This Warrant to Purchase Stock (“Warrant”) is issued in connection with that certain First Amendment, dated January 27,2016, to that certain Mezzanine Loan and Security Agreement dated November 20, 2014, between Silicon Valley Bank and the Company (collectively, and as may be further amended and/or modified and in effect from time to time, the “Loan Agreement”) and the participation therein of WestRiver Mezzanine Loans, LLC pursuant to an arrangement between Silicon Valley Bank and WestRiver Mezzanine Loans, LLC.

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, WESTRIVER MEZZANINE LOANS, LLC (together with any successor or permitted assignee or transferee of this Warrant, “Holder”) is entitled to purchase up to the number of fully paid and non-assessable shares (the “Shares”) of the above-stated Type/Series of Stock (the “Class”) of the above-named company (the “Company”), at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.

 

SECTION 1. EXERCISE.

 

1.1           Method of Exercise. Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix I and, unless Holder is exercising this Warrant pursuant to a cashless exercise as set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

 

¹ Share number and exercise price are subject to adjustment in connection with events described in Section 2 below that occur after effective date of First Amendment to Mezzanine Loan and Security Agreement and on or before issuance of Warrant.

1.2           Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:

 

X= Y(A-B)/A

 

where:

 

X =

the number of Shares to be issued to the Holder;

 

Y =

the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

 

A =

the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

 

B =

the Warrant Price.

 

1.3           Fair Market Value. If shares of the Class are then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be the closing price or last sale price of a share of the Class reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If shares of the Class are not then traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

 

1.4           Delivery of Certificate and New Warrant. Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

 

1.5           Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

 

1.6           Treatment of Warrant Upon Acquisition of Company.

 

(a)           Acquisition. For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

(b)           Treatment of Warrant at Acquisition. In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), and the fair market value of one Share as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall automatically be deemed to be exercised on a cashless basis pursuant to Section 1.2 above as to all Shares effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition. In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as of the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise. In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.

 

(c)           Upon the closing of any Acquisition other than a Cash/Public Acquisition, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

 

(d)           As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in a Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.

 

SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1           Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in additional shares of the Class or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

2.2           Reclassification, Exchange, Combinations or Substitution. Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations, substitutions, replacements or other similar events.

 

2.3           No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

 

2.4           Notice/Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

 

SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1           Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder as follows:

 

(a)         The initial Warrant Price referenced on the first page of this Warrant is not greater than the fair market value of a share of the Class as determined by the most recently completed valuation, approved by the Company’s Board of Directors, of the Company’s stock for purposes of its compliance with Section 409A of the Internal Revenue Code of 1986, as amended.

 

(b)        All Shares which may be issued upon the exercise of this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class and other securities as will be sufficient to permit the exercise in full of this Warrant.

 

(c)         The Company’s capitalization table attached hereto as Schedule 1 is true and complete, in all material respects, as of the Issue Date.

3.2          Notice of Certain Events. If the Company proposes at any time to:

 

(a) declare any dividend or distribution upon the outstanding shares of the Class, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

 

(b) offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

 

(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class;

 

(d) effect an Acquisition or to liquidate, dissolve or wind up; or

 

(e) effect its initial, underwritten offering and sale of its securities to the public pursuant to an effective registration statement under the Act (the “IPO”);

 

then, in connection with each such event, the Company shall give Holder:

 

(1) in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any;

 

(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice); and

 

(3) with respect to the IPO, at least seven (7) Business Days prior written notice of the date on which the Company proposes to file its registration statement in connection therewith.

 

The Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

 

SECTION 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.

 

The Holder represents and warrants to the Company as follows:

 

4.1           Purchase for Own Account. This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

4.2           Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

 

4.3           Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities. Holder has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

 

4.4           Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

4.5           The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof 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 Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

4.6           No Voting Rights. Holder, as a holder of this Warrant, will not have any voting rights until the exercise of this Warrant.

 

SECTION 5. MISCELLANEOUS.

 

5.1           Term; Automatic Cashless Exercise Upon Expiration.

 

(a)           Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.

 

(b)           Automatic Cashless Exercise upon Expiration. In the event that, upon the Expiration Date, the fair market value of one Share as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares issued upon such exercise to Holder.

5.2           Legends. Each certificate evidencing Shares shall be imprinted with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO WESTRIVER MEZZANINE LOANS, LLC DATED SEPTEMBER 29, 2016, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

5.3           Compliance with Securities Laws on Transfer. This Warrant and the Shares issued upon exercise of this Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder, provided that such affiliate is an “accredited investor” as defined in Regulation D promulgated under the Act.

 

5.4           Transfer Procedure. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, Holder may transfer all or part of this Warrant or the Shares issued upon exercise of this Warrant to any transferee, provided, however, in connection with any such transfer, Holder will give the Company notice of the portion of the Warrant and/or Shares being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant and shall make the representations in Section 4 hereof. Notwithstanding any contrary provision herein, at all times prior to the IPO, Holder may not, without the Company’s prior written consent, transfer this Warrant or any portion hereof, or any Shares issued upon any exercise hereof, to any person or entity who directly competes with the Company, except in connection with an Acquisition of the Company by such a direct competitor.

 

5.5           Notices. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 

WestRiver Mezzanine Loans, LLC

c/o Chief Financial Officer

3720 Carillon Point

Kirkland, Washington 98033-7455

Attention: Trent Dawson

Telephone: (425) 952-3951

Email: tdawson@westrivermgmt.com

With a copy (which shall not constitute notice) to:

 

Perkins Coie LLP

1201 Third Avenue, Suite 4800

Seattle, Washington 98101-3099

Attention: David C. Clarke

Telephone: (206) 359-8612

EmaiI: dclarke@perkinscoie.com

 

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

 

Outbrain Inc.

Attn: Chief Financial Officer

39 West 13^th Street, 3rd Floor

New York, NY 10011

Telephone: 917.534.5383

Email: egarofalo@outbrain.com

 

and

 

Outbrain Inc.

Attn: Michael Kistler

39 West 13^th Street, 3^rd Floor

New York, NY 10011

Telephone: 212 353-5898

Email: mkistler@outbrain.com

 

With a copy (which shall not constitute notice) to:

 

Loeb & Loeb LLP

Attn: Lloyd Rothenberg

345 Park Ave

New York, New York 10154

Telephone: 212 407-4937

Facsimile: 212 407-4990

EmaiI: lrothenberg@loeb.com

 

5.6           Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

5.7        Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

5.8        Counterparts; Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

5.9        Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

 

5.10      Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

5.11      Business Days. “Business Day” is any day that is not a Saturday, Sunday or a day on which banks in Washington are closed.

 

[Remainder of page left blank intentionally]
[Signature page follows]

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

 

“COMPANY”

 

OUTBRAIN INC.

 

By:	/s/ Barry Schofield
Name:	Barry Schofield
	(Print)
Title:	VP, Corporate Finance & Treasury

 

“HOLDER”

 

WESTRIVER MEZZANINE LOANS, LLC

 

By:	Loan Manager, LLC, its Managing Member
By:
	Trent Dawson, Chief Financial Officer

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.            The undersigned Holder hereby exercises its right to purchase ________________ shares of the Common/Series ________ Preferred [circle one] Stock of ______________ (the “Company”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

 

¨

check in the amount of $________ payable to order of the Company enclosed herewith

 

¨

Wire transfer of immediately available funds to the Company’s account

 

¨

Cashless Exercise pursuant to Section 1.2 of the Warrant

 

¨

Other [Describe] ______________________________________________________________________________

 

2.             Please issue a certificate or certificates representing the Shares in the name specified below:

 

	Holder’s Name
	(Address)

 

3.             By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.

 

	HOLDER:
	By:
	Name:
	Title:
	(Date):

SCHEDULE 1

 

Company Capitalization Table

 

See attached

 

Exhibit 4.7

 

NEITHER THIS WARRANT NOR ANY SECURITIES WHICH MAY BE ISSUED UPON CONVERSION OR EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “Securities Act”), OR REGISTERED OR OTHERWISE QUALIFIED UNDER ANY STATE SECURITIES LAW. NEITHER THIS WARRANT NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND REGISTRATION OR OTHER QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR OTHER QUALIFICATION IS NOT REQUIRED.

 

Warrant

 

to Purchase up to an Aggregate of 100,000

 

Shares of Common Stock (subject to adjustment) of

 

OUTBRAIN, INC.

 

at a per share price as detailed below

 

Void After the expiration of the Option Period (defined below)

 

This is to certify that American Friends of Tmura (“Holder”) is entitled to purchase, subject to the provision of this Warrant, from Outbrain, Inc. a company incorporated under the laws of the State of Delaware (the “Company”), during the period (the ‘‘Option Period”) from the date hereof and until the earlier of (i) immediately prior to the closing of the initial public offering of the Company’s shares (“IPO”), (ii) a Deemed Liquidation, as such term is defined in the Company’s Amended and Restated Certificate of Incorporation of the Company, or (iii) on the tenth anniversary of the date hereof, an aggregate of up to 100,000 (subject to adjustment as provided in Section 3 below) fully paid and non-assessable shares of Common Stock, US$ 0.001 par value per share (the “Warrant Shares”), of the Company at a price of US$0,576 per share (the “Exercise Price”), all subject to the terms and conditions set forth below.

 

1.

Exercise of Warrant

 

(a)       Exercise. Subject to the provisions hereof, this Warrant may be exercised, in whole or in part, on one or more occasions at any time during the Option Period. Notice of exercise of this Warrant in the form annexed hereto duly completed and executed on behalf of the Holder must be submitted to the Company no later than the expiration of the Option Period.

 

(b)       Method of Exercise.

 

(i) Exercise for Cash - This Warrant may be exercised in whole or in part by presentation and surrender hereof to the Company at the principal office of the Company, accompanied by (i) a written notice of exercise and (ii) payment to the Company, for the account of the Company, of the Exercise Price for the number of Warrant Shares specified in such notice. The Exercise Price for the number of Warrant Shares specified in the notice shall be payable in immediately available good funds, in U.S. dollars.

(ii) Net Exercise - In the event of (i) the closing of the IPO, (ii) the closing of any transaction for the sale of all or substantially all of the assets or the shares of the Company, or (iii) the merger or consolidation of the Company in which the Company is not the surviving entity (an “Exit Event”), and provided that the Warrant has not been previously fully exercised or terminated, in lieu of the payment method set forth in Section 1(b)(i) above, the Holder may elect to exchange the Warrant for a number of Warrant Shares calculated pursuant to the following formula. If the Holder elects to exchange this Warrant as provided in this Section l(b)(ii), the Holder shall tender to the Company the Warrant along with the Notice of Exercise, and the Company shall issue to the Holder the number of Warrant Shares computed using the following formula:

 

	X = Y(A-B)
	A

 

Where:

 

X = the number of Warrant Shares to be issued to the Holder.

 

Y = the number of shares of Warrant Shares purchasable under the Warrant (as adjusted to the date of such calculation, but excluding those shares already issued under this Warrant).

 

A = the Fair Market Value (as defined below) of one share of the Company’s Common Stock.

 

B = Per share Exercise Price (as adjusted to the date of such calculation).

 

“Fair Market Value” of a share of the Company’s Commons Stock shall mean:

 

(a)

Except as set forth in paragraphs 1(b)(ii)(b) and 1(b)(ii)(c) (below), as determined by the Company’s Board of Directors in good faith.

 

(b)

If the exercise date is the date of closing of the IPO, then the price at which the Common Stock is being sold to the public in the IPO (after deduction of discounts and commissions but before expenses).

 

(c)

If the exercise date is the date of closing of an Exit Event, then the value of such shares as determined for purpose of such transaction, and, in the absence of such determination, in accordance with Section 1(c)(i)(a) above.

(c)       Partial Exercise, Etc. If this Warrant should be exercised in part, the Company shall, promptly after surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the balance of the shares purchasable hereunder.

 

(d)       Issuance of the Warrant Shares. Promptly after presentation and surrender of the notice of exercise accompanied by the payment of the Exercise Price pursuant to Section 1(b)(i) above or in accordance with Section 1(b)(ii) above, the Company shall issue to the Holder the shares to which the Holder is entitled thereto. Upon receipt by the Company of the notice or exercise and the Exercise Price, the Holder shall be deemed to be the holder of the shares issuable upon such exercise, notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to the Holder. The Company shall pay all charges that may be payable in connection with the issuance of the shares and the preparation and delivery of share certificates pursuant to this Section 1 in the name of the Holder, but shall not pay any taxes, levies, charges and the like payable by the Holder by virtue of the receipt, holding and exercise of this Warrant or of the holding, issuance, exercise or sale of the Warrant Shares to or by the Holder.

 

(e)       Withholding Taxes. The Holder is responsible for any and all taxes to be paid in connection with the exercise of the Warrant or the sale of the Warrant Shares. To the extent required by applicable federal, state, local or foreign law, and as a condition to the Company’s obligation to issue any Warrant Shares upon the exercise of the Warrant in full or in part, Holder will make arrangements reasonably satisfactory to the Company for the payment of any withholding tax obligations that arise by reason of such exercise.

 

2.             Reservation of Shares

 

The Company hereby agrees that at all times it will maintain and reserve, free from pre-emptive rights, such number of authorized but unissued Warrant Shares so that this Warrant may be exercised without additional authorization of Warrant Shares after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of the Company.

 

3.             Adjustment

 

The number of Warrant Shares purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time or upon exercise as provided in this Section 3.

 

(a)       Rights Offer. If the Company’s shareholders are offered any securities whatsoever by a rights issue, neither the Exercise Price nor the quantity of Warrant Shares will be adjusted, provided that the Company shall offer identical rights on the same terms and conditions to the Holder, as if the Holder had exercised this Warrant in full immediately prior to the date of conferring the right to participate in the rights issue.

(b)       Consolidation and Division. If the Company consolidates its shares into shares of greater nominal value, or subdivides them into shares of lesser nominal value, the number of Warrant Shares to be allotted on exercise of this Warrant after such consolidation or subdivision and the Exercise Price will be reduced or increased, as the case may be. The Holder will not be entitled to receive a fraction of a Warrant Share.

 

(c)       Bonus Shares and Certain Distributions. In the event of a distribution of share dividend, other distribution payable in additional shares or bonus shares prior to the end of the Option Period, this Warrant shall represent, subject to its exercise, the right to acquire, in addition to the number of Warrant Shares indicated in the caption of this Warrant, and without payment of any additional consideration therefor, the amount of shares in such share dividend, other distribution payable in additional shares or bonus shares to which the Holder hereof would have been entitled had this Warrant been exercised prior to the distribution of the bonus shares.

 

(d)       General Protection. The Company will not, by amendment of its Certificate of Incorporation, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder, but will at all times in good faith assist in the carrying out of all the provisions hereof and in taking of all such actions and making all such adjustments as may be necessary or appropriate in order to protect the rights of the Holder against impairment.

 

4.             Representations of Holder

 

The Holder, by accepting this Warrant, represents that the Holder is acquiring this Warrant for its own account or the account of an affiliate for investment purposes and not with the view to any offering or distribution and that the Holder will not sell or otherwise dispose of this Warrant or the underlying Warrant Shares in violation of applicable securities laws. The Holder acknowledges that the certificates representing any Warrant Shares will bear a legend indicating that they have not been registered under the Securities Act and may not be sold by the Holder except pursuant to an effective registration statement or pursuant to an exemption from the registration requirements of the Securities Act and in accordance with federal and state securities laws.

 

5.             No Stockholder Rights

 

The Holder shall not, by virtue hereof, be entitled to any rights or privileges of a stockholder in the Company.

 

Upon exercising any portion of this Warrant, Holder shall enter into and be bound by all of the terms of the Company’s Stockholders’ Agreement, if any.

 

6.            Termination

 

This Warrant and the rights conferred hereunder shall terminate on the earlier of: (i) the expiration of the Option Period, or (ii) the date of exercise in full of this Warrant.

7.             Limitation on Transfer

 

This Warrant and the rights of the Holder hereunder may not be transferred and/or assigned in any way whatsoever other than in connection with an estate planning, and no transaction in respect thereof shall be made, either for consideration or for no consideration.

 

8.              Governing Law

 

This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflicts or choice of laws. The parties hereto hereby submit to the jurisdiction of the courts of the State of New York located in New York City or the United States District Court for the Southern District of New York for every dispute, action, claim or proceeding arising from or in connection with this Warrant.

 

DATED: July 26, 2011		OUTBRAIN, INC.
		By:	/s/ Patrick Kelly
		Name:	Patrick Kelly
		Title:	VP Finance, Secretary

 

We acknowledge and agree to the terms of this Warrant.

 

/s/ Baruch Lipner
(sign)

  

American Friends of Tmura

 

By:	/s/ Baruch Lipner
Name:	Baruch Lipner
Title:	Executive Director

NOTICE OF EXERCISE

 

To: Outbrain, Inc.

 

1.

The undersigned hereby elects to purchase __________ shares of Common Stock of Outbrain, Inc., pursuant to the terms of the attached Warrant, (a) tenders herewith payment of the purchase price for such shares; or (b) tenders the Warrant as a net exercise pursuant to Section 1(c)(ii) thereof.

 

2.

In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares are being acquired solely for the account of the undersigned and not as a nominee for any other party, or for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.

 

3.

Please issue a certificate representing said shares in the name of the undersigned.

 

4.

Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned.

 

(Date)		(Print Name)
		(Signature)

IRREVOCABLE LETTER OF APPOINTMENT
OF PROXY AND POWER OF ATTORNEY

 

1.

The undersigned holder (“Stockholder”) of [___] shares of Common Stock (the “Shares”) of OUTBRAIN, INC, a Delaware corporation (the “Company”), hereby irrevocably (to the fullest extent permitted by the Delaware General Corporation Law) appoints the chairman of the Company’s Board of Directors, as may be appointed from time to time (the “Chairman”) as the Stockholder’s true and lawful, sole and exclusive proxy and attorney-in-fact, with full power of substitution, to vote and exercise all voting and related rights as Stockholders proxy (i) at all annual and special meetings of the stockholders of the Company including any class meetings, and any postponements or adjournments thereof, and (ii) on all consents or dissents by stockholders of the Company to corporate actions in writing without a meeting, with respect to all of the Shares (which term shall include the Shares and any other voting security of the Company owned as of record by the Stockholder (whether now owned or hereafter acquired)), in the Chairman’s sole discretion. The Stockholder shall be entitled to receive any notice submitted to the stockholders of the Company; provided, that Stockholder hereby waives the timely delivery of any such notice (including with respect to meetings of the stockholders of the Company). Without limiting the foregoing, the Chairman, in his capacity as proxy holders hereunder shall have the right to waive the timely delivery of any such notice on behalf of Stockholder.

 

2.

The proxy granted by the Stockholder pursuant to this Irrevocable Letter of Appointment is coupled with an interest and is given to secure the performance of the Stockholder’s duties under certain obligations that he took upon himself toward the Chairman.

 

3.

In addition, the Stockholder hereby irrevocably constitutes and appoints the Chairman as the Stockholder’s true and lawful attorney-in-fact, with full power of substitution and with full power and authority to act in the name of, for and on behalf of, the Stockholder with respect to any and all matters arising in connection with the Shares or any agreement to which the Stockholder and the Company are bound, including, but not limited to, the power and authority on behalf of the Stockholder to make, execute, acknowledge and deliver any and all contracts, amendments, stock powers, orders, receipts, notices, instructions, certificates, letters and other writings, and in general do any and all things, that the Chairman in his sole discretion may deem advisable and not adverse to the Stockholder, in each case as fully as could the Stockholder if personally present and acting. The Stockholder hereby agrees that, upon the execution and deliver of any such instruments by the Chairman on behalf of the Stockholder, the Stockholder shall be bound by and obligated to perform each and every covenant and agreement of the Stockholder contained therein.

 

4.

The Chairman is hereby empowered to determine in his sole discretion the time or times when, the purpose for and the manner in which any power herein conferred upon him shall be exercised, and the conditions, provisions or covenants of any instrument or document that may be executed by him pursuant hereto.

5.

The Stockholder hereby agrees to indemnify the Chairman for and to hold the Chairman free from and harmless against any and all loss, claim, damage, liability or expense incurred by or on behalf of the Chairman under this Irrevocable Letter of Appointment arising out of or in connection with acting as Stockholder’s proxy or attorney-in-fact hereunder, as well as the reasonable costs and expenses of defending against any claim of liability hereunder, and not due to the Chairman’s own gross negligence or willful misconduct.

 

6.

This Irrevocable Letter of Appointment shall be irrevocable until, and shall automatically terminate upon, the consummation of the Company’s initial public offering, and shall survive the death, incompetency or disability of the Stockholder (if he or she is an individual), or the merger or dissolution of the Stockholder (that is a corporation or a partnership), and shall be binding upon Stockholder’s successors and assignees. The Stockholder acknowledges and understands that the specific date on which this Irrevocable Letter of Appointment will terminate is not presently known, and that such date may be more than three years after the date hereof.

 

7.

The undersigned acknowledges and agrees that his/its undertakings as per the above are and will remain irrevocable, as one or more third parties will be relying upon them in taking action that they may otherwise not take, and by which they may be adversely changing their financial and/or legal situation.

 

8.

Stock certificates representing the Shares shall be imprinted with a legend stating that the shares are subject to this Irrevocable Letter of Appointment. Upon termination of this Irrevocable Letter of Appointment and upon receipt of certificates representing Shares bearing a legend referring to this Irrevocable Letter of Appointment, certificates without the legend may be reissued by the Company.

 

9.

This Irrevocable Letter of Appointment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles. The undersigned hereby submits to the jurisdiction of New York courts every dispute arising from, or in connection with, this Irrevocable Letter of Appointment.

 

10.

Stockholder hereby revokes any prior oral or written proxy which may have been executed by Stockholder with respect to any securities of the Company and agrees not to grant any subsequent proxies with respect to any securities of the Company until after the termination of this Irrevocable Letter of Appointment.

 

American Friends of Tmura

 

Address:

 

Date:

[For US Investors]

 

Today: _________

 

To
Outbrain. Inc.

 

Dear Sirs,

 

The undersigned (the “Investor”), having been granted, under a Warrant Agreement dated as of _____________ (the “Warrant Agreement”) the right to purchase from Outbrain, Inc., a Delaware corporation (“the Company”), 100,000 shares of Common Stock, $0.001 par value each of the Company against payment of the sum of $[____] per share, hereby represents and warrants as follows:

 

1.

The Investor resides in the United States in the state or other jurisdiction included within the Investor’s address set forth below the Investor’s signature below;

 

2.

The Investor understands and acknowledges that the Company has entered into the Warrant Agreement with the Investor in reliance upon (i) the accuracy of the information supplied to the Company by the Investor, and (ii) the Investor’s representation to the Company, including those contained herein, which the Investor’s execution of the Warrant Agreement and of this instrument hereby confirms, that the Shares to be received by the Investor will be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof in violation of applicable securities laws.

 

3.

The Investor understands and acknowledges that the offering of the Shares pursuant to the Warrant Agreement will not be registered under the Securities Act of 1933 on the grounds that the offering and sale of securities contemplated by the Warrant Agreement are exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 (the “Securities Act”) and Rule 506 of Regulation D promulgated thereunder, and that the Company’s reliance upon such exemption is predicated upon the Investor’s representations set forth herein.

 

4.

The Investor acknowledges and agrees that the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Investor has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited public resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring not less than the required holding period, the sale being through an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934, as amended) and the number of shares being sold during any three-month period not exceeding specified limitations.

5.

The Investor: (i) is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, (ii) has previously invested in securities of companies in the development stage and acknowledges that it is able to fend for itself, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares; (iii) has the ability to bear the economic risks of the Investor’s prospective investment; (iv) is able, without materially impairing its financial condition, to hold the Shares, for an indefinite period of time and to suffer complete loss on its investment.

 

6.

The Investor agrees, at any time and from time to time, without consideration, to take such actions and to execute and deliver such documents as may be reasonably required by the Company to effectuate or complete this instrument and/or the rights of the Company hereunder.

 

(sign)

Name: American Friends of Tmura

Address:

[For Non-US Investors]

 

Today :________

 

To
Outbrain. Inc.

 

Dear Sirs,

 

The undersigned (the “Investor”), having been granted, under a Warrant Agreement dated as of____________ (the “Warrant Agreement”) the right to purchase from Outbrain, Inc., a Delaware corporation (“the Company”), 100,000 shares of Common Stock, $0.001 par value each of the Company against payment of the sum of $[___] per share, hereby represents and warrants as follows:

 

1.

The Investor is not a “U.S. person” as that term is defined in Rule 902(k) of Regulation S promulgated under the Securities Act of 1933 (the “Securities Act”), meaning that the Investor is not (i) a natural person resident in the United States, (ii) a partnership or corporation organized or incorporated under the laws of the United States, (iii) an estate of which any executor or administrator is a U.S. person, (iv) a trust of which any trustee is a U.S. person, or (v) a partnership or corporation organized or incorporated under the laws of a jurisdiction outside the United States but formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act.

 

2.

The Investor is not purchasing the Shares for the account or benefit of any U.S. person, or with a view towards distribution to any U.S. person, in violation of the registration requirements of the Securities Act.

 

3.

The Investor will make all subsequent offers and sales of the Shares either (x) outside of the United States in compliance with Regulation S; (y) pursuant to a registration under the Securities Act; or (z) pursuant to an available exemption from registration under the Securities Act. Specifically, such Shareholder will not resell the Shares to any U.S. person or within the United States prior to the expiration of a period commencing on the Effective Date and ending on the date that is one year thereafter, except pursuant to registration under the Securities Act or an exemption from registration under the Securities Act.

 

4.

The Investor did not receive an offer to purchase the Shares from the Company or any of its representatives at any time when the Investor was physically present in the United States, and the Investor has executed the Warrant Agreement outside of the United States.

 

(sign)

Name: American Friends of Tmura

Address:

 

Exhibit 4.8

 

Execution Copy

 

NEITHER THIS WARRANT NOR ANY SECURITIES WHICH MAY BE ISSUED UPON CONVERSION OR EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “Securities Act”), OR REGISTERED OR OTHERWISE QUALIFIED UNDER ANY STATE SECURITIES LAW. NEITHER THIS WARRANT NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND REGISTRATION OR OTHER QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR OTHER QUALIFICATION IS NOT REQUIRED.

 

Warrant

 

to Purchase up to an Aggregate of 37,713

 

Shares of Common Stock (subject to adjustment) of

 

OUTBRAIN, INC.

 

at a per share price as detailed below

 

Void After the expiration of the Option Period (defined below)

 

This is to certify that Ouriel Ohyaon (“Holder”) is entitled to purchase, subject to the provisions of this Warrant, from OUTBRAIN, INC., a company incorporated under the laws of the State of Delaware (the “Company”), during the period (the “Option Period”) from the date hereof until the earlier of (i) immediately prior to the closing of the initial public offering of the Company’s shares (“IPO”), or (ii) immediately prior to the closing of any transaction for the sale of substantially all of the assets or the shares of the Company, an aggregate of up to 37,713 (subject to adjustment as provided in Section 3 below)-fully paid and non-assessable shares of Common Stock, U.S.$ 0.001 par value per share (the “Warrant Shares”), of the Company at a price of U.S.$0.2186 per share (the “Exercise Price”), all subject to the terms and conditions set forth below.

 

1.

Vesting and Exercise of Warrant

 

(a)        Vesting; Acceleration. Initially, the entire Warrant will be unvested; during the term that Holder is serving as an advisor to the Company, portions of the Warrant will become vested in twenty-four equal installments, each of which to occur every month (approximately 1,571 shares/month) on a cumulative basis over the twenty-four month period commencing on January 8, 2007. It is hereby clarified that no portion of the Warrant shall vest from and after the date that Holder ceases to serve as an advisor to the Company.

Notwithstanding the above, this Warrant, to the extent not previously terminated or expired and provided that Holder is serving as an advisor to the Company as of the relevant time, shall become fully vested immediately prior to the earlier of: (i) the closing of the IPO, (ii) the closing of any transaction for the sale of all or substantially all of the assets or the shares of the Company, or (iii) the merger or consolidation of the Company in which the Company is not the surviving entity (an “Exit Event”).

 

(b)        Notice of Exercise. Notice of exercise of this Warrant in the form annexed hereto duly completed and executed on behalf of the Holder must be submitted to the Company no later than the expiration of the Option Period.

 

(c)        Method of Exercise. 

 

(i) Exercise for Cash - The vested portion of this Warrant may be exercised in whole or in part by presentation and surrender hereof to the Company at the principal office of the Company, accompanied by (i) a written notice of exercise and (ii) payment to the Company, for the account of the Company, of the Exercise Price for the number of Warrant Shares specified in such notice. The Exercise Price for the number of Warrant Shares specified in the notice shall be payable in immediately available good funds, in U.S. dollars.

 

(ii) Net Exercise – In the event of an IPO or an Exit Event, and provided that the Warrant has not been previously fully exercised or terminated, in lieu of the payment method set forth in Section l(c)(i) above, the Holder may elect to exchange the vested portion of the Warrant for a number of Warrant Shares calculated pursuant to the following formula. If the Holder elects to exchange this Warrant as provided in this Section l(c)(ii), the Holder shall tender to the Company the Warrant along with the Notice of Exercise, and the Company shall issue to the Holder the number of Warrant Shares computed using the following formula:

 

X =	Y(A-B)
	A

 

Where:

 

X = the number of Warrant Shares to be issued to the Holder.

 

Y = the number of shares of vested Warrant Shares purchasable under the Warrant (as adjusted to the date of such calculation, but excluding those shares already issued under this Warrant).

 

A = the Fair Market Value (as defined below) of one share of the Company’s Common Stock.

 

B = Per share Exercise Price (as adjusted to the date of such calculation).

“Fair Market Value” of a share of the Company’s Commons Stock shall mean:

 

(a)

Except as set forth in paragraphs l(c)(ii)(b) and l(c)(ii)(c) (below), as determined by the Company’s Board of Directors in good faith.

(b)

If the exercise date is the date of closing of the IPO, then the price at which the Common Stock is being sold to the public in the IPO (after deduction of discounts and commissions hut before expenses).

(c)

If the exercise date is the date of closing of an Exit Event, then the Value of such shares as determined for purpose of such transaction, and, in the absence of such determination, in accordance with Section l(c)(i)(a) above.

 

(d)        Partial Exercise, Etc. If this Warrant should be exercised in part, the Company shall, promptly after surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the balance of the shares purchasable hereunder.

 

(e)        Issuance of the Warrant Shares. Promptly after presentation and surrender of the notice of exercise accompanied by the payment of the Exercise Price pursuant to Section l(c)(i) above or in accordance with Section 1(c) (ii) above, the Company shall issue to the Holder the shares to which the Holder is entitled thereto. Upon receipt by the Company of the notice or exercise and the Exercise Price, the Holder shall be deemed to be the holder of the shares issuable upon such exercise, notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to the Holder. The Company shall pay all charges that may be payable in connection with the issuance of the shares and the preparation and delivery of share certificates pursuant to this Section 1 in the name of the Holder, but shall not pay any taxes, levies, charges and the like payable by the Holder by virtue of the receipt, holding and exercise of this Warrant or of the holding, issuance, exercise or sale of the Warrant Shares to or by the Holder.

 

(f)         Withholding Taxes. The Holder is responsible for any and all taxes to be paid in connection with the exercise of the Warrant or the sale of the Warrant Shares. To the extent required by applicable federal, state, local or foreign law, and as a condition to the Company’s obligation to issue any Warrant Shares upon the exercise of the Warrant in full or in part, Holder will make arrangements reasonably satisfactory to the Company for the payment of any withholding tax obligations that arise by reason of such exercise.

 

2.

Reservation of Shares

 

The Company hereby agrees that at all times it will maintain and reserve, free from pre-emptive rights, such number of authorized but unissued Warrant Shares so that this Warrant may be exercised without additional authorization of Warrant Shares after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of the Company.

3.

Adjustment

 

The number of Warrant Shares purchasable upon the exercise of this Warrant and_:the Exercise Price shall be subject to adjustment from time to time or upon exercise as provided in this Section 3.

 

(a)        Rights Offer. If the Company’s shareholders are offered any securities whatsoever by a rights issue, neither the Exercise Price nor the quantity of Warrant Shares will be adjusted, provided that the Company shall offer identical rights on the same terms and conditions to the Holder, as if the Holder had exercised this Warrant in full immediately prior to the date of conferring the right to participate in the rights issue.

 

(b)        Consolidation and Division. If the Company consolidates its Warrant Shares into shares of greater nominal value, or subdivides them into shares of lesser nominal value, the number of Warrant Shares to be allotted on exercise of this Warrant after such consolidation or subdivision and the Exercise Price will be reduced or increased, as the case may be. The Holder will not be entitled to receive a fraction of a Warrant Share.

 

(c)        Bonus Shares and Certain Distributions. In the event of a distribution of share dividend, other distribution payable in additional shares or bonus shares prior to the end of the Option Period, this Warrant shall represent, subject to its exercise, the right to acquire, in addition to the number of Warrant Shares indicated in the caption of this Warrant, and without payment of any additional consideration therefor, the amount of shares in such share dividend, other distribution payable in additional shares or bonus shares to which the Holder hereof would have been entitled had this Warrant been exercised prior to the distribution of the bonus shares.

 

(d)        General Protection. The Company will not, by amendment of its Certificate of Incorporation, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder, but will at all times in good faith assist in the carrying out of all the provisions hereof and in taking of all such actions and making all such adjustments as may be necessary or appropriate in order to protect the rights of the Holder against impairment.

 

4.

Representations of Holder

 

The Holder has executed a letter directed to the Company indicating that the Holder is either an “accredited investor” or not a “U.S. person”. The Holder understands that the Company is relying on the Holder’s representations relating to the Holder’s status in order to comply with the securities laws of the United States. The Holder, by accepting this Warrant, represents that the Holder is acquiring this Warrant for its own account or the account of an affiliate for investment purposes and not with the view to any offering or distribution and that the Holder will not sell or otherwise dispose of this Warrant or the underlying Warrant Shares in violation of applicable securities laws. The Holder acknowledges that the certificates representing any Warrant Shares will bear a legend indicating that they have not been registered under the Securities Act and may not be sold by the Holder except pursuant to an effective registration statement or pursuant to an exemption from the registration requirements of the Securities Act and in accordance with federal and state securities laws.

5.

No Stockholder Rights

 

The Holder shall not, by virtue hereof be entitled to any rights of privileges of a stockholder in the Company.

 

6.

Termination

 

This Warrant and the rights conferred hereunder shall terminate on the earlier of: (i) the expiration of the Option Period, or (ii) the date of exercise in full of this Warrant.

 

7.

Limitation On Transfer

 

This Warrant and the rights of the Holder hereunder may not be transferred and/or assigned in any way whatsoever other than in connection with an estate planning and no transaction in respect thereof shall be made, either for consideration or for no consideration.

 

8..

Governing Law

 

This Warrant shall fee governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflicts or choice of laws. The parties hereto hereby submit to the jurisdiction of the courts of the State of New York located in New York City or the United States District Court for the Southern District of New York for every dispute, action, claim or proceeding arising from or in connection with this Warrant.

 

DATED: January 8, 2007	OUTBRAIN, INC.
	By:	/s/ Yaron Galai

 

	Name:	Yaron Galai
	Title:	CEO

 

I acknowledge and agree to the terms of this Warrant.

 

/s/ Ouriel Ohayon
(sign)
Name: Ouriel Ohayon

NOTICE OF EXERCISE

 

To: Outbrain, Inc.

 

1.

The undersigned hereby elects to purchase _____ shares of Common Stock of Outbrain, Inc., pursuant to the terms of the attached Warrant, (a) tenders herewith payment of the purchase price for such shares; or (b) tenders the Warrant as a net exercise pursuant to Section l (c)(ii) thereof.

 

2.

In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares are being acquired solely for the account of the undersigned and not as a nominee for any other party, or for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.

 

3.

The undersigned represents and warrants that the undersigned (a) purchased the Warrant from the Company, (b) is an “accredited investor” (as such term is defined in Rule 501(a) under the Securities Act of 1933, as amended (the “Securities Act”)), or (c) is not a “U.S. person” (as defined in Rule 902(k) under the Securities Act).

 

3.

Please issue a certificate representing said shares in the name of the undersigned.

 

4.

Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned.

 

(Date)		(Print Name)
		(Signature)

 

Exhibit 10.2

 

AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of September 15, 2014 (the “Effective Date”) between (i) SILICON VALLEY BANK, a California corporation (“Bank”), and (ii) OUTBRAIN INC., a Delaware corporation (“Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. This Agreement amends and restates in its entirety that certain Loan and Security Agreement dated as of May 24, 2013 between Borrower and Bank (as amended from time to time, the “Prior Loan Agreement”). The parties agree as follows:

 

1

ACCOUNTING AND OTHER TERMS

 

Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

 

2

LOAN AND TERMS OF PAYMENT

 

2.1          Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.

 

2.2

Revolving Advances.

 

(a)          Availability. Subject to the terms and conditions of this Agreement and to deduction of Reserves, Bank shall make Advances not exceeding the Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein.

 

(b)          Termination; Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.

 

2.3          Overadvances. If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in cash the amount of such excess (such excess, the “Overadvance”). Without limiting Borrower’s obligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at the Default Rate.

 

2.4

Payment of Interest on the Credit Extensions.

 

(a)          Advances. Subject to Section 2.4(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to three-quarters of one percentage point (0.75%) above the Prime Rate; provided, however, during a Streamline Period, the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to one-quarter of one percentage point (0.25%) above the Prime Rate, which interest shall be payable monthly in accordance with Section 2.4(e) below.

(b)          Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is five percent (5.0%) above the rate that is otherwise applicable thereto (the “Default Rate”). Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.4(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank.

 

(c)          Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change.

 

(d)          Minimum Interest. In the event the aggregate amount of interest earned by Bank in connection with the Revolving Line in any month (such period, the “Minimum Interest Period,” which period shall begin on the Effective Date and continue with each month thereafter until the earlier of the Revolving Line Maturity Date or the date this Agreement is terminated) is less than Six Thousand Dollars ($6,000) (exclusive of any collateral monitoring fees, or any other fees and charges hereunder) (“Minimum Interest”), Borrower shall pay to Bank, upon demand by Bank, an amount equal to the (i) Minimum Interest minus (ii) the aggregate amount of all interest earned by Bank (exclusive of any collateral monitoring fees, or any other fees and charges hereunder) in such Minimum Interest Period. The amount of Minimum Interest charged shall be prorated for any partial Minimum Interest Period and any partial Minimum Interest Period resulting from the termination of this Agreement. Borrower shall not be entitled to any credit, rebate, or repayment of any Minimum Interest pursuant to this Section 2.4(d) notwithstanding any termination of this Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under this Section 2.4(d) pursuant to the terms of Section 2.6(c). Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of this Section 2.4(d).

 

(e)          Payment; Interest Computation. Interest is payable monthly on the last calendar day of each month and shall be computed on the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 12:00 p.m. Eastern time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.

2.5

Fees. Borrower shall pay to Bank:

 

(a)          Commitment Fee. A fully earned, non-refundable commitment fee of Thirty Seven Thousand Five Hundred Dollars ($37,500), payable as follows: Eighteen Thousand Seven Hundred Fifty Dollars ($18,750) on the Effective Date, and Eighteen Thousand Seven Hundred Fifty Dollars ($18,750) on the first anniversary of the Effective Date.

 

(b)          Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).

 

(c)          Fees Fully Earned. Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses of this Section 2.5 pursuant to the terms of Section 2.6(c). Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.5.

 

2.6

Payments; Application of Payments; Debit of Accounts.

 

(a)          All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff or counterclaim, before 12:00 p.m. Eastern time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.

 

(b)          Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.

 

(c)          Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other documented amounts Borrower owes Bank when due. These debits shall not constitute a set-off.

 

3

CONDITIONS OF LOANS

 

3.1          Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:

 

(a)          duly executed original signatures of Borrower to the Loan Documents;

(b)          the Operating Documents and long-form good standing certificates of Borrower certified by the Secretary of State (or equivalent agency) of Borrower’s jurisdiction of organization or formation and each jurisdiction in which Borrower is qualified to conduct business, each as of a date no earlier than thirty (30) days prior to the Effective Date;

 

(c)          duly executed original signatures to the completed Borrowing Resolutions for Borrower;

 

(d)          certified copies, dated as of a recent date, of financing statement and other lien searches, as Bank may request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released;

 

(e)          the Perfection Certificate of Borrower, together with the duly executed original signature thereto;

 

(f)          a legal opinion of Borrower’s counsel dated as of the Effective Date together with the duly executed original signature thereto;

 

(g)          evidence satisfactory to Bank that the insurance policies and endorsements required by Section 6.7 hereof are in full force and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank; and

 

(h)          payment of the fees and Bank Expenses then due as specified in Section 2.5 hereof.

 

3.2          Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension, are subject to the following conditions precedent:

 

(a)          timely receipt of an executed Transaction Report;

 

(b)          the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the Transaction Report and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and

(c)          Bank determines to its reasonable satisfaction that there has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations, or any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank.

 

3.3          Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit Extension; provided, however, such condition precedent shall not require Borrower to deliver any item required under this Agreement prior to the required delivery date under this Agreement. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion.

 

3.4          Procedures for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, to obtain an Advance, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Eastern time on the Funding Date of the Advance. In connection with such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or facsimile a completed Transaction Report executed by a Responsible Officer or his or her designee. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Bank shall credit proceeds of an Advance to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due.

 

3.5          Post-Closing Requirements. Bank shall have received, in form and substance satisfactory to Bank within the time periods set forth below, the following:

 

(a)          Within sixty (60) days after the Effective Date (i) a landlord’s consent in favor of Bank for (A) 2200 Busse Road, Elk Grove, Illinois 60007, (B) 1 Enterprise Avenue North, Seacaucus, New Jersey 07094, and (C) 600 West 7^th Street, Las Angeles, California 90017 by the respective landlord thereof, together with the duly executed original signatures thereto, and (ii) a bailee’s waiver in favor of Bank for each location where Borrower maintains property with a third party, by each such third party, together with the duly executed original signatures thereto; and

 

(b)          Within ninety (90) days after the Effective Date, Borrower shall close all of its Collateral Accounts in the United States not located at Bank, with the proceeds in such Collateral Accounts transferred to an account of Borrower at Bank.

 

4

CREATION OF SECURITY INTEREST

 

4.1          Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.

Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien in this Agreement).

 

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred percent (100.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred five percent (105.0%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its business judgment), to secure all of the Obligations relating to such Letters of Credit.

 

4.2          Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.

 

4.3          Authorization to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code.

5

REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants as follows:

 

5.1          Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate as of the Effective Date signed by Borrower, entitled “Perfection Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational identification number.

 

The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect and except where the failure to make any filing, registration or qualification could not reasonably be expected to have a material adverse effect on Borrower’s business), or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s business.

 

5.2          Collateral. Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a perfected security interest therein, pursuant to the term of Section 6.8(b). The Accounts recorded or reflected on Borrower’s Books or records are bona fide, existing obligations of the Account Debtors.

The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2.

 

Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate. Each Patent which it owns or purports to own and which is material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s business.

 

Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.

 

5.3

Accounts Receivable.

 

(a)          For each Account with respect to which Advances are requested, on the date each Advance is requested and made, such Account shall be an Eligible Account.

 

(b)          All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Eligible Accounts are and shall be true and correct as of the date of such invoice or issuance of such other document and all such invoices, instruments and other documents, and all of Borrower’s Books are genuine and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Transaction Report. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms.

 

5.4          Litigation. Except as set forth in the Perfection Certificate delivered on the Effective Date or as disclosed pursuant to Section 6.2(i), there are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, One Hundred Thousand Dollars ($100,000).

 

5.5          Financial Statements; Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations (subject to the lack of footnotes and year-end adjustments). There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank.

5.6          Solvency. The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition costs) exceeds the fair value of Borrower’s liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.

 

5.7          Regulatory Compliance. Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted.

 

5.8          Subsidiaries; Investments. Borrower does not own any stock, partnership, or other ownership interest or other equity securities except for Permitted Investments.

 

5.9          Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Twenty Thousand Dollars ($20,000).

 

To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the Governmental Authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

5.10        Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions as working capital and to fund its general business requirements and not for personal, family, household or agricultural purposes.

 

5.11        Full Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

 

5.12        Definition of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.

 

6

AFFIRMATIVE COVENANTS

 

Borrower shall do all of the following:

 

6.1

Government Compliance.

 

(a)          Except as permitted by Section 7.3, maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, in all material respects, with all laws, ordinances and regulations to which it is subject.

 

(b)          Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in all of its property. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank.

 

6.2

Financial Statements, Reports, Certificates. Provide Bank with the following:

 

(a)          a Transaction Report (and any schedules related thereto) (i) with each request for an Advance, and (ii) within thirty (30) days after the end of each month;

 

(b)          (i) within thirty (30) days after the end of each month, (A) monthly accounts receivable agings, aged by invoice date and (B) monthly accounts payable agings, aged by invoice date, and (ii) upon request by Bank, copies of outstanding or held check registers, if any, monthly reconciliations of accounts receivable agings (aged by invoice date), transaction reports, and general ledger;

(c)          as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations for such month certified by a Responsible Officer and in a form acceptable to Bank (the “Monthly Financial Statements”);

 

(d)          within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with all of the terms and conditions of this Agreement (except as specifically noted therein), and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank may reasonably request, including, without limitation, a statement that at the end of such month there were no held checks;

 

(e)          within thirty (30) days after the end of each of Borrower’s fiscal years, and contemporaneously with any updates or changes thereto, an annual operating budget and annual financial projection as to the then current fiscal year (prepared on a quarterly basis) as approved by Borrower’s board of directors, together with any related business forecasts used in the preparation of such annual financial projections, in a form of presentation reasonably acceptable to Bank;

 

(f)           as soon as available, and in any event within one hundred eighty (180) days following the end of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank. Notwithstanding the foregoing, Borrower shall provide Bank, on or before September 30, 2014, with Borrower’s audited consolidated financial statements for the fiscal years ended 2012 and 2013;

 

(g)          in the event that Borrower becomes subject to the reporting requirements under the Exchange Act within five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s website on the Internet at Borrower’s website address; provided, however, Borrower shall promptly notify Bank in writing (which may be by electronic mail) of the posting of any such documents;

 

(h)          within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt;

 

(i)            prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could result in uninsured damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Fifty Thousand Dollars ($50,000) or more; and

(j)            other financial information reasonably requested by Bank.

 

6.3

Accounts Receivable.

 

(a)          Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank transaction reports and schedules of collections, as provided in Section 6.2, on Bank’s standard forms; provided, however, that Borrower’s failure to execute and deliver the same shall not affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein. If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request following the occurrence and during the continuance of an Event of Default, originals) of all contracts, orders, invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on its request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts in excess of $100,000, in the same form as received, with all necessary indorsements, and copies of all credit memos.

 

(b)          Disputes. Borrower shall promptly notify Bank of all disputes or claims relating to Accounts in excess of $50,000 individually or $150,000 in the aggregate per month for all such disputes or claims. Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions, and reports the same to Bank in the regular reports provided to Bank; (ii) no Default or Event of Default has occurred and is continuing; and (iii) after taking into account all such discounts, settlements and forgiveness, the total outstanding Advances will not exceed the lesser of the Revolving Line or the Borrowing Base.

 

(c)          Collection of Accounts. Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing. Bank shall require that Borrower direct Account Debtors to deliver or transmit all proceeds of Accounts into a lockbox account, or such other “blocked account” as specified by Bank (either such account, the “Cash Collateral Account”). Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to the Cash Collateral Account and (i) prior to the occurrence of an Event of Default, (A) during a Streamline Period, transferred to the Designated Deposit Account or (B) when a Streamline Period is not in effect, applied to immediately reduce the Obligations and (ii) following the occurrence of an Event of Default, in accordance with Section 9.4.

 

(d)          Returns. Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower, Borrower shall promptly (i) determine the reason for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount, and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event any attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in trust for Bank, and immediately notify Bank of the return of the Inventory.

(e)          Verification. Bank may, from time to time, verify directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or such other name as Bank may choose, and notify any Account Debtor of Bank’s security interest in such Account.

 

(f)          No Liability. Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrower’s obligations under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bank from liability for its own gross negligence or willful misconduct.

 

6.4          Remittance of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of any Collateral to Bank in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied to the Obligations (a) prior to an Event of Default, pursuant to the terms of Section 2.5(b) hereof, and (b) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of One Hundred Thousand Dollars ($100,000) or less (for all such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral with any of Borrower’s other funds or property, but will hold such proceeds separate and apart from such other funds and property and in an express trust for Bank. Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.

 

6.5          Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except (i) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Fifty Thousand Dollars ($50,000) or (ii) for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

 

6.6          Access to Collateral; Books and Records. At reasonable times, on three (3) Business Day’s notice (provided no notice is required if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy Borrower’s Books. The foregoing inspections and audits shall be conducted at Borrower’s expense and no more often than once every twelve (12) months unless an Event of Default has occurred and is continuing in which case such inspections and audits shall occur as often as Bank shall determine is necessary. The charge therefor shall be $850 per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than five (5) Business Days in advance, and Borrower cancels or seeks to or reschedules the audit with less than five (5) Business Days written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling.

6.7

Insurance.

 

(a)          Keep its business and the Collateral insured for risks and in amounts standard for companies of Borrower’s size and in Borrower’s industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates of Borrower, and in amounts that are reasonably satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as lender loss payee. All liability policies shall show, or have endorsements showing, Bank as an additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral.

 

(b)          Ensure that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations, unless such proceeds are payable to the holder of a Lien permitted pursuant to subsection (c) of the definition of Permitted Liens.

 

(c)          At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each provider of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before any such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.7, and take any action under the policies Bank deems prudent.

 

6.8

Operating Accounts.

 

(a)          Maintain all of its and all of its Subsidiaries’ depository, operating and securities/investment accounts with Bank and/or Bank’s Affiliates with the exception of the Offshore Accounts. Notwithstanding the foregoing, Borrower shall have ninety (90) days after the Effective Date to close all of its Collateral Accounts in the United States not located at Bank, and transfer the proceeds in such Collateral Accounts to an account of Borrower at Bank.

 

(b)          Provide Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account not located at Bank and/or Bank’s Affiliates (other than Offshore Accounts) that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such, and the Collateral Accounts described in Section 6.8(a) above during such ninety (90) day transition period, provided, however, if such Collateral Accounts are not closed within ninety (90) days after the Effective Date, Borrower shall be required to comply with this Section 6.8(b) for all such Collateral Accounts.

6.9

Financial Covenants.

 

Maintain at all times, subject to periodic reporting as set forth below, calculated on a consolidated basis with respect to Borrower and its Subsidiaries:

 

(a)          Adjusted Quick Ratio. An Adjusted Quick Ratio of at least 1.00 to 1.00, tested as of the last day of each month.

 

6.10

Protection of Intellectual Property Rights.

 

(a)          (i) Use commercially reasonable efforts to protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii) promptly advise Bank in writing of material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.

 

(b)          Provide written notice to Bank within ten (10) days of entering or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank reasonably requests to obtain the consent of, or waiver by, any Person whose consent or waiver is necessary for (i) any Restricted License to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under this Agreement and the other Loan Documents.

 

6.11        Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower.

6.12        Formation or Acquisition of Subsidiaries. Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the time that Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Effective Date, Borrower shall (a) cause such new Subsidiary to provide to Bank a joinder to the Loan Agreement to cause such Subsidiary to become a co-borrower hereunder, together with such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Bank appropriate certificates and powers and financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to Bank; provided, that with respect to any Foreign Subsidiary, in the event that Borrower and Bank mutually agree that (i) the grant of a continuing pledge and security interest in and to the assets of any such Foreign Subsidiary, (ii) the guaranty of the Obligations of the Borrower by any such Foreign Subsidiary and/or (iii) the pledge by Borrower of a perfected security interest in one hundred percent (100%) of the stock, units or other evidence of ownership of each Foreign Subsidiary, would reasonably be expected to have a material adverse tax effect on the Borrower, then the Borrower shall only be required to grant and pledge to Bank a perfected security interest in up to sixty-five percent (65%) of the stock, units or other evidence of ownership of such Foreign Subsidiary; and (c) provide to Bank all other documentation in form and substance satisfactory to Bank, including one or more opinions of counsel satisfactory to Bank, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 6.12 shall be a Loan Document.

 

6.13        Further Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement.

 

7

NEGATIVE COVENANTS

 

Borrower shall not do any of the following without Bank’s prior written consent:

 

7.1          Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use or transfer of money or Cash Equivalents in the ordinary course of its business for the payment of ordinary course business expenses in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; and (f) of assets resulting from a casualty or condemnation event; and (g) non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business.

 

7.2          Changes in Business, Management, Ownership, or Business Locations.  (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; or (c) (i) fail to provide notice to Bank of any Key Person departing from or ceasing to be employed by Borrower within five (5) days after his or her departure from Borrower; or (ii) enter into any transaction or series of related transactions in which the stockholders of Borrower who were not stockholders immediately prior to the first such transaction own more than forty percent (40%) of the voting stock of Borrower immediately after giving effect to such transaction or related series of such transactions (other than by the sale of Borrower’s equity securities in a public offering or to venture capital or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction).

Borrower shall not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Fifty Thousand Dollars ($50,000) in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000) to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Bank, and such bailee shall execute and deliver a bailee agreement in form and substance satisfactory to Bank.

 

7.3          Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary). A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.

 

7.4          Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

 

7.5          Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein (except Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien under this Agreement), or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Liens” herein.

 

7.6          Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8(b) hereof.

7.7          Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock provided that (i) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in common stock; and (iii) Borrower may repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase, provided that the aggregate amount of all such repurchases does not exceed One Hundred Thousand Dollars ($100,000) per fiscal year; or (b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so.

 

7.8          Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are (i) in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person or (ii) Permitted Investments.

 

7.9          Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof, provide for earlier or greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank.

 

7.10        Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; (a) fail to meet the minimum funding requirements of ERISA, (b) fail to prevent a Reportable Event or Prohibited Transaction, as defined in ERISA, from occurring; (c) fail to comply with the Federal Fair Labor Standards Act, the failure of any of the conditions described in clauses (a) through (c) which could reasonably be expected to have a material adverse effect on Borrower’s business; or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

8

EVENTS OF DEFAULT

 

Any one of the following shall constitute an event of default (an “Event of Default”) under this Agreement:

 

8.1          Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);

 

8.2

Covenant Default.

 

(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.5, 6.7, 6.8, 6.9, 6.10(b), 6.12, 6.13 or violates any covenant in Section 7; or

 

(b) Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in clauses (a) above;

 

8.3

Material Adverse Change. A Material Adverse Change occurs;

 

8.4

Attachment; Levy; Restraint on Business.

 

(a) (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or

 

(b) (i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business;

 

8.5          Insolvency. (a) Borrower or any of its Subsidiaries is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries and is not dismissed or stayed within forty-five (45) days (but no Credit Extensions shall be made while any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);

8.6          Other Agreements. There is, under any agreement to which Borrower is a party with a third party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of One Hundred Thousand Dollars ($100,000); or (b) any breach or default by Borrower, the result of which could have a material adverse effect on Borrower’s business;

 

8.7          Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);

 

8.8          Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made;

 

8.9          Subordinated Debt. The Obligations shall for any reason be subordinated to Subordinated Debt or shall not have the priority contemplated by this Agreement; or

 

8.10        Governmental Approvals. Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal (i) cause, or could reasonably be expected to cause, a Material Adverse Change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction.

 

9

BANK’S RIGHTS AND REMEDIES

 

9.1          Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, without notice or demand, do any or all of the following:

 

(a)          declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);

(b)          stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

 

(c)          demand that Borrower (i) deposit cash with Bank in an amount equal to at least 100% (105% with respect to Letters of Credit denominated in a Foreign Currency) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit remaining undrawn (plus, in each case, all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

 

(d)          terminate any FX Contracts;

 

(e)          verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person owing Borrower money of Bank’s security interest in such funds;

 

(f)          make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral including, without limitation, perfecting Bank’s security interest in Borrower’s Intellectual Property. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest (other than Permitted Liens that are permitted pursuant to the terms of this agreement to have superior priority to Bank’s Lien under this Agreement) and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;

 

(g)          apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Borrower;

 

(h)          ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;

 

(i)            place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;

 

(j)            demand and receive possession of Borrower’s Books; and

(k)           exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof).

 

9.2          Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement) and Bank is under no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement) and Bank’s obligation to provide Credit Extensions terminates.

 

9.3          Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.7 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral, Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default.

 

9.4          Application of Payments and Proceeds Upon Default. If an Event of Default has occurred and is continuing, Bank shall have the right to apply in any order any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.

9.5          Bank’s Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

 

9.6          No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank from exercising any other remedy under this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.

 

9.7          Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.

 

10

NOTICES

 

All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10.

 

If to Borrower:	Outbrain Inc.
	39 West 13th Street, 3rd Floor
	New York, New York 10011
	Attn: Barry Schofield
	Email: bschofield@outbrain.com

and:	Outbrain Inc.
	39 West 13th Street, 3rd Floor
	New York, New York 10011
	Attn: Michael J. Kistler, Esquire
	Email: MKistler@outbrain.com
with a copy to:	Loeb & Loeb LLP
	345 Park Avenue
	New York, New York 10154
	Attn: Lloyd Rothenberg, Esquire
	Fax: (212) 407-4990
	Email: lrothenberg@loeb.com
If to Bank:	Silicon Valley Bank
	505 Fifth Avenue, 11th Floor
	New York, New York 10017
	Attn: Claudia Canales
	Email: ccanales@svb.com
with a copy to:	Riemer & Braunstein LLP
	Three Center Plaza
	Boston, Massachusetts 02108
	Attn: Charles W. Stavros, Esquire
	Fax: (617) 880-3456
	Email: cstavros@riemerlaw.com

  

11

CHOICE OF LAW, VENUE, JURY TRIAL WAIVER

 

New York law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in New York, New York; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to the jurisdiction of New York, New York in any action or suit commenced in any court located in such jurisdiction, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

 

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

This Section 11 shall survive the termination of this Agreement.

 

12

GENERAL PROVISIONS

 

12.1        Termination Prior to Revolving Line Maturity Date; Survival. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied. So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank. Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination.

 

12.2        Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted or withheld in Bank’s discretion). Bank has the right, without the consent of Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents; provided. that, Bank shall provide Borrower with notice of such sale, transfer or assignment within a commercially reasonable period thereafter. Notwithstanding the foregoing, prior to the occurrence of an Event of Default, Bank shall not assign any interest in the Loan Documents to an operating company which is a direct competitor of Borrower.

 

12.3        Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (i) all obligations, demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except for Claims, expenses and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.

 

This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run.

12.4         Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.

 

12.5         Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

 

12.6         Correction of Loan Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties.

 

12.7         Amendments in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.

 

12.8         Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.

 

12.9         Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however. Bank shall use its best efforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.

 

Bank Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses not expressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive termination of this Agreement.

12.10       Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and Bank arising out of or relating to the Loan Documents, the Bank shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled.

 

12.11        Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.

 

12.12       Right of Setoff. Borrower hereby grants to Bank a Lien and a right of setoff as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a subsidiary of Bank) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may setoff the same or any part thereof and apply the same to any liability or Obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

12.13       Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

 

12.14       Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.

 

12.15       Relationship. The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.

 

12.16       Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any Person other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any Person not an express party to this Agreement; or (c) give any Person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

13

DEFINITIONS

 

13.1        Definitions. As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative. As used in this Agreement, the following capitalized terms have the following meanings:

 

“Account” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower.

 

“Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

 

“Adjusted Quick Ratio” is the ratio of (a) Quick Assets to (b) Current Liabilities minus the current portion of Deferred Revenue.

 

“Advance” or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving Line.

 

“Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

 

“Agreement” is defined in the preamble hereof.

 

“Authorized Signer” is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents, including any Advance request, on behalf of Borrower.

 

“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the outstanding principal balance of any Advances.

 

“Bank” is defined in the preamble hereof.

 

“Bank Entities” is defined in Section 12.9.

 

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.

“Bank Services” are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).

 

“Borrower” is defined in the preamble hereof

 

“Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

 

“Borrowing Base” is eighty percent (80%) of Eligible Accounts, as determined by Bank from Borrower’s most recent Transaction Report; provided, however, that Bank has the right, after consultation with Borrower, to decrease the foregoing percentages in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the Collateral or its value.

 

“Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such Person’s board of directors (and, if required under the terms of such Person’s Operating Documents, stockholders) and delivered by such Person to Bank approving the Loan Documents to which such Person is a party and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that set forth as a part of or attached as an exhibit to such certificate is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution, delivery, and performance by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents, including any Advance request, on behalf of such Person, together with a sample of the true signature(s) of such Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such Person shall have delivered to Bank a further certificate canceling or amending such prior certificate.

 

“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.

 

“Cash Collateral Account” is defined in Section 6.3(c).

 

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue.

“Claims” is defined in Section 12.3.

 

“Code” is in the United States, the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of New York; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.

 

“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A.

 

“Collateral Account” is any Cash Collateral Account, Deposit Account, Securities Account, or Commodity Account.

 

“Commodity Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.

 

“Compliance Certificate” is that certain certificate in the form attached hereto as Exhibit B.

 

“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

 

“Control Agreement” is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account.

“Copyrights” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

 

“Credit Extension” is any Advance, any Overadvance, Letter of Credit, FX Contract, amount utilized for cash management services, or any other extension of credit by Bank for Borrower’s benefit.

 

“Currency” is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium of exchange.

 

“Current Liabilities” are all obligations and liabilities of Borrower to Bank, plus, without duplication, the aggregate amount of Borrower’s Total Liabilities that mature within one (1) year but excluding intercompany payables and statutory severance required in Israel.

 

“Default” means any event which with notice or passage of time or both, would constitute an Event of Default.

 

“Default Rate” is defined in Section 2.4(b).

 

“Deferred Revenue” is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.

 

“Deposit Account” is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.

 

“Designated Deposit Account” is the multicurrency account denominated in Dollars, account number ending 2448, maintained by Borrower with Bank.

 

“Dollars,” “dollars” or use of the sign “$” means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.

 

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.

 

“Domestic Subsidiary” means a Subsidiary organized under the laws of the United States or any state or territory thereof or the District of Columbia.

 

“Effective Date” is defined in the preamble hereof.

“Eligible Accounts” means Accounts which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts shall not include:

 

(a)          Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or agent;

 

(b)          Accounts that the Account Debtor has not paid within one hundred twenty (120) days of invoice date regardless of invoice payment period terms;

 

(c)          Accounts with credit balances over one hundred twenty (120) days from invoice date;

 

(d)          Accounts owing from an Account Debtor if fifty percent (50%) or more of the Accounts owing from such Account Debtor have not been paid within one hundred twenty (120) days of invoice date;

 

(e)          Accounts owing from an Account Debtor which is not located in the United States, Canada, the United Kingdom, Japan, Italy, France or Germany, unless otherwise approved by Bank in writing on a case-by-case basis in its sole and absolute discretion;

 

(f)          Accounts billed from and/or payable to Borrower outside of the United States unless Bank has a first priority, perfected security interest or other enforceable Lien in such Accounts under all applicable laws, including foreign laws (sometimes called foreign invoiced accounts);

 

(g)          Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts), but only to the extent of Borrower’s indebtedness or obligation to such Account Debtor;

 

(h)          Accounts owing from an Account Debtor which is a United States government entity or any department, agency, or instrumentality thereof unless Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended;

 

(i)           Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;

 

(j)           Accounts owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimes called memo billings or prebillings);

 

(k)          Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according to completion or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrower’s failure to perform in accordance with the contract (sometimes called contracts accounts receivable, progress billings, milestone billings, or fulfillment contracts);

(l)            Accounts owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s satisfaction of Borrower’s complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);

 

(m)          Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;

 

(n)          Accounts owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor unless Bank, Borrower, and the Account Debtor have entered into an agreement acceptable to Bank wherein the Account Debtor acknowledges that (i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts);

 

(o)          Accounts for which the Account Debtor has not been invoiced;

 

(p)          Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s business;

 

(q)          Accounts for which Borrower has changed the invoice date;

 

(r)           Accounts arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;

 

(s)           Accounts arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);

 

(t)           Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;

 

(u)          Accounts owing from an Account Debtor with respect to which Borrower has received Deferred Revenue (but only to the extent of such Deferred Revenue):

 

(v)          Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts, for the amounts that exceed that percentage, unless Bank approves in writing; and

 

(w)          Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation, accounts represented by “refreshed” or “recycled” invoices.

“Equipment” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

 

“ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.

 

“Event of Default” is defined in Section 8.

 

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

 

“Foreign Currency” means lawful money of a country other than the United States.

 

“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

 

“Funding Date” is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.

 

“FX Contract” is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date.

 

“GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

 

“General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

 

“Governmental Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

 

“Governmental Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self- regulatory organization.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.

 

“Indemnified Person” is defined in Section 12.3.

 

“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

“Intellectual Property” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:

 

(a)          its Copyrights, Trademarks and Patents;

 

(b)          any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating manuals;

 

(c)          any and all source code;

 

(d)          any and all design rights which may be available to such Person;

 

(e)          any and all claims for damages by way of past, present and future infringement of any of the foregoing, 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; and

 

(f)          all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

 

“Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with GAAP for the relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower and its Subsidiaries, including, without limitation or duplication, all commissions, discounts, or related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types).

 

“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person.

 

“Key Person” is Borrower’s (a) Chief Executive Officer, who is Yaron Galai as of the Effective Date, and (b) Chief Financial Officer, who is Elise Garofalo as of the Effective Date.

 

“Letter of Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application, guarantee, indemnity, or similar agreement.

 

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

 

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Perfection Certificate, any Bank Services Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement by Borrower and/or any Guarantor with or for the benefit of Bank in connection with this Agreement or Bank Services, all as amended, restated, or otherwise modified.

 

“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; (c) a material impairment of the prospect of repayment of any portion of the Obligations; or (d) Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period.

 

“Minimum Interest” is defined in Section 2.4(d).

 

“Minimum Interest Period” is defined in Section 2.4(d).

 

“Monthly Financial Statements” is defined in Section 6.2(c).

 

“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank Expenses, and other amounts Borrower owes Bank now or later, under this Agreement or the other Loan Documents, including, without limitation, interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.

 

“Offshore Accounts” are accounts maintained by Borrower’s Subsidiaries outside the United States and United Kingdom with financial institutions other than Bank or Bank’s Affiliates, provided that the maximum balance maintained in such accounts does not exceed the aggregate amount of Six Million Dollars ($6,000,000) at any time.

“Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws (as the case may be) in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

 

“Overadvance” is defined in Section 2.3.

 

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

 

“Perfection Certificate” is defined in Section 5.1.

 

“Permitted Indebtedness” is:

 

(a)          Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;

 

(b)          Indebtedness existing on the Effective Date and shown on the Perfection Certificate;

 

(c)          Subordinated Debt;

 

(d)          unsecured Indebtedness to trade creditors incurred in the ordinary course of business;

 

(e)          Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

 

(f)           Indebtedness secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder;

 

(g)          Indebtedness consisting of the financing of insurance premiums arising in the ordinary course of business not to exceed Twenty Five Thousand Dollars ($25,000) in the aggregate at any time;

 

(h)          deferred compensation due to employees not to exceed Fifty Thousand Dollars ($50,000) in the aggregate at any time; and

 

(i)          extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (h) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

“Permitted Investments” are:

 

(a)          Investments (including, without limitation, Subsidiaries) existing on the Effective Date and shown on the Perfection Certificate;

 

(b)          Investments consisting of Cash Equivalents; and

 

(c)          Investments by Borrower in Subsidiaries not to exceed Ten Million Dollars ($10,000,000) in any fiscal quarter of Borrower, not to exceed Forty Million Dollars ($40,000,000) in the aggregate in any fiscal year.

 

“Permitted Liens” are:

 

(a)          Liens existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and the other Loan Documents;

 

(b)          Liens for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;

 

(c)          purchase money Liens or capital leases (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than Ten Million Dollars ($10,000,000) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;

 

(d)          Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed One Hundred Thousand Dollars ($100,000) and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

 

(e)          Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA);

 

(f)          leases or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another Person, in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the ordinary course of Borrower’s business (or, if referring to another Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest therein;

 

(g)          Liens in favor of other financial institutions arising in connection with Borrower’s deposit and/or securities accounts held at such institutions, provided that Bank has a perfected security interest in the amounts held in such deposit and/or securities accounts;

(h)          Liens on insurance policies and the proceeds thereof securing the financing of premiums with respect thereto; and

 

(i)           Liens incurred in the extension, renewal or refinancing of the Indebtedness secured by Liens described in (a) through (h), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase.

 

“Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

 

“Prime Rate” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors).

 

“Prior Loan Agreement” is defined in the preamble.

 

“Quick Assets” is, on any date, Borrower’s consolidated, unrestricted cash maintained with Bank plus net billed accounts receivable, determined according to GAAP.

 

“Registered Organization” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.

 

“Requirement of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, 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.

 

“Reserves” means, as of any date of determination, such amounts as Bank may from time to time establish and revise in its good faith business judgment, reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a) to reflect events, conditions, contingencies or risks which, as determined by Bank in its good faith business judgment, do or may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority thereof); or (b) to reflect Bank’s reasonable belief that any collateral report or financial information furnished by or on behalf of Borrower or any Guarantor to Bank is or may have been incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state of facts which Bank determines constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.

“Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.

 

“Restricted License” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral.

 

“Revolving Line” is an aggregate principal amount equal to Thirty Five Million Dollars ($35,000,000) outstanding at any time.

 

“Revolving Line Maturity Date” is September 15, 2016.

 

“SEC” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.

 

“Securities Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.

 

“Streamline Period” is, on and after the Effective date, provided no Event of Default has occurred and is continuing, the period (a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has, for each consecutive day in the immediately preceding calendar month, maintained an Adjusted Quick Ratio of greater than 1.10 to 1.00, as determined by Bank in its reasonable discretion (the “Streamline Threshold”); and (b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, and (ii) the first day thereafter in which Borrower fails to maintain the Streamline Threshold, as determined by Bank in its reasonable discretion. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Threshold each consecutive day for one (1) calendar month, as determined by Bank in its reasonable discretion, prior to entering into a subsequent Streamline Period. Borrower shall give Bank prior written notice of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period shall commence on the first day of the monthly period following the date the Bank determines, in its reasonable discretion, that the Streamline Threshold has been achieved.

 

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank.

 

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

“Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness.

 

“Trademarks” means 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 Report” is that certain report of transactions and schedule of collections on Bank’s standard form.

 

“Transfer” is defined in Section 7.1.

 

[Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.

BORROWER:
OUTBRAIN INC.
By	/s/ Yaron Galai
Name:				Yaron Galai
Title:		CEO
BANK:
SILICON VALLEY BANK
By	/s/ Claudia Canales
Name:				Claudia Canales
Title:		Director

 

[Signature Page to Amended and Restated Loan and Security Agreement]

Exhibit A – Collateral Description

 

The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:

 

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, Deposit Accounts, certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and

 

all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

 

Notwithstanding the foregoing, the Collateral does not include any of the following: (a) more than 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any Foreign Subsidiary which shares entitle the holder thereof to vote for directors or any other matter; (b) rights held under a license that are not assignable by their terms without the consent of the licensor thereof (but only to the extent such restriction on assignment is enforceable under applicable law); (c) any interest of Borrower as a lessee or sublessee under a real property lease or an Equipment lease if Borrower is prohibited by the terms of such lease from granting a security interest in such lease or under which such an assignment or Lien would cause a default to occur under such lease (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-407(a) of Article/Division 9 of the Code); provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action by Borrower or Bank; or (d) any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Bank’s security interest in such Accounts and such other property of Borrower that are proceeds of the Intellectual Property.

Exhibit B

 

COMPLIANCE CERTIFICATE

 

TO:	SILICON VALLEY BANK		Date:
FROM:	OUTBRAIN INC.

 

The undersigned, in his or her capacity as authorized officer of Outbrain Inc. and Outbrain UK Limited (each and together, jointly and severally, “Borrower”) and not in her or her individual capacity certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”): (1) Borrower is in complete compliance for the period ending ________________ with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants		Required		Complies
	Monthly financial statements with Compliance Certificate		Monthly within 30 days	Yes   No
	Annual financial statement (CPA Audited) + CC		FYE within 180 days	Yes   No
	10-0, 10-K and 8-K		Within 5 days after filing with SEC	Yes   No
	A/R & A/P Agings		Monthly within 30 days	Yes   No
	Transaction Reports		Monthly within 30 days and each request for an Advance	Yes   No
	Projections		FYE within 30 days	Yes   No

 

Financial Covenant		Required	Actual	Complies
	Maintain as indicated:
	Minimum Adjusted Quick Ratio	1.00:1.00	___ : 1.0	Yes   No

Performance Pricing				Applies
	Adjusted Quick Ratio > 1.10:1.00		Prime + 0.25%	Yes   No
	Adjusted Quick Ratio ≤ 1.10:1.00		Prime + 0.75%	Yes   No

 

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”) 

OUTBRAIN INC.					BANK USE ONLY
					Received by:
By:								AUTHORIZED SIGNER
Name:					Date:
Title:
					Verified:
							AUTHORIZED SIGNER
					Date:
					Compliance Status:   Yes   No

Schedule 1 to Compliance Certificate 

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern. 

I.	Adjusted Quick Ratio (Section 6.9(a))
Required:         1.00:1.00
Actual:
A.	Aggregate value of Borrower’s consolidated, unrestricted cash maintained with Bank		$
B.	Aggregate value of Borrower’s consolidated net billed accounts receivable, determined according to GAAP		$
C.	Quick Assets (the sum of lines A and B)		$
D.	Aggregate value of all Obligations of Borrower to Bank		$
E.	Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, not otherwise reflected in line D above, that matures within one (1) year but excluding intercompany payables and statutory severance required in Israel		$
F.	Current Liabilities (the sum of lines D and E)		$
G.	Aggregate value of current portion of all amounts received or invoiced by Borrower in advance of performance under contracts and not yet recognized as revenue		$
H.	Line F minus G		$
I.	Adjusted Quick Ratio (line C divided by line H)

 

Is line I equal to or greater than 1.00:1:00?

 

_____ No, not in compliance

______ Yes, in compliance

 

Exhibit 10.3

 

OUTBRAIN INC.

2007 OMNIBUS SECURITIES AND INCENTIVE PLAN

 

AMENDED AND RESTATED JANUARY 21, 2009

 

 

Table of Contents

 

			Page
ARTICLE I	PURPOSE		1
ARTICLE II	DEFINITIONS		1
ARTICLE III	EFFECTIVE DATE OF PLAN		6
ARTICLE IV	ADMINISTRATION		6
	Section 4.1	Composition of Committee	6
	Section 4.2	Powers	6
	Section 4.3	Additional Powers	7
	Section 4.4	Committee Action	7
ARTICLE V	STOCK SUBJECT TO PLAN AND LIMITATIONS THEREON		7
	Section 5.1	Stock Grant and Award Limits	7
	Section 5.2	Stock Offered	7
	Section 5.3	Lock-Up Agreement	7
ARTICLE VI	ELIGIBILITY FOR AWARDS; TERMINATION OF EMPLOYMENT, DIRECTOR STATUS OR CONSULTANT STATUS		8
	Section 6.1	Eligibility	8
	Section 6.2	Termination of Employment or Director Status	8
	Section 6.3	Termination of Consultant Status	9
	Section 6.4	Special Termination Rule	9
	Section 6.5	Termination for Cause	10
ARTICLE VII	OPTIONS		10
	Section 7.1	Option Period	10
	Section 7.2	Limitations on Exercise of Option	10
	Section 7.3	Special Limitations on Incentive Stock Options	10
	Section 7.4	Option Agreement	11
	Section 7.5	Option Price and Payment	11
	Section 7.6	Stockholder Rights and Privileges	12
	Section 7.7	Options and Rights in Substitution for Stock Options Granted by Other Corporations	12
ARTICLE VIII	RESTRICTED STOCK AWARDS		12
	Section 8.1	Restriction Period to be Established by Committee	12
	Section 8.2	Other Terms and Conditions	12
	Section 8.3	Payment for Restricted Stock	13
	Section 8.4	Restricted Stock Award Agreements	13
ARTICLE IX	UNRESTRICTED STOCK AWARDS		13
ARTICLE X	PERFORMANCE UNIT AWARDS		13
	Section 10.1	Terms and Conditions	13
	Section 10.2	Payments	13

 

 

Table of Contents

 

			Page
ARTICLE XI	PERFORMANCE SHARE AWARDS		13
	Section 11.1	Terms and Conditions	13
	Section 11.2	Stockholder Rights and Privileges	13
ARTICLE XII	DISTRIBUTION EQUIVALENT RIGHTS		14
	Section 12.1	Terms and Conditions	14
	Section 12.2	Interest Equivalents	14
ARTICLE XIII	STOCK APPRECIATION RIGHTS		14
	Section 13.1	Terms and Conditions	14
	Section 13.2	Tandem Stock Appreciation Rights	15
ARTICLE XIV	RECAPITALIZATION OR REORGANIZATION		15
	Section 14.1	Adjustments to Common Stock	15
	Section 14.2	Recapitalization	16
	Section 14.3	Merger and Sale of Company	16
	Section 14.4	Other Events	17
	Section 14.5	Powers Not Affected	17
	Section 14.6	No Adjustment for Certain Awards	17
ARTICLE XV	AMENDMENT AND TERMINATION OF PLAN		18
ARTICLE XVI	RIGHT OF FIRST REFUSAL		18
ARTICLE XVII	MISCELLANEOUS		18
	Section 17.1	No Right to Award	18
	Section 17.2	No Rights Conferred	18
	Section 17.3	Other Laws; Withholding	19
	Section 17.4	No Restriction on Corporate Action	19
	Section 17.5	Restrictions on Transfer	19
	Section 17.6	Beneficiary Designations	19
	Section 17.7	Rule 16b-3	20
	Section 17.8	Section 162(m)	20
	Section 17.9	Section 409A	20
	Section 17.10	Other Plans	20
	Section 17.11	Limits of Liability	20
	Section 17.12	Governing Law	21
	Section 17.13	Severability of Provisions	21
	Section 17.14	No Funding	21
	Section 17.15	Headings	21
	Section 17.16	Terms of Award Agreements	21

 

 

OUTBRAIN INC.

 

2007 OMNIBUS SECURITIES AND INCENTIVE PLAN

 

AMENDED AND RESTATED JANUARY 21, 2009

 

ARTICLE I

PURPOSE

 

The purpose of this Outbrain Inc. 2007 Omnibus Securities and Incentive Plan (the “Plan”) is to benefit the stockholders of Outbrain Inc., a Delaware corporation (the “Company”), by assisting the Company to attract, retain and provide incentives to key management employees and nonemployee directors of, and non-employee consultants to, the Company and its Affiliates, and to align the interests of such employees, nonemployee directors and nonemployee consultants with those of the Company’s stockholders. Accordingly, the Plan provides for the granting of Distribution Equivalent Rights, Incentive Stock Options, Non-Qualified Stock Options, Performance Share Awards, Restricted Stock Awards, Stock Appreciation Rights, Tandem Stock Appreciation Rights, Unrestricted Stock Awards or any combination of the foregoing, as may be best suited to the circumstances of the particular Employee, Director or Consultant as provided herein.

 

ARTICLE II
DEFINITIONS

 

The following definitions shall be applicable throughout the Plan unless the context otherwise requires:

 

“Affiliate” shall mean any person or entity which, at the time of reference, directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company.

 

“Award” shall mean, individually or collectively, any Distribution Equivalent Right, Option, Performance Share Award, Performance Unit Award, Restricted Stock Award, Stock Appreciation Right or Unrestricted Stock Award.

 

“Award Agreement” shall mean a written agreement between the Company and the Holder with respect to an Award, each of which shall constitute a part of the Plan.

 

“Board” shall mean the Board of Directors of the Company.

 

 

“Cause” shall mean (i) if the Holder is a party to an employment or similar agreement with the Company or an Affiliate which agreement defines “Cause” (or a similar term) therein, “Cause” shall have the same meaning as provided for in such agreement, or (ii) for a Holder who is not a party to such an agreement, “Cause” shall mean termination by the Company or an Affiliate of the employment (or other service relationship) of the Holder by reason of the Holder’s (A) intentional failure to perform reasonably assigned duties, (B) dishonesty or willful misconduct in the performance of the Holder’s duties, (C) involvement in a transaction which is materially adverse to the Company or an Affiliate, (D) breach of fiduciary duty involving personal profit, (E) willful violation of any law, rule, regulation or court order (other than misdemeanor traffic violations and misdemeanors not involving misuse or misappropriation of money or property), (F) commission of an act of fraud or intentional misappropriation or conversion of any asset or opportunity of the Company or an Affiliate, or (G) material breach of any provision of the Plan or the Holder’s Award Agreement or any other written agreement between the Holder and the Company or an Affiliate, in each case as determined in good faith by the Board, the determination of which shall be final, conclusive and binding on all parties.

 

“Change of Control” shall mean (i) for a Holder who is a party to an employment or consulting agreement with the Company or an Affiliate which agreement defines “Change of Control” (or a similar term) therein, “Change of Control” shall have the same meaning as provided for in such agreement, or (ii) for a Holder who is not a party to such an agreement, “Change of Control” shall mean the satisfaction of any one or more of the following conditions (and the “Change of Control” shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied):

 

(a)               Any person (as such term is used in paragraphs 13(d) and 14(d)(2) of the Exchange Act, hereinafter in this definition, “Person”), other than the Company or an Affiliate or an employee benefit plan of the Company or an Affiliate, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities;

 

(b)               The closing of a merger, consolidation or other business combination (a “Business Combination”) other than a Business Combination in which holders of common stock of the Company immediately prior to the Business Combination have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the Business Combination as immediately before;

 

(c)               The closing of either (i) an agreement for the sale or disposition of all or substantially all of the Company’s assets to any entity that is not an Affiliate, or (ii) a plan of complete liquidation of the Company;

 

(d)               The persons who were members of the Board immediately before a tender offer by any Person other than the Company or an Affiliate, or before a merger, consolidation or contested election, or before any combination of such transactions, cease to constitute a majority of the members of the Board as a result of such transaction or transactions; or

 

(e)               Any other event which shall be deemed by a majority of the members of the Board to constitute a “Change of Control.”

 

“Code” shall mean the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to any section and any regulation under such section.

 

 

“Committee” shall mean a committee comprised of (i) at any time that the Common Stock is not registered under Section 12 of the Exchange Act, the full Board or a committee designated by the Board, and (ii) at any time that the Common Stock is registered under Section 12 of the Exchange Act, not less than three (3) members of the Board who are selected by the Board as provided in Section 4.1.

 

“Common Stock” shall mean the Common Stock, par value $0.001 per share, of the Company.

 

“Company” shall mean Outbrain Inc., a Delaware corporation, and any successor thereto.

 

“Consultant” shall mean any non-Employee (individual or entity) advisor to the Company or an Affiliate who or which has contracted directly with the Company or an Affiliate to render bona fide consulting or advisory services thereto.

 

“Director” shall mean a member of the Board or a member of the board of directors of an Affiliate, in either case, who is not an Employee.

 

“Distribution Equivalent Right” shall mean an Award granted under Article XII of the Plan which entitles the Holder to receive bookkeeping credits, cash payments and/or Common Stock distributions equal in amount to the distributions that would have been made to the Holder had the Holder held a specified number of shares of Common Stock during the period the Holder held the Distribution Equivalent Right.

 

“Distribution Equivalent Right Award Agreement” shall mean a written agreement between the Company and a Holder with respect to a Distribution Equivalent Right Award.

 

“Effective Date” shall mean October 24, 2007.

 

“Employee” shall mean any employee, including officers, of the Company or an Affiliate.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” shall mean, as determined consistent with the applicable requirements of Sections 409A and 422 of the Code, as of any specified date, the closing sales price of the Common Stock for such date (or, in the event that the Common Stock is not traded on such date, on the immediately preceding trading date) on the Nasdaq Stock Market or a domestic or foreign national securities exchange (including London’s Alternative Investment Market) on which the Common Stock may be listed, as reported in The Wall Street Journal or The Financial Times. If the Common Stock is not listed on the Nasdaq Stock Market or on a national securities exchange, but is quoted on the OTC Bulletin Board or by the National Quotation Bureau, the Fair Market Value of the Common Stock shall be the mean of the bid and asked prices per share of the Common Stock for such date. If the Common Stock is not quoted or listed as set forth above, Fair Market Value shall be determined by the Board in good faith by any fair and reasonable means (which means, with respect to a particular Award grant, may be set forth with greater specificity in the applicable Award Agreement). The Fair Market Value of property other than Common Stock shall be determined by the Board in good faith by any fair and reasonable means, and consistent with the applicable requirements of Sections 409A and 422 of the Code.

 

 

“Family Member” shall mean any child, stepchild, grandchild, parent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, any person sharing the Holder’s household (other than a tenant of the Holder), a trust in which such persons have more than fifty percent (50%) of the beneficial interest, a foundation in which such persons (or the Holder) control the management of assets, and any other entity in which such persons (or the Holder) own more than fifty percent (50%) of the voting interests.

 

“Holder” shall mean an Employee, Director or Consultant who has been granted an Award or any such individual’s beneficiary, estate or representative, to the extent applicable.

 

“Incentive Stock Option” shall mean an Option which is intended by the Committee to constitute an “incentive stock option” under Section 422 of the Code.

 

“Non-Qualified Stock Option” shall mean an Option which is not an Incentive Stock Option.

 

“Option” shall mean an Award granted under Article VII of the Plan of an option to purchase shares of Common Stock and includes both Incentive Stock Options and Non-Qualified Stock Options.

 

“Option Agreement” shall mean a written agreement between the Company and a Holder with respect to an Option.

 

“Performance Share Award” shall mean an Award granted under Article XI of the Plan under which, upon the satisfaction of predetermined individual and/or Company (and/or Affiliate) performance goals and/or objectives, shares of Common Stock are paid to the Holder.

 

“Performance Share Award Agreement” shall mean a written agreement between the Company and a Holder with respect to a Performance Share Award.

 

“Performance Unit” shall mean a Unit awarded to a Holder pursuant to a Performance Unit Award.

 

“Performance Unit Award” shall mean an Award granted under Article X of the Plan under which, upon the satisfaction of predetermined individual and/or Company (and/or Affiliate) performance goals and/or objectives, a cash payment shall be made to the Holder, based on the number of Units awarded to the Holder.

 

“Performance Unit Award Agreement” shall mean a written agreement between the Company and a Holder with respect to a Performance Unit Award.

 

“Plan” shall mean this Outbrain Inc. 2007 Omnibus Securities and Incentive Plan, as amended from time to time, together with each of the Award Agreements utilized hereunder.

 

 

“Restricted Stock Award” shall mean an Award granted under Article VIII of the Plan of shares of Common Stock, the transferability of which by the Holder shall be subject to Restrictions.

 

“Restricted Stock Award Agreement” shall mean a written agreement between the Company and a Holder with respect to a Restricted Stock Award.

 

“Restriction Period” shall mean the period of time for which shares of Common Stock subject to a Restricted Stock Award shall be subject to Restrictions, as set forth in the applicable Restricted Stock Award Agreement.

 

“Restrictions” shall mean forfeiture, transfer and/or other restrictions applicable to shares of Common Stock awarded to an Employee, Director or Consultant under the Plan pursuant to a Restricted Stock Award and set forth in a Restricted Stock Award Agreement.

 

“Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act, as such may be amended from time to time, and any successor rule, regulation or statute fulfilling the same or a substantially similar function.

 

“Stock Appreciation Right” shall mean an Award granted under Article XIII of the Plan of a right, granted alone or in connection with a related Option, to receive a payment on the date of exercise.

 

“Stock Appreciation Right Award Agreement” shall mean a written agreement between the Company and a Holder with respect to a Stock Appreciation Right.

 

“Tandem Stock Appreciation Right” shall mean a Stock Appreciation Right granted in connection with a related Option, the exercise of which shall result in termination of the otherwise entitlement to purchase some or all of the shares of Common Stock under the related Option, all as set forth in Section 13.2.

 

“Ten Percent Stockholder” shall mean an Employee who, at the time an Option is granted to him or her, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any parent corporation or subsidiary corporation thereof (both as defined in Section 424 of the Code), within the meaning of Section 422(b)(6) of the Code.

 

“Total and Permanent Disability” shall mean the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months, all as described in Section 22(e)(3) of the Code.

 

“Units” shall mean bookkeeping units, each of which represents such monetary amount as shall be designated by the Committee in each Performance Unit Award Agreement.

 

“Unrestricted Stock Award” shall mean an Award granted under Article IX of the Plan of shares of Common Stock which are not subject to Restrictions.

 

“Unrestricted Stock Award Agreement” shall mean a written agreement between the Company and a Holder with respect to an Unrestricted Stock Award.

 

 

ARTICLE III

EFFECTIVE DATE OF PLAN

 

The Plan shall be effective as of the Effective Date.

 

ARTICLE IV
ADMINISTRATION

 

Section 4.1            Composition of Committee. The Plan shall be administered by the Committee, which shall be appointed by the Board. Notwithstanding the foregoing, however, at any time that the Common Stock is registered under Section 12 of the Exchange Act, the Committee shall consist solely of two (2) or more Directors who are each (i) “outside directors” within the meaning of Section 162(m) of the Code (“Outside Directors”), and (ii) “non-employee directors” within the meaning of Rule 16b-3 (“Non-Employee Directors”); provided, however, that the Board or the Committee may delegate to a committee of one or more members of the Board who are not (x) Outside Directors, the authority to grant Awards to eligible persons who are not (A) then “covered employees” within the meaning of Section 162(m) of the Code and are not expected to be “covered employees” at the time of recognition of income resulting from such Award, or (B) persons with respect to whom the Company wishes to comply with the requirements of Section 162(m) of the Code, and/or (y) Non-Employee Directors, the authority to grant Awards to eligible persons who are not then subject to the requirements of Section 16 of the Exchange Act. If a member of the Committee shall be eligible to receive an Award under the Plan, such Committee member shall have no authority hereunder with respect to his or her own Award.

 

Section 4.2            Powers. Subject to the provisions of the Plan, the Committee shall have the sole authority, in its discretion, to make all determinations under the Plan, including but not limited to determining which Employees, Directors or Consultants shall receive an Award, the time or times when an Award shall be made, what type of Award shall be granted, the term of an Award, the date or dates on which an Award vests (including acceleration of vesting), the form of any payment to be made pursuant to an Award, the terms and conditions of an Award, the Restrictions under a Restricted Stock Award and the number of shares of Common Stock which may be issued under an Award, all as applicable. In making such determinations the Committee may take into account the nature of the services rendered by the respective Employees, Directors and Consultants, their present and potential contribution to the Company’s (or the Affiliate’s) success and such other factors as the Committee in its discretion shall deem relevant.

 

 

Section 4.3            Additional Powers. The Committee shall have such additional powers as are delegated to it under the other provisions of the Plan. Subject to the express provisions of the Plan, the Committee is authorized to construe the Plan and the respective Award Agreements executed hereunder, to prescribe such rules and regulations relating to the Plan as it may deem advisable to carry out the intent of the Plan, and to determine the terms, restrictions and provisions of each Award, including such terms, restrictions and provisions as shall be requisite in the judgment of the Committee to cause designated Options to qualify as Incentive Stock Options, and to make all other determinations necessary or advisable for administering the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in any Award Agreement in the manner and to the extent it shall deem expedient to carry it into effect. The determinations of the Committee on the matters referred to in this Article IV shall be conclusive and binding on the Company and all Holders.

 

Section 4.4            Committee Action. In the absence of specific rules to the contrary, action by the Committee shall require the consent of a majority of the members of the Committee, expressed either orally at a meeting of the Committee or in writing in the absence of a meeting. No member of the Committee shall have any liability for any good faith action, inaction or determination in connection with the Plan.

 

ARTICLE V
STOCK SUBJECT TO PLAN AND LIMITATIONS THEREON

 

Section 5.1            Stock Grant and Award Limits. The Committee may from time to time grant Awards to one or more Employees, Directors and/or Consultants determined by it to be eligible for participation in the Plan in accordance with the provisions of Article VI. Subject to Article XIV, the aggregate number of shares of Common Stock that may be issued under the Plan shall not exceed 4,006,179 shares. Shares shall be deemed to have been issued under the Plan solely to the extent actually issued and delivered pursuant to an Award. To the extent that an Award lapses, expires, is canceled, is terminated unexercised or ceases to be exercisable for any reason, or the rights of its Holder terminate, any shares of Common Stock subject to such Award shall again be available for the grant of a new Award. Notwithstanding any provision in the Plan to the contrary, the maximum number of shares of Common Stock that may be subject to Awards of Options under Article VII and/or Stock Appreciation Rights under Article XIII, in either or both cases granted to any one Employee during any calendar year, shall be 500,000 shares (subject to adjustment in the same manner as provided in Article XIV with respect to shares of Common Stock subject to Awards then outstanding). The limitation set forth in the preceding sentence shall be applied in a manner which shall permit compensation generated in connection with the exercise of Options or Stock Appreciation Rights to constitute “performance-based” compensation for purposes of Section 162(m) of the Code, including, but not limited to, counting against such maximum number of shares, to the extent required under Section 162(m) of the Code, any shares subject to Options or Stock Appreciation Rights that are canceled or repriced.

 

Section 5.2            Stock Offered. The stock to be offered pursuant to the grant of an Award may be authorized but unissued Common Stock, Common Stock purchased on the open market or Common Stock previously issued and outstanding and reacquired by the Company.

 

Section 5.3            Lock-Up Agreement. Each Award Agreement which provides for the issuance of Common Stock, including but not limited to the issuance of Common Stock upon the exercise of an Option, shall provide for a lock-up covenant by the Holder, to be effective for a period not to exceed one year, upon the request of the Company or the Company’s principal underwriter in connection with an underwritten public offering of the Common Stock.

 

 

 

 

ARTICLE VI
ELIGIBILITY FOR AWARDS; TERMINATION OF
EMPLOYMENT, DIRECTOR STATUS OR CONSULTANT STATUS

 

Section 6.1           Eligibility. Awards made under the Plan may be granted solely to persons or entities who, at the time of grant, are Employees, Directors or Consultants. An Award may be granted on more than one occasion to the same Employee, Director or Consultant, and, subject to the limitations set forth in the Plan, such Award may include, a Non-Qualified Stock Option, a Restricted Stock Award, an Unrestricted Stock Award, a Distribution Equivalent Right Award, any combination thereof or, solely for Employees, an Incentive Stock Option.

 

Section 6.2            Termination of Employment or Director Status. Except to the extent inconsistent with the terms of the applicable Award Agreement and/or the provisions of Section 6.4, the following terms and conditions shall apply with respect to the termination of a Holder’s employment with, or status as a Director of, the Company or an Affiliate, as applicable, for any reason, including, without limitation, Total and Permanent Disability or death:

 

(a)               The Holder’s rights, if any, to exercise any then exercisable Non-Qualified Stock Options shall terminate:

 

(1)               If such termination is for a reason other than the Holder’s Total and Permanent Disability or death, not more than ninety (90) days after the date of such termination of employment or after the date of such termination of Director status;

 

(2)              If such termination is on account of the Holder’s Total and Permanent Disability, one (1) year after the date of such termination of employment or Director status; or

 

(3)               If such termination is on account of the Holder’s death, one (1) year after the date of the Holder’s death.

 

Upon such applicable date the Holder (and such Holder’s estate, designated beneficiary or other legal representative) shall forfeit any rights or interests in or with respect to any such Non-Qualified Stock Options.

 

(b)               The Holder’s rights, if any, to exercise any then exercisable Incentive Stock Option shall terminate:

 

(1)               If such termination is for a reason other than the Holder’s Total and Permanent Disability or death, not more than three (3) months after the date of such termination of employment;

 

(2)              If such termination is on account of the Holder’s Total and Permanent Disability, one (1) year after the date of such termination of employment; or

 

 

(3)               If such termination is on account of the Holder’s death, one (1) year after the date of the Holder’s death.

 

Upon such applicable date the Holder (and such Holder’s estate, designated beneficiary or other legal representative) shall forfeit any rights or interests in or with respect to any such Incentive Stock Options.

 

(c)           If a Holder’s employment with, or status as a Director of, the Company or an Affiliate, as applicable, terminates for any reason prior to the actual or deemed satisfaction and/or lapse of the restrictions, terms and conditions applicable to an Award of Restricted Stock and/or Deferred Stock, such Restricted Stock and/or Deferred Stock shall immediately be canceled, and the Holder (and such Holder’s estate, designated beneficiary or other legal representative) shall forfeit any rights or interests in and with respect to any such Restricted Stock and/or Deferred Stock. The immediately preceding sentence to the contrary notwithstanding, the Committee, in its sole discretion, may determine, prior to or within thirty (30) days after the date of such termination of employment or Director status, that all or a portion of any such Holder’s Restricted Stock and/or Deferred Stock shall not be so canceled and forfeited.

 

Section 6.3          Termination of Consultant Status. Except to the extent inconsistent with the terms of the applicable Award Agreement and/or the provisions of Section 6.4, the following terms and conditions shall apply with respect to the termination of a Holder’s status as a Consultant, for any reason:

 

(a)           The Holder’s rights, if any, to exercise any then exercisable Non-Qualified Stock Options shall terminate:

 

(1)               If such termination is for a reason other than the Holder’s death, not more than ninety (90) days after the date of such termination; or

 

(2)               If such termination is on account of the Holder’s death, one (1) year after the date of the Holder’s death.

 

(b)           If the status of a Holder as a Consultant terminates for any reason prior to the actual or deemed satisfaction and/or lapse of the restrictions, terms and conditions applicable to an Award of Restricted Stock and/or Deferred Stock, such Restricted Stock and/or Deferred Stock shall immediately be canceled, and the Holder (and such Holder’s estate, designated beneficiary or other legal representative) shall forfeit any rights or interests in and with respect to any such Restricted Stock and/or Deferred Stock. The immediately preceding sentence to the contrary notwithstanding, the Committee, in its sole discretion, may determine, prior to or within thirty (30) days after the date of such termination of such a Holder’s status as a Consultant, that all or a portion of any such Holder’s Restricted Stock and/or Deferred Stock shall not be so canceled and forfeited.

 

Section 6.4            Special Termination Rule. Except to the extent inconsistent with the terms of the applicable Award Agreement, and notwithstanding anything to the contrary contained in this Article VI, if a Holder’s employment with, or status as a Director of, the Company or an Affiliate shall terminate, if, within ninety (90) days of such termination, such Holder shall become a Consultant, such Holder’s rights with respect to any Award or portion thereof granted thereto prior to the date of such termination may be preserved, if and to the extent determined by the Committee in its sole discretion, as if such Holder had been a Consultant for the entire period during which such Award or portion thereof had been outstanding. Should the Committee effect such determination with respect to such Holder, for all purposes of the Plan, such Holder shall not be treated as if his or her employment or Director status had terminated until such time as his or her Consultant status shall terminate, in which case his or her Award, as it may have been reduced in connection with the Holder’s becoming a Consultant, shall be treated pursuant to the provisions of Section 6.3; provided, however, that any such Award which is intended to be an Incentive Stock Option shall, upon the Holder’s no longer being an Employee, automatically convert to a Non-Qualified Stock Option. Should a Holder’s status as a Consultant terminate, if, within ninety (90) days of such termination, such Holder shall become an Employee or a Director, such Holder’s rights with respect to any Award or portion thereof granted thereto prior to the date of such termination may be preserved, if and to the extent determined by the Committee in its sole discretion, as if such Holder had been an Employee or a Director, as applicable, for the entire period during which such Award or portion thereof had been outstanding, and, should the Committee effect such determination with respect to such Holder, for all purposes of the Plan, such Holder shall not be treated as if his or her Consultant status had terminated until such time as his or her employment with the Company or an Affiliate, or his or her Director status, as applicable, shall terminate, in which case his or her Award shall be treated pursuant to the provisions of Section 6.2.

 

 

Section 6.5            Termination for Cause. Notwithstanding anything in this Article VI or elsewhere in the Plan to the contrary, and unless a Holder’s Award Agreement specifically provides otherwise, should a Holder’s employment, Director status or engagement as a Consultant with or for the Company or an Affiliate be terminated by the Company or Affiliate for Cause, all of such Holder’s then outstanding Awards shall expire immediately and be forfeited in their entirety upon such termination.

 

ARTICLE VII
OPTIONS

 

Section 7.1            Option Period. The term of each Option shall be as specified in the Option Agreement.

 

Section 7.2            Limitations on Exercise of Option. An Option shall be exercisable in whole or in such installments and at such times as specified in the Option Agreement.

 

Section 7.3            Special Limitations on Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined at the time the respective Incentive Stock Option is granted) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an individual during any calendar year under all plans of the Company and any parent corporation or subsidiary corporation thereof (both as defined in Section 424 of the Code) which provide for the grant of Incentive Stock Options exceeds One Hundred Thousand Dollars ($100,000) (or such other individual limit as may be in effect under the Code on the date of grant), such Incentive Stock Options shall be treated as Non-Qualified Stock Options. The Committee shall determine, in accordance with applicable provisions of the Code, Treasury Regulations and other administrative pronouncements, which of a Holder’s Options, which were intended by the Committee to be Incentive Stock Options when granted to the Holder, will not constitute Incentive Stock Options because of such limitation, and shall notify the Holder of such determination as soon as practicable after such determination. No Incentive Stock Option shall be granted to an Employee if, at the time the Option is granted, such Employee is a Ten Percent Stockholder, unless (i) at the time such Incentive Stock Option is granted the Option price is at least one hundred ten percent (110 %) of the Fair Market Value of the Common Stock subject to the Option, and (ii) such Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the date of grant. No Incentive Stock Option shall be granted more than ten (10) years from the date on which the Plan is approved by the Company’s stockholders. The designation by the Committee of an Option as an Incentive Stock Option shall not guarantee the Holder that the Option will satisfy the applicable requirements for “incentive stock option” status under Section 422 of the Code.

 

 

Section 7.4            Option Agreement. Each Option shall be evidenced by an Option Agreement in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve, including, but not limited to, provisions intended to qualify an Option as an Incentive Stock Option. An Option Agreement may provide for the payment of the Option price, in whole or in part, by the delivery of a number of shares of Common Stock (plus cash if necessary) having a Fair Market Value equal to such Option price. Each Option Agreement shall, solely to the extent inconsistent with the provisions of Sections 6.2, 6.3 and 6.4, as applicable, specify the effect of termination of employment, Director status or Consultant status on the exercisability of the Option. Moreover, an Option Agreement may provide for a “cashless exercise” of the Option by establishing procedures whereby the Holder, by a properly-executed written notice, directs (i) an immediate market sale or margin loan respecting all or a part of the shares of Common Stock to which he is entitled upon exercise pursuant to an extension of credit by the Company to the Holder of the Option price, (ii) the delivery of the shares of Common Stock from the Company directly to a brokerage firm and (iii) the delivery of the Option price from sale or margin loan proceeds from the brokerage firm directly to the Company. An Option Agreement may also include provisions relating to (i) subject to the provisions hereof, accelerated vesting of Options, (ii) tax matters (including provisions covering any applicable Employee wage withholding requirements and requiring additional “gross-up” payments to Holders to meet any excise taxes or other additional income tax liability imposed as a result of a payment upon a “change of control” of the Company resulting from the operation of the Plan or of such Option Agreement) and (iii) any other matters not inconsistent with the terms and provisions of the Plan that the Committee shall in its sole discretion determine. The terms and conditions of the respective Option Agreements need not be identical.

 

Section 7.5            Option Price and Payment. The price at which a share of Common Stock may be purchased upon exercise of an Option shall be determined by the Committee; provided, however, that such Option price (i) shall not be less than the Fair Market Value of a share of Common Stock on the date such Option is granted, and (ii) shall be subject to adjustment as provided in Article XIV. The Option or portion thereof may be exercised by delivery of an irrevocable notice of exercise to the Company. The Option price for the Option or portion thereof shall be paid in full in the manner prescribed by the Committee as set forth in the applicable Option Agreement. Separate stock certificates shall be issued by the Company for those shares of Common Stock acquired pursuant to the exercise of an Incentive Stock Option and for those shares of Common Stock acquired pursuant to the exercise of a Non-Qualified Stock Option.

 

 

Section 7.6            Stockholder Rights and Privileges. The Holder of an Option shall be entitled to all the privileges and rights of a stockholder of the Company solely with respect to such shares of Common Stock as have been purchased under the Option and for which certificates of stock have been registered in the Holder’s name.

 

Section 7.7            Options and Rights in Substitution for Stock Options Granted by Other Corporations. Options may be granted under the Plan from time to time in substitution for stock options held by individuals employed by entities who become Employees as a result of a merger or consolidation of the employing entity with the Company or any Affiliate, or the acquisition by the Company or an Affiliate of the assets of the employing entity, or the acquisition by the Company or an Affiliate of stock of the employing entity with the result that such employing entity becomes an Affiliate.

 

ARTICLE VIII
RESTRICTED STOCK AWARDS

 

Section 8.1            Restriction Period to be Established by Committee. At the time a Restricted Stock Award is made, the Committee shall establish the Restriction Period applicable to such Award. Each Restricted Stock Award may have a different Restriction Period, in the discretion of the Committee. The Restriction Period applicable to a particular Restricted Stock Award shall not be changed except as permitted by Section 8.2.

 

Section 8.2           Other Terms and Conditions. Common Stock awarded pursuant to a Restricted Stock Award shall be represented by a stock certificate registered in the name of the Holder of such Restricted Stock Award. If provided for under the Restricted Stock Award Agreement, the Holder shall have the right to vote Common Stock subject thereto and to enjoy all other stockholder rights, including the entitlement to receive dividends on the Common Stock during the Restriction Period, except that (i) the Holder shall not be entitled to delivery of the stock certificate until the Restriction Period shall have expired, (ii) the Company shall retain custody of the stock certificate during the Restriction Period (with a stock power endorsed by the Holder in blank), (iii) the Holder may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Common Stock during the Restriction Period and (iv) a breach of the terms and conditions established by the Committee pursuant to the Restricted Stock Award Agreement shall cause a forfeiture of the Restricted Stock Award. At the time of such Award, the Committee may, in its sole discretion, prescribe additional terms and conditions or restrictions relating to Restricted Stock Awards, including, but not limited to, rules pertaining to the effect of termination of employment, Director status or Consultant status prior to expiration of the Restriction Period. Such additional terms, conditions or restrictions shall, to the extent inconsistent with the provisions of Sections 6.2, 6.3 and 6.4, as applicable, be set forth in a Restricted Stock Award Agreement made in conjunction with the Award. Such Restricted Stock Award Agreement may also include provisions relating to (i) subject to the provisions hereof, accelerated vesting of Awards, including but not limited to accelerated vesting upon the occurrence of a “change of control” of the Company, (ii) tax matters (including provisions covering any applicable Employee wage withholding requirements and requiring additional “gross-up” payments to Holders to meet any excise taxes or other additional income tax liability imposed as a result of a payment made in connection with a “change of control” of the Company resulting from the operation of the Plan or of such Restricted Stock Award Agreement) and (iii) any other matters not inconsistent with the terms and provisions of the Plan that the Committee shall in its sole discretion determine. The terms and conditions of the respective Restricted Stock Agreements need not be identical.

 

 

Section 8.3            Payment for Restricted Stock. The Committee shall determine the amount and form of any payment from a Holder for Common Stock received pursuant to a Restricted Stock Award, if any, provided that in the absence of such a determination, a Holder shall not be required to make any payment for Common Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required by law.

 

Section 8.4            Restricted Stock Award Agreements. At the time any Award is made under this Article VIII, the Company and the Holder shall enter into a Restricted Stock Award Agreement setting forth each of the matters contemplated hereby and such other matters as the Committee may determine to be appropriate.

 

ARTICLE IX
UNRESTRICTED STOCK AWARDS

 

Pursuant to the terms of the applicable Unrestricted Stock Award Agreement, a Holder may be awarded (or sold at a discount) shares of Common Stock which are not subject to Restrictions, in consideration for past services rendered thereby to the Company or an Affiliate or for other valid consideration.

 

ARTICLE X

PERFORMANCE UNIT AWARDS

 

Section 10.1        Terms and Conditions. The Committee shall set forth in the applicable Performance Unit Award Agreement the performance goals and objectives (and the period of time to which such goals and objectives shall apply) which the Holder and/or the Company would be required to satisfy before the Holder would become entitled to payment pursuant to Section 10.2, the number of Units awarded to the Holder and the dollar value assigned to each such Unit.

 

Section 10.2        Payments. The Holder of a Performance Unit shall be entitled to receive a cash payment equal to the dollar value assigned to such Unit under the applicable Performance Unit Award Agreement if the Holder and/or the Company satisfy (or partially satisfy, if applicable under the applicable Performance Unit Award Agreement) the performance goals and objectives set forth in such Performance Unit Award Agreement.

 

ARTICLE XI
PERFORMANCE SHARE AWARDS

 

Section 11.1        Terms and Conditions. The Committee shall set forth in the applicable Performance Share Award Agreement the performance goals and objectives (and the period of time to which such goals and objectives shall apply) which the Holder and/or the Company would be required to satisfy before the Holder would become entitled to the receipt of shares of Common Stock pursuant to such Holder’s Performance Share Award and the number of shares of Common Stock subject to such Performance Share Award.

 

Section 11.2        Stockholder Rights and Privileges. The Holder of a Performance Share Award shall have no rights as a stockholder of the Company until such time, if any, as the Holder actually receives shares of Common Stock pursuant to the Performance Share Award.

 

  

ARTICLE XII
DISTRIBUTION EQUIVALENT RIGHTS

 

Section 12.1        Terms and Conditions. The Committee shall set forth in the applicable Distribution Equivalent Rights Award Agreement the terms and conditions, if any, including whether the Holder is to receive credits currently in cash, is to have such credits reinvested (at Fair Market Value determined as of the date of reinvestment) in additional shares of Common Stock or is to be entitled to choose among such alternatives. Distribution Equivalent Rights Awards may be settled in cash or in shares of Common Stock, as set forth in the applicable Distribution Equivalent Rights Award Agreement. A Distribution Equivalent Rights Award may, but need not be, awarded in tandem with another Award, whereby, if so awarded, such Distribution Equivalent Rights Award shall expire, terminate or be forfeited by the Holder, as applicable, under the same conditions as under such other Award.

 

Section 12.2        Interest Equivalents. The Distribution Equivalent Rights Award Agreement for a Distribution Equivalent Rights Award may provide for the crediting of interest on a Distribution Rights Award to be settled in cash at a future date, at a rate set forth in the applicable Distribution Equivalent Rights Award Agreement, on the amount of cash payable thereunder.

 

ARTICLE XIII
STOCK APPRECIATION RIGHTS

 

Section 13.1        Terms and Conditions. The Committee shall set forth in the applicable Stock Appreciation Right Award Agreement the terms and conditions of the Stock Appreciation Right, including (i) the base value (the “Base Value”) for the Stock Appreciation Right, which for purposes of a Stock Appreciation which is not a Tandem Stock Appreciation Right, shall be not less than the Fair Market Value of a share of the Common Stock on the date of grant of the Stock Appreciation Right, (ii) the number of shares of Common Stock subject to the Stock Appreciation Right, (iii) the period during which the Stock Appreciation Right may be exercised, and (iv) any other special rules and/or requirements which the Committee imposes upon the Stock Appreciation Right. Upon the exercise of some or all of the portion of a Stock Appreciation Right, the Holder shall receive a payment from the Company, in cash or in the form of shares of Common Stock having an equivalent Fair Market Value or in a combination of both, as determined in the sole discretion of the Committee, equal to the product of:

 

(a)               The excess of (i) the Fair Market Value of a share of the Common Stock on the date of exercise, over (ii) the Base Value, multiplied by;

 

 

(b)               The number of shares of Common Stock with respect to which the Stock Appreciation Right is exercised.

 

Section 13.2        Tandem Stock Appreciation Rights. If the Committee grants a Stock Appreciation Right which is intended to be a Tandem Stock Appreciation Right, the Tandem Stock Appreciation Right must be granted at the same time as the related Option, and the following special rules shall apply:

 

(a)               The Base Value shall be equal to or greater than the exercise price under the related Option;

 

(b)            The Tandem Stock Appreciation Right may be exercised for all or part of the shares of Common Stock which are subject to the related Option, but solely upon the surrender by the Holder of the Holder’s right to exercise the equivalent portion of the related Option (and when a share of Common Stock is purchased under the related Option, an equivalent portion of the related Tandem Stock Appreciation Right shall be cancelled);

 

(c)               The Tandem Stock Appreciation Right shall expire no later than the date of the expiration of the related Option;

 

(d)            The value of the payment with respect to the Tandem Stock Appreciation Right may be no more than one hundred percent (100%) of the difference between the exercise price under the related Option and the Fair Market Value of the shares of Common Stock subject to the related Option at the time the Tandem Stock Appreciation Right is exercised; and

 

(e)             The Tandem Stock Appreciation Right may be exercised solely when the Fair Market Value of the shares of Common Stock subject to the related Option exceeds the exercise price under the related Option.

 

ARTICLE XIV
RECAPITALIZATION OR REORGANIZATION

 

Section 14.1        Adjustments to Common Stock. The shares with respect to which Awards may be granted under the Plan are shares of Common Stock as presently constituted; provided, however, that if, and whenever, prior to the expiration or distribution to the Holder of an Award theretofore granted, the Company shall effect a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend on Common Stock without receipt of consideration by the Company, the number of shares of Common Stock with respect to which such Award may thereafter be exercised or satisfied, as applicable, (i) in the event of an increase in the number of outstanding shares, shall be proportionately increased, and the purchase price per share shall be proportionately reduced, and (ii) in the event of a reduction in the number of outstanding shares, shall be proportionately reduced, and the purchase price per share shall be proportionately increased. Notwithstanding the foregoing, any such adjustment made with respect to an Award which is an Incentive Stock Option shall comply with the requirements of Section 424(a) of the Code, and in no event shall any such adjustment be made which would render any Incentive Stock Option granted under the Plan to be other than an “incentive stock option” for purposes of Section 422 of the Code.

 

 

Section 14.2        Recapitalization. If the Company recapitalizes or otherwise changes its capital structure, thereafter upon any exercise or satisfaction, as applicable, of a previously granted Award, the Holder shall be entitled to receive (or entitled to purchase, if applicable) under such Award, in lieu of the number of shares of Common Stock then covered by such Award, the number and class of shares of stock and securities to which the Holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior to such recapitalization, the Holder had been the holder of record of the number of shares of Common Stock then covered by such Award.

 

Section 14.3        Merger and Sale of Company. In the event of (i) a sale of all or substantially all of the assets of the Company; or (ii) a sale (including an exchange) of all or substantially all of the shares of the Company, or an acquisition by a stockholder of the Company or by an Affiliate of such stockholder, of all the shares of the Company held by other stockholders or by other stockholders who are not Affiliated with such acquiring party; (iii) a merger, consolidation, amalgamation or like transaction of the Company with or into another corporation; (iv) a scheme of arrangement for the purpose of effecting such sale, merger or amalgamation; or (v) such other transaction that is determined by the Committee to be a transaction having a similar effect (all such transactions being herein referred to as a “Merger/Sale”), then, without the Holder’s consent and action:

 

(a)               unless otherwise determined by the Committee in its sole and absolute discretion, any Award then outstanding shall be assumed or an equivalent Award shall be substituted by such successor corporation of the Merger/Sale or any parent or Affiliate thereof as determined by the Board in its discretion (the “Successor Corporation”), under substantially the same terms as the Award;

 

For the purposes of this Section 14.3(a), the Award shall be considered assumed if, following a Merger/Sale, the Award confers on the holder thereof the right to purchase or receive, for each share underlying an Award immediately prior to the Merger/Sale, either (i) the consideration (whether stock, cash, or other securities or property) distributed to or received by holders of shares in the Merger/Sale for each share held on the effective date of the Merger/Sale (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock), which may be subject to vesting and other terms as determined by the Committee in its discretion, or (ii) regardless of the consideration received by the holders of shares of Common Stock in the Merger/Sale, solely shares (or their equivalent) of the Successor Corporation at a value to be determined by the Committee in its discretion, which may be subject to vesting and other terms as determined by the Committee in its discretion. The foregoing shall not limit the Committee authority to determine, in its sole and absolute discretion, that in lieu of such assumption or substitution of Awards for Awards of the Successor Corporation, such Award will be substituted for any other type of asset or property, including under Section 14.3(b) hereunder.

 

(b)               In the event that the Awards are not assumed or substituted by an equivalent Award, then the Committee may (but shall not be obligated to), in lieu of such assumption or substitution of the Award and in its sole and absolute discretion, (i) provide for the Holder to have the right to exercise the then-outstanding and vested Award, including the cancellation of all unexercised Awards upon closing of the Merger/Sale, or provide for another arrangement as the Committee shall decide; and/or (ii) provide for the cancellation of each outstanding Award at the closing of such Merger/Sale, and payment to the Holder of an amount in cash as determined by the Committee to be fair in the circumstances (with full authority to determine the method for making such determination, which may be Black-Scholes model or any other method, and which determination shall be conclusive and binding on all parties), and subject to such terms and conditions as determined by the Committee in its sole and absolute discretion.

 

 

(c)               Notwithstanding the foregoing, in the event of a Merger/Sale, the Committee may determine, in its sole and absolute discretion, that upon completion of such Merger/Sale, the terms of any Award be otherwise amended, modified or terminated, as the Committee shall deem in its sole and absolute discretion to be appropriate, and if an Option Award, that the Option Award shall confer the right to purchase or receive any other security or asset, or any combination thereof, or that its terms be otherwise amended, modified or terminated, as the Committee shall deem in its sole and absolute discretion to be appropriate. Neither the authorities and powers of the Committee under this Section 14.3, nor the exercise or implementation thereof, shall (i) be restricted or limited in any way by any adverse consequences (tax or otherwise) that may result to any holder of an Award, and (ii) as, inter alia, being a feature of the Award upon its grant, be deemed to constitute a change or an amendment of the rights of such holder under this Plan, nor shall any such adverse consequences (as well as any adverse tax consequences that may result from any tax ruling or other approval or determination of any relevant tax authority) be deemed to constitute a change or an amendment of the rights of such holder under this Plan.

 

Section 14.4        Other Events. In the event of changes to the outstanding Common Stock by reason of recapitalization, reorganization, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for under this Article XIV, any outstanding Awards and any Award Agreements evidencing such Awards shall be adjusted by the Board in its discretion as to the number and price of shares of Common Stock or other consideration subject to such Awards. In the event of any such change to the outstanding Common Stock, the aggregate number of shares available under the Plan may be appropriately adjusted by the Board, the determination of which shall be conclusive.

 

Section 14.5        Powers Not Affected. The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or of the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change of the Company’s capital structure or business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Common Stock or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.

 

Section 14.6        No Adjustment for Certain Awards. Except as hereinabove expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect previously granted Awards, and no adjustment by reason thereof shall be made with respect to the number of shares of Common Stock subject to Awards theretofore granted or the purchase price per share, if applicable.

 

 

ARTICLE XV
AMENDMENT AND TERMINATION OF PLAN

 

The Board in its discretion may terminate the Plan at any time with respect to any shares for which Awards have not theretofore been granted; provided, however, that the Plan’s termination shall not materially and adversely impair the rights of a Holder with respect to any Award theretofore granted without the consent of the Holder. The Board shall have the right to alter or amend the Plan or any part hereof from time to time; provided, however, that no change in any Award theretofore granted may be made which would materially and adversely impair the rights of a Holder with respect to such Award without the consent of the Holder (unless such change is required in order to cause the benefits under the Plan to qualify as “performance-based” compensation within the meaning of Section 162(m) of the Code).

 

ARTICLE XVI
RIGHT OF FIRST REFUSAL

 

Solely during such time that the Common Stock is not publicly traded, no Holder (or beneficiary of a Holder including but not limited to the Holder’s estate) may sell or otherwise transfer (except for inter vivos transfers to Family Members) any Common Stock obtained thereby pursuant to an Award without first (a) providing the Company with a written offer to sell the Common Stock to the Company on the same terms as were offered to the Holder (or the Holder’s beneficiary) by a bona fide third party (a copy of which third party offer shall be attached to the Holder’s or beneficiary’s offer to sell such Common Stock to the Company) for a sales price and with other terms and conditions, in each case equal to those stated in the third party’s purchase offer, and (b) waiting thirty (30) days from the date of the Company’s receipt of such offer. If the Company shall accept the Holder’s or beneficiary’s offer in writing within said thirty (30) day period, the Holder or beneficiary and the Company shall promptly effect such transaction. If the Company does not provide a written acceptance of the Holder’s or beneficiary’s offer within said thirty (30) day period, the Holder or beneficiary shall be entitled to accept such third party’s offer and effect such transaction.

 

ARTICLE XVII
MISCELLANEOUS

 

Section 17.1        No Right to Award. Neither the adoption of the Plan by the Company nor any action of the Board or the Committee shall be deemed to give an Employee, Director or Consultant any right to an Award except as may be evidenced by an Award Agreement duly executed on behalf of the Company, and then solely to the extent and on the terms and conditions expressly set forth therein.

 

Section 17.2        No Rights Conferred. Nothing contained in the Plan shall (i) confer upon any Employee any right with respect to continuation of employment with the Company or any Affiliate, (ii) interfere in any way with any right of the Company or any Affiliate to terminate the employment of an Employee at any time, (iii) confer upon any Director any right with respect to continuation of such Director’s membership on the Board, (iv) interfere in any way with any right of the Company or an Affiliate to terminate a Director’s membership on the Board at any time, (v) confer upon any Consultant any right with respect to continuation of his or her consulting engagement with the Company or any Affiliate, or (vi) interfere in any way with any right of the Company or an Affiliate to terminate a Consultant’s consulting engagement with the Company or an Affiliate at any time.

 

 

Section 17.3        Other Laws; Withholding. The Company shall not be obligated to issue any Common Stock pursuant to any Award granted under the Plan at any time when the shares covered by such Award have not been registered under the Securities Act of 1933 and under such other state and federal laws, rules or regulations as the Company or the Committee deems applicable and, in the opinion of legal counsel of the Company, if there is no exemption from the registration requirements of such laws, rules or regulations available for the issuance and sale of such shares. No fractional shares of Common Stock shall be delivered, nor shall any cash in lieu of fractional shares be paid. The Company shall have the right to deduct in cash (whether under this Plan or otherwise) in connection with all Awards any taxes required by law to be withheld and to require any payments required to enable it to satisfy its withholding obligations. In the case of any Award satisfied in the form of shares of Common Stock, no shares shall be issued unless and until arrangements satisfactory to the Company shall have been made to satisfy any tax withholding obligations applicable with respect to such Award. Subject to such terms and conditions as the Committee may impose, the Company shall have the right to retain, or the Committee may, subject to such terms and conditions as it may establish from time to time, permit Holders to elect to tender, Common Stock (including Common Stock issuable in respect of an Award) to satisfy, in whole or in part, the amount required to be withheld.

 

Section 17.4        No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to prevent the Company or any Affiliate from taking any corporate action which is deemed by the Company or such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No Employee, Director, Consultant, beneficiary or other person shall have any claim against the Company or any Affiliate as a result of any such action.

 

Section 17.5        Restrictions on Transfer. No Award under the Plan or any Award Agreement and no rights or interests herein or therein, shall or may be assigned, transferred, sold, exchanged, encumbered, pledged or otherwise hypothecated or disposed of by a Holder except (i) by will or by the laws of descent and distribution, or (ii) except for an Incentive Stock Option, by gift to any Family Member of the Holder. An Award may be exercisable during the lifetime of the Holder only by such Holder or by the Holder’s guardian or legal representative unless it has been transferred by gift to a Family Member of the Holder, in which case it shall be exercisable solely by such transferee. Notwithstanding any such transfer, the Holder shall continue to be subject to the withholding requirements provided for under Section 16.3 hereof.

 

Section 17.6        Beneficiary Designations. Each Holder may, from time to time, name a beneficiary or beneficiaries (who may be contingent or successive beneficiaries) for purposes of receiving any amount which is payable in connection with an Award under the Plan upon or subsequent to the Holder’s death. Each such beneficiary designation shall serve to revoke all prior beneficiary designations, be in a form prescribed by the Company and be effective solely when filed by the Holder in writing with the Company during the Holder’s lifetime. In the absence of any such written beneficiary designation, for purposes of the Plan, a Holder’s beneficiary shall be the Holder’s estate.

 

 

 

Section 17.7       Rule 16b-3. It is intended that, at any time when the Common Stock is registered under Section 12 of the Exchange Act, the Plan and any Award made to a person subject to Section 16 of the Exchange Act shall meet all of the requirements of Rule 16b-3. If any provision of the Plan or of any such Award would disqualify the Plan or such Award under, or would otherwise not comply with the requirements of, Rule 16b-3, such provision or Award shall be construed or deemed to have been amended as necessary to conform to the requirements of Rule 16b-3.

 

Section 17.8        Section 162(m). It is intended that, at any time when the Common Stock is registered under Section 12 of the Exchange Act, the Plan shall comply fully with and meet all the requirements of Section 162(m) of the Code so that Awards hereunder which are made to Holders who are “covered employees” (as defined in Section 162(m) of the Code) shall constitute “performance-based” compensation within the meaning of Section 162(m) of the Code. The performance criteria to be utilized under the Plan for such purposes shall consist of objective tests based on one or more of the following: earnings or earnings per share, cash flow, customer satisfaction, revenues, financial return ratios (such as return on equity and/or return on assets), market performance, stockholder return and/or value, operating profits, EBITDA, net profits, profit returns and margins, stock price, credit quality, sales growth, market share, comparisons to peer companies (on a company-wide or divisional basis), working capital and/or individual or aggregate employee performance. If any provision of the Plan would disqualify the Plan or would not otherwise permit the Plan to comply with Section 162(m) as so intended, such provision shall be construed or deemed amended to conform to the requirements or provisions of Section 162(m).

 

Section 17.9        Section 409A. Notwithstanding any other provision of the Plan, the Committee shall have no authority to issue an Award under the Plan with terms and/or conditions which would cause such Award to constitute non-qualified “deferred compensation” under Section 409A of the Code. Accordingly, by way of example but not limitation, no Option shall be granted under the Plan with a per share Option exercise price which is less than the Fair Market Value of a share of Common Stock on the date of grant of the Option. Notwithstanding anything herein to the contrary, no Award Agreement shall provide for any deferral feature with respect to an Award which constitutes a deferral of compensation under Section 409A of the Code.

 

Section 17.10    Other Plans. No Award, payment or amount received hereunder shall be taken into account in computing an Employee’s salary or compensation for the purposes of determining any benefits under any pension, retirement, life insurance or other benefit plan of the Company or any Affiliate, unless such other plan specifically provides for the inclusion of such Award, payment or amount received.

 

Section 17.11    Limits of Liability. Any liability of the Company with respect to an Award shall be based solely upon the contractual obligations created under the Plan and the Award Agreement. None of the Company, any member of the Board nor any member of the Committee shall have any liability to any party for any action taken or not taken, in good faith, in connection with or under the Plan.

 

 

Section 17.12    Governing Law. Except as otherwise provided herein, the Plan shall be construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law.

 

Section 17.13    Severability of Provisions. If any provision of the Plan is held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of the Plan, and the Plan shall be construed and enforced as if such invalid or unenforceable provision had not been included in the Plan.

 

Section 17.14    No Funding. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of funds or assets to ensure the payment of any Award.

 

Section 17.15    Headings. Headings used throughout the Plan are for convenience only and shall not be given legal significance.

 

Section 17.16    Terms of Award Agreements. Each Award shall be evidenced by an Award Agreement, which Award Agreement, if it provides for the issuance of Common Stock, shall require the Holder to enter into and be bound by the terms of the Company’s Stockholders’ Agreement, if any. The terms of the Award Agreements utilized under the Plan need not be the same.

 

 

OUTBRAIN, INC.

 

APPENDIX A – ISRAEL 2007

 

TO THE 2007 OMNIBUS SECURITIES AND INCENTIVE PLAN AS WAS AMENDED

AND RESTATED ON JANUARY 21, 2009

 

Notwithstanding any other provision of the Outbrain Inc. 2007 Omnibus Securities and Incentive Plan as was amended and restated on January 21, 2009 (“the Plan”) to the contrary, the provisions of this Annex A to the Plan, which Annex A shall constitute a part of the Plan, shall be applicable to Awards made under the Plan to Optionees who are residents of the state of Israel or those who are deemed to be residents of the state of Israel for the payment of tax. For purposes of Awards made under the Plan to Optionees described in the preceding sentence, in the case of any conflict between the terms of this Annex A and those of the remainder of the Plan, the terms of this Annex A shall control.

 

ARTICLE A - DEFINITIONS

 

In this Annex A, the following capitalized terms shall have the meaning indicated below. Capitalized words and terms defined in the Plan and not otherwise defined in this Annex A, shall have the same meaning ascribed to them in the Plan.

 

“Approved 102 Award” means an Award granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Optionee.

 

“CGA” as defined in Paragraph 4 of Article B below.

 

“ITA” means the Israeli Tax Authorities.

 

“OIA” as defined in Paragraph 5 of Article B below.

 

“102 Award” means any Award granted to an Optionee pursuant to Section 102 of the Ordinance.

 

“Ordinance” means the Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended.

 

“Section 102” means Section 102 of the Ordinance and any regulations, rules, orders or procedures promulgated thereunder, as now in effect or as hereafter amended.

 

“Trustee” means any Person appointed by the Company to serve as a trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.

 

“Unapproved 102 Award” means an Award granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.

 

 

ARTICLE B - DESIGNATION OF AWARDS PURSUANT TO SECTION 102

 

1.

The Company may designate Awards granted to Employees pursuant to Section 102 as Unapproved 102 Awards or Approved 102 Awards.

 

2.

The grant of Approved 102 Awards shall be made under this Plan adopted by the Board and shall be conditioned upon the approval of this Plan by the ITA.

 

3.

Approved 102 Award may either be classified as CGA or OIA (defined below).

 

4.

Approved 102 Award elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) shall be referred to herein as Capital Gain Award (“CGA”).

 

5.

Approved 102 Award elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) shall be referred to herein as Ordinary Income Award (“OIA”).

 

6.

The Company’s election of the type of Approved 102 Awards as CGA or OIA granted to Employees (the “Election”), shall be appropriately filed with the ITA before the date of grant of an Approved 102 Award. Such Election shall become effective beginning the first date of grant of an Approved 102 Award under the Plan and shall remain in effect at least until the end of the year following the year during which the Company first granted Approved 102 Awards. The Election shall obligate the Company to grant only the type of Approved 102 Award it has elected, and shall apply to all Optionees who were granted Approved 102 Awards during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Awards simultaneously. In addition, it is hereby clarified that the Company may change the Election in accordance with the provisions of Section 102, and the Optionees, or any of them, shall not be deemed to have acquired or otherwise be vested with any rights in respect of any Election made by the Company and/or the change thereof.

 

7.

All Approved 102 Awards must be held in trust by a Trustee, as described below.

 

8.

For the avoidance of doubt, the designation of Unapproved 102 Awards and Approved 102 Awards shall be subject to the terms and conditions set forth in Section 102.

 

9.

With regards to Approved 102 Awards, the provisions of the Plan and/or the Award Agreement shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the Plan and of the Award Agreement. Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan or the Award Agreement, shall be considered binding upon the Company and the Optionees. In this respect, and without derogating from any other authority conferred upon the Committee, the Committee may amend any provision of the Plan such that it will comply with Section 102 and/or the said permit, to the extent the Committee deems necessary in order to receive and/or to keep in effect any tax benefit pursuant to Section 102. The Committee shall be entitled, but not obligated, to determine, in its absolute discretion, that such an amendment shall be considered binding upon the Company and the Optionees retroactively, from the date in which it is required in order to receive and/or to keep in effect any tax benefit pursuant to Section 102.

 

 

ARTICLE C - TRUSTEE

 

1.

Approved 102 Awards which shall be granted under the Plan and/or any shares allocated or issued upon exercise of such Approved 102 Awards and/or other shares received subsequently following any realization of rights, including without limitation bonus shares, shall be allocated or issued to the Trustee and held for the benefit of the Optionees for such period of time as required by Section 102 (the “Holding Period”). In case the requirements for Approved 102 Awards are not met, then the Approved 102 Awards may be treated as Unapproved 102 Awards, all in accordance with the provisions of Section 102.

 

2.

Notwithstanding anything to the contrary, the Trustee shall not release any shares allocated or issued upon exercise of Approved 102 Awards prior to the full payment of the Optionee’s tax liabilities arising from Approved 102 Awards which were granted to him and/or any shares allocated or issued upon exercise of such Awards.

 

3.

With respect to any Approved 102 Award, subject to the provisions of Section 102, an Optionee shall not sell or release from trust any share received upon the exercise of an Approved 102 Award and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of the Ordinance shall apply to and shall be borne by such Optionee.

 

4.

By receiving of an Approved 102 Award, the Optionee will be deemed to have undertaken to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with the Plan, or any Approved 102 Award or share granted to him thereunder.

 

ARTICLE D - GENERAL PROVISIONS

 

1.

Solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the date of grant the shares of Outbrain Inc. are listed on any established stock exchange or a national market system or if such shares will be registered for trading within ninety (90) days following the date of grant, the Fair Market Value of a share at the date of grant shall be determined in accordance with the average value of the shares of Outbrain Inc. on the thirty (30) trading days preceding the date of grant or on the thirty (30) trading days following the date of registration for trading, as the case may be.

 

2.

Each Optionee, by receiving an Award, shall be deemed to have been representing that he is familiar with the provisions of Section 102 and that he is aware of the Election that applies to him, and that he is agreeing to the terms and conditions of the trust agreement between the Company and the Trustee and undertakes not to sell the shares prior to the end of the term, as defined in Section 102.

 

 

3.

The provisions of Section 17.6 of the Plan shall not apply to Awards made under the Plan which are subject to this Annex A.

 

4.

For purposes of Section 17.10 of the Plan, managers insurance, vocational studies fund, provident funds, severance pay, holiday pay and the like shall be included as Israeli social benefits the amounts of which shall not be determined by taking into account any Award made under the Plan which is subject to this Annex A.

 

5.

For purposes of Section 17.12 of the Plan, Israeli law shall govern all Awards made under the Plan which are subject to this Annex A.

 

 

OUTBRAIN INC.

 

2007 OMNIBUS SECURITIES AND INCENTIVE PLAN

 

ADDENDUM

 

Terms and Conditions for UK Company Share Option Plan Grants

 

1.                  Definitions. Except to the extent otherwise defined in this Section 1, in which case the definition in this Section 1 shall control over the definition otherwise contained in the Plan, all capitalized terms and expressions contained in this Addendum shall have the meanings ascribed to them in the Outbrain, Inc. 2007 Omnibus Securities and Incentive Plan and to the extent that any term is defined in both the Plan and the Addendum the definitions in the Addendum shall prevail and in the event of any inconsistency between the terms of the Plan, and the Addendum, the terms of the Addendum shall prevail :

 

(a)               “the Act” the Income Tax (Earnings and Pensions) Act 2003.

 

(b)               “the Approval Date” the date on which the Company receives notice that this Plan has been approved by HMRC in accordance with the CSOP Code.

 

(c)               “Applicable Laws” means the legal requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and UK corporate, securities, labor and tax laws, all as applicable to Options which are subject to this Addendum and to the Optionees.

 

(d)               “Associated Company” has the meaning given the purposes of CSOP Code.

 

(e)               “Close Company” has the same meaning as in s.989 of the Income Tax Act 2007 but includes also a company which would be such a close company but for s.442(a), 446 and 447 of the Corporation Tax Act 2010.

 

(f)                “control” has the meaning given in section 995 of the Income Tax Act 2007.

 

(g)               “the CSOP Code” Chapter 8 of Part 7 and Schedule 4 of the Act and Part 3 of Schedule 7D to the Taxation of Chargeable Gains Act 1992.

 

(h)               “Employee” means (i) an employee who is a director of the Company or a Subsidiary and required under his contract of employment to work for not less than 25 hours per week (excluding meal breaks) disregarding holiday entitlement; or (ii) any other employee of the Company or a Subsidiary other than one who is a director of the Company or a Subsidiary.

 

(i)                 “Exit Event” means (i) an IPO as defined in the Section 2 of the Amended and Restated Stockholders Agreement dated December 2, 2011; or (ii) a Deemed Liquidiation as defined in the Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on 2 December 2011.

 

 

(j)             “Fair Market Value” in relation to a share on a given day, the market value of a share determined in accordance with the provisions of Part 8 of the Taxation of Chargeable Act 1992 and agreed for the purposes of this Plan with HMRC Shares and Assets Valuation.

 

(k)               “Group” the Company and each and every company which is for the time being a Subsidiary

.

(l)                 “HMRC” Her Majesty’s Revenue and Customs.

 

(m)             “Key Feature” in relation to this Plan, means a provision which is necessary in order to meet the requirements of Schedule 4 to the Act.

 

(n)               “Material Interest” has the meaning given in paragraph 10 of Schedule 4 to the Act.

 

(o)               “NICs” National Insurance Contributions.

 

(p)               “NIC Option Gain” a gain realised upon the exercise of, or acquisition of Shares in pursuance of, an Option, being a gain that is treated as remuneration derived from the Optionee’s employment by virtue of section 4(4)(a) of the Social Security Contributions and Benefits Act 1992.

 

(q)               “NI Regulations” the laws, regulations and practices currently in force relating to liability for, and the collection of, NICs.

 

(r)                “Optionee’s Employer” in realtion to an Optionee, such member of the Group as is the Optionee’s employer or, if he has ceased to hold employment within the Group, was his employer.

 

(s)                “Subsidiary” means any company which is for the time being both a subsidiary (as defined in section 1159 and Schedule 6 of the Companies Act 2006) of the Company and under the control of the Company.

 

(t)                 “Termination” means, if the Optionee is an Employee, the last day on which the Optionee worked as an Employee irrespective of whether the termination of the Optionee’s employment is due to resignation or dismissal of the Optionee for any reason whatsoever; if the Optionee is a corporate officer as defined in Section 2 of this Addendum, “Termination” means the date on which he or she effectively leaves his or her position as a corporate officer of the Company or a Subsidiary for any reason whatsoever.

 

(u)               “Optioned Stock” means the Shares issued upon the exercise of an Option which satisfy the requirements of paragraphs 16 to 20 of Schedule 4 to the Act.

 

2.                  Eligibility. Options granted pursuant to this Addendum may be granted solely to Employees who do not have, or have not had in the previous 12 months, a Material Interest in a Close Company, being the Company or a company that has control of the Company or is a member of a consortium which owns such a company.

 

 

3.                  Individual Limits on the Granting of Options. The number of Shares in respect of which an Option is granted to an Employee shall be limited, and the Option shall take effect, so that the Fair Market Value of shares which may be acquired upon the exercise the Option, when added to:

 

(a)               The aggregate Fair Market Value of Shares in respect of which Options have previously been granted (and have not then been exercised nor ceased to be exercisable); and

 

(b)               The aggregate Fair Market Value of shares in respect of which rights to acquire such shares have been obtained by that Employee under any other share option plan approved in accordance with the CSOP Code which has been established by the company or by any Associated Company (and have not been being exercised nor ceased to be exercisable) shall not exceed or further extended £30,000.

 

4.                  No Right to Employment. Neither the Plan nor any Option which is subject to this Addendum shall confer upon any Optionee any right with respect to continuing the Optionee’s employment relationship with the Company or any Subsidiary.

 

5.                  Exercise Price. The per Share exercise price stated in the Award Agreement for the Shares to be issued pursuant to exercise of an Option will be determined by the Committee and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant of the Option.

 

6.                  Term of Option. The term of each Option which is subject to this Addendum shall be as stated in the Award Agreement; provided, however, that the maximum term of an Option which is subject to this Addendum shall not exceed ten (10) years from the date of grant of the Option.

 

7.                  Exercise of Option;

 

(a)               Termination of Employment Relationship. Upon Termination of an Optionee’s status as an Employee (other than as a result of the Optionee’s death or Total and Permanent Disability), including retirement on or after reaching age 55, the Optionee may exercise his or her Option which is subject to this Addendum within three (3) months of Termination, or such longer period of time as specified in the Award Agreement, and only to the extent that the Optionee was entitled to exercise it at the date of Termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).

 

(b)               Total and Permanent Disability of Optionee. Upon Termination of an Optionee’s status as an Employee as a result of the Optionee’s Total and Permanent Disability, the Optionee may exercise his or her Option which is subject to this Addendum at any time within six (6) months from the date of such Termination or such longer period of time as specified in the Award Agreement, but only to the extent that the Optionee was entitled to exercise it at the date of such Termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).

 

 

(c)               Death of Optionee. In the event of the death of an Optionee while an Employee, his or her Option which is subject to this Addendum may be exercised at any time within six (6) months following the date of death by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the date of the Optionee’s death.

 

(d)               Material Interest. An Option may not in any event be exercised at any time if the Optionee then has, or has within the preceding 12 months had, a Material Interest in a Close Company being the Company or a company which has control of the Company or is a member of a consortium which owns such a company.

 

8.                  Restrictions on Transferability of Options and Shares Issued in Connection with Option Exercise. An Option subject to this Addendum may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

 

9.                  Changes in Capitalization. If any adjustment or substitution provided for in Section 14 of the Plan to the exercise price and the number of shares of Common Stock covered by outstanding Options would violate Applicable Laws in such a way to jeopardize the favourable tax and NIC treatment of the Plan (together with this Addendum) and the Options granted thereunder, then no such adjustment nor substitution will be made prior to the exercise of any outstanding Option and no such adjustment or substitution shall take effect unless HMRC has confirmed in writing that such adjustment or substitution shall not affect the approved status of the Agreement and/or Plan. As soon as reasonably practicable after making any alteration under this Section 9, the Committee shall give notice in writing thereof to any Optionee affected.

 

Sections 14.3 shall be substituted as follows :

 

Section 14.3 Merger and Sale of Company. If any company (in this rule referred to as ‘the acquiring company’):

 

(1)          obtains control of the Company as a result of either:

 

(b)

a general offer to acquire the whole of the Common Stock which is made on a condition such that if it is satisfied the person making the offer will have control of the Company ; or

 

(c)

a general offer to acquire all of the shares in the Company of the same class as the Shares ;

 

(2)

obtains control of the Company in pursuance of a compromise or arrangement sanctioned by the court under section 899 of the Companies Act 2006; or

 

 

(3)

becomes bound or entitled to acquire Shares under sections 979 to 982 of the Companies Act 2006

 

an Optionee may, at any time within the appropriate period as defined in Section 14.3(a), by agreement with the acquiring company and notwithstanding that any performance-related condition is not then satisfied, release his rights under his Option in consideration of the grant to him of rights to acquire shares in the acquiring company or some other company falling within sub-paragraphs (b) or (c) of paragraph 16 of Schedule 4 to the Act (“a New Option”) PROVIDED THAT:

 

(i)

such New Option will be exercisable only in accordance with the provisions of this Addendum as it had effect immediately before the release of his rights under his Option (read and construed as mentioned in Section 14.3(b)); and

(ii)

the shares to which the new rights relate satisfy the provisions of paragraphs 16 to 20 of Schedule 4 to the Act; and

(iii)

the total market value, immediately before such release, of the Shares in respect of which the Option then subsists is equal to the total market value, immediately after such grant, of the shares in respect of which the New Option is granted to the Optionholder; and

(iv)

the total amount payable by the Optionee for the acquisition of shares upon exercise of the New Option is equal to the amount that would have been payable for the acquisition of Shares upon exercise of the Option.

 

(a)       In Section 14.3 ‘the appropriate period’ means:

 

(i)

in a case falling within Section 14.3(1), the period of 6 months beginning with the time when the acquiring company obtains control of the Company and any condition or conditions subject to which the offer is made has or have all been satisfied or waived;

(ii)

in a case falling within rule Section 14.3(2), the period of 6 months beginning with the time when the court sanctions the compromise or arrangement; and

(iii)

in a case falling within rule Section 14.3(3), the period during which the acquiring company remains bound or entitled as mentioned in that paragraph.

 

(b)

For the purposes mentioned in Section 14.3 the provisions of this Plan shall be read and construed as if:

 

(i)

references to “the Company” where applicable were references to the company in respect of whose shares the New Options is granted;

(ii)

references to “Shares” where applicable were references to such shares;

(iii)

references to “Option” where applicable were references to such New Option;

(iv)

references to “Optionee” where applicable were references to the persons to whom such New Option is granted;

(v)

references to “Ordinary Share Capital” where applicable were references to the ordinary share capital (other than fixed rate preference shares) of such company;

(vi)

references to “the Exercise Price” where applicable were references to the price per share payable upon the exercise of such new rights;

(vii)

references to “the Directors” where applicable were references to the board of directors of the acquiring company.

 

 

(c)

New Options granted pursuant to Section 14.3(a) shall be regarded for the purposes of the CSOP Code and for the purposes of the subsequent application of the provisions of this Plan as having been granted on the Date of Grant of the corresponding rights as mentioned in Section 14.3(a).

 

10.              Information Statements to Optionees. The Company or a Subsidiary, as required under Applicable Laws, will provide each Optionee with copies to the appropriate governmental entities, such statements of information as required by the Applicable Laws.

 

11.              Reporting to the Shareholders’ Meeting. A Subsidiary, if required under Applicable Laws, will provide its shareholders with an annual report with respect to Options granted and/or exercised by its Employees in the applicable financial year.

 

12.              Right of First Refusal. The Optionee will not be subject to the provisions of Section 2 of the Amended and Restated Stockholders Agreement dated December 2, 2011 in respect of Shares purchased pursuant to the exercise of the Option and Article XVI of the Plan shall not apply.

 

13.              Other Laws ; Witholding. The optioneee will not be subject to the parts of Section 17.3 of the Plan that provide the ability of the Company to withhold the issue of shares on the exercise of any Option to meet tax withholding obligations applicable with respect to such Award and the Company having the right to retain Common Stock to satisfy, in whole or in part, the amount required to be withheld.

 

14.              Amendment. The Committee may at any time make any alteration to the Agreement (or the rules of the Plan as they apply to the Agreement) in any respect PROVIDED THAT:

 

a)

no such alteration in any Key Feature of the Agreement or the Plan shall take effect unless HMRC has confirmed in writing that such alteration or addition shall not affect the approved status of the Agreement and/or Plan; and

 

b)

no such alteration shall take effect so as to affect the liabilities of any person other than the Company in relation to any Option granted by such person without the prior consent in writing of such person.

 

As soon as reasonably practicable after making any alteration under this Section 13, the Committee shall give notice in writing thereof to any Optionee affected.

 

 

 

 

Exhibit 10.5

 

SIXTH AMENDMENT
TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Sixth Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into this 27th day of March, 2020, by and between SILICON VALLEY BANK (“Bank”) and OUTBRAIN INC., a Delaware corporation (“Borrower”) whose address is 39 West 13^th Street, 3^rd Floor, New York, New York 10011.

 

Recitals

 

A.           Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of September 15, 2014, as amended by that certain First Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of November 20, 2014, as further amended by that certain Second Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of January 27, 2016, as further amended by that certain Third Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of August 25, 2016, as further amended by that certain Fourth Amendment to Amended and Restated Loan and Security Agreement dated as of October 6, 2016 and as further amended by that certain Fifth Amendment to Amended and Restated Loan and Security Agreement, dated as of November 2, 2018 (as amended, and as the same may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”).

 

B.           Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

C.           Borrower has requested that Bank amend the Loan Agreement to make certain revisions to the Loan Agreement as more fully set forth herein.

 

D.           Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

 

Agreement

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.            Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

2.            Amendments to Loan Agreement.

 

2.1          Section 6.9 (Financial Covenants). Section 6.9(b) is amended in its entirety and replaced with the following:

 

“(b)       EBITDA. Achieve, measured as of the last day of each period set forth below on a trailing six (6) month basis, EBITDA of at least the following amounts:

 

Period		Minimum EBITDA
March 31, 2020		$4,500,000
June 30, 2020		$3,500,000
September 30, 2020		$3,500,000
December 31, 2020		$11,500,000
March 31, 2021 and thereafter		To be mutually agreed upon by Bank and Borrower on or prior to March 20, 2021 and demonstrate not less than $15,000,000 in EBITDA for fiscal year 2021”

 

2.2          Section 6.12 (Formation or Acquisition of Subsidiaries). Section 6.12 is amended in its entirety and replaced with the following:

 

“6.12      Formation or Acquisition of Subsidiaries. Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the time that Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Effective Date (including, without limitation, pursuant to a Division), Borrower shall (a) cause such new Subsidiary to provide to Bank a joinder to the Loan Agreement to cause such Subsidiary to become a co-borrower hereunder, together with such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Bank appropriate certificates and powers and financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to Bank; provided, that with respect to any Foreign Subsidiary, in the event that Borrower and Bank mutually agree that (i) the grant of a continuing pledge and security interest in and to the assets of any such Foreign Subsidiary, (ii) the guaranty of the Obligations of the Borrower by any such Foreign Subsidiary and/or (iii) the pledge by Borrower of a perfected security interest in one hundred percent (100%) of the stock, units or other evidence of ownership of each Foreign Subsidiary, would reasonably be expected to have a material adverse tax effect on the Borrower, then the Borrower shall only be required to grant and pledge to Bank a perfected security interest in up to sixty-five percent (65%) of the stock, units or other evidence of ownership of such Foreign Subsidiary; and (c) provide to Bank all other documentation in form and substance satisfactory to Bank, including one or more opinions of counsel satisfactory to Bank, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 6.12 shall be a Loan Document.”

2.3           Section 7.1 (Dispositions). Section 7.1 is amended in its entirety and replaced with the following:

 

“7.1         Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (including, without limitation, pursuant to a Division) (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use or transfer of money or Cash Equivalents in the ordinary course of its business for the payment of ordinary course business expenses in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; and (f) of assets resulting from a casualty or condemnation event; and (g) non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business.”

 

2.4           Section 7.3 (Mergers or Acquisitions). Section 7.3 is amended in its entirety and replaced with the following:

 

“7.3         Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary or pursuant to a Division), other than Permitted Acquisitions. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.”

 

2.5          Section 7.7 (Distributions; Investments). Clause (b) of Section 7.7 is amended in its entirety and replaced with the following:

 

“(b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary or pursuant to a Division) other than Permitted Investments, or permit any of its Subsidiaries to do so.”

 

2.6          Section 10 (Notice). Section 10 is amended by deleting the notice address for Bank’s counsel and inserting the following in lieu thereof:

 

“with a copy to:

Morrison and Foerster LLP 200 Clarendon, Floor 20 Boston, Massachusetts 20116 Attn: Charles W. Stavros, Esquire Email: cstavros@mofo.com”

2.7           Section 13.1 (Definitions). The Loan Agreement shall be amended by inserting the following new definitions in Section 13.1, each in the appropriate alphabetical order:

 

“Division” means, in reference to any Person which is an entity, the division of such Person into two (2) or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including, without limitation, as contemplated under Section 18-217 of the Delaware Limited Liability Company Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity.

 

2.8          Exhibit B (Compliance Certificate). The Compliance Certificate appearing as Exhibit B to the Loan Agreement is amended in its entirety and replaced with the Compliance Certificate in the form of Schedule 1 attached hereto.

 

3.            Limitation of Amendments.

 

3.1           The amendments set forth in Section 2 above are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

3.2           This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

4.            Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

4.1           Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

4.2           Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

 

4.3           Except for the amendments to Borrower’s articles of incorporation set forth in Schedule 3, the organizational documents, as amended, of Borrower previously delivered to Bank remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect, or have otherwise been delivered by Borrower to Bank in connection with this Amendment;

 

4.4           The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

4.5           The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6           The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and

 

4.7           This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

5.            Ratification of Intellectual Property Security Agreement. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Intellectual Property Security Agreement dated as of November 20, 2014 between Borrower and Bank, as supplemented by that certain First Supplement to Intellectual Property Security Agreement between Borrower and Bank dated as of January 27, 2016, and as further supplemented by that certain Second Supplement to Intellectual Property Security Agreement between Borrower and Bank dated as of August 9, 2016 (as supplemented, the “Intellectual Property Security Agreement”) and acknowledges, confirms and agrees that said Intellectual Property Security Agreement (a) contains an accurate and complete listing of all Intellectual Property Collateral, as defined in said Intellectual Property Security Agreement, except for such additional Intellectual Property Collateral set forth in the Updated Perfection Certificate and (b) shall remain in full force and effect.

 

6.            Perfection Certificate. Attached as Schedule 2 hereto is an updated Perfection Certificate (the “Updated Perfection Certificate”). Borrower agrees that all references in the Loan Agreement to “Perfection Certificate” shall hereinafter be deemed to be a reference to the Updated Perfection Certificate.

 

7.            Integration. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

 

8.            Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

9.            Effectiveness. As a condition precedent to the effectiveness of this Amendment (the “Sixth Amendment Effective Date”) and the Bank’s obligation to make further Advances under the Revolving Line, the Bank shall have received the following documents prior to or concurrently with this Amendment, each in form and substance acceptable to Bank:

 

9.1          this Amendment duly executed by each party hereto;

 

9.2          a good standing certificate of Borrower, certified by the Secretary of State of the state of incorporation of Borrower, dated as of a date no earlier than thirty (30) days prior to the Sixth Amendment Effective Date;

 

9.3          certified copies, dated as of a recent date, of financing statement searches of Borrower, as Bank may request and which shall be obtained by Bank, accompanied by written evidence (including any UCC termination statements) that the Liens revealed in any such search either (i) will be terminated prior to or in connection with the Agreement, or (ii) in the sole discretion of Bank, will constitute Permitted Liens;

 

9.4          the Updated Perfection Certificate;

 

9.5          Borrower’s payment of Bank’s legal fees and expenses incurred in connection with this Amendment; and

 

9.6          such additional documents as Bank may reasonably request to effectuate the terms of this Amendment.

 

10.          Post-Closing Requirement. Within thirty (30) days after the date hereof, Borrower shall deliver to Bank (a) evidence satisfactory to Bank that the insurance policies required for Borrower are in full force and effect, together with appropriate evidence showing lender loss payable and additional insured clauses or endorsements in favor of Bank and (b) a duly executed Third Supplement to Intellectual Property Security Agreement, in form and substance reasonably satisfactory to Bank, supplementing the Intellectual Property Security Agreement to include all of Borrower’s Intellectual Property not included thereunder as of the date hereof. Failure to comply with the foregoing requirement within the time period noted shall constitute an Event of Default for which no grace or cure period shall apply.

 

[Signature page follows.]

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

 

BANK			BORROWER
SILICON VALLEY BANK			OUTBRAIN INC.
By:	/s/ Mike Bozicas		By:	/s/ Barry Schofield
Name: Mike Bozicas Title: Vice President			Name: Barry Schofield Title: Vice President, Corporate Finance & Treasurer

Schedule 1 to Sixth Amendment

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO:	SILICON VALLEY BANK	Date:
FROM:	OUTBRAIN INC.

 

The undersigned, in his or her capacity as authorized officer of Outbrain Inc. (“Borrower”) and not in her or her individual capacity certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (as amended, the “Agreement”): (1) Borrower is in complete compliance for the period ending _________________________ with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants	Required	Complies
Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes   No
Annual financial statement (CPA Audited) + CC	FYE within 180 days	Yes   No
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes   No
A/R & A/P Agings	Monthly within 30 days	Yes   No
Borrowing Base Reports	Monthly within 7 Business Days and with each request for an Advance	Yes   No
Projections	FYE within 30 days	Yes   No
409A Report	As completed, but at least annually	Yes   No
Capitalization Table	As updated, but at least annually	Yes   No
The following Intellectual Property was registered (or a registration application submitted) after the Effective Date (if no registrations, state “None).

Financial Covenants	Required	Actual	Complies
Maintain as indicated:
Liquidity Ratio	1.15:1.00	_____:1.00	Yes   No
EBITDA	*	$ _____	Yes  No

 

*See Section 6.9(b)

 

Streamline Period		Applies
Liquidity Ratio > 1.75:1.00 or Uncapped Availability Ratio > 1.50:1.00	Prime + 0.25%	Yes   No
Liquidity Ratio ≤ 1.75:1.00 and Uncapped Availability Ratio < 1.50:1.00	Prime + 0.75%	Yes   No

 

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

 

 

Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

I.

Liquidity Ratio (Section 6.9(a))

 

Required:

Maintain at all times, to be certified to Bank as of the last day of each month, a Liquidity Ratio of greater than 1.15 to 1.00. In connection therewith, Borrower shall also comply with the requirement set forth in the definition of Quick Assets.

 

Actual:

 

A.	Aggregate value of Borrower’s unrestricted and unencumbered cash	$ ____
B.	Aggregate value of Borrower’s net billed accounts receivable, determined according to GAAP	$ ____
C.	Quick Assets (the sum of lines A and B)	$ ____
D.	Aggregate value of accounts payable of Borrower	$ ____
E.	Aggregate value of traffic acquisition cost accruals	$ ____
F.	Line C minus line D minus line E	$ ____
G.	Aggregate value of all Obligations	$ ____
H.	Liquidity Ratio (line E divided by line G)	_____

 

Is line H greater than 1.15:1:00?

 

_____ No, not in compliance

_____ Yes, in compliance

 

Is the unrestricted and unencumbered cash of Borrower in Deposit Accounts at Bank equal to or greater than $12,500,000?

 

_____ No, not in compliance

_____ Yes, in compliance

II.

EBITDA (Section 6.9(b))

 

Required:

Achieve, measured as of the last day of each period set forth below on a trailing six (6) month basis, EBITDA of at least the following amounts:

 

Period		Minimum EBITDA
March 31, 2020		$4,500,000
June 30, 2020		$3,500,000
September 30, 2020		$3,500,000
December 31, 2020		$11,500,000
March 31, 2021 and thereafter		To be mutually agreed upon by Bank and Borrower on or prior to March 20, 2021 and demonstrate not less than $15,000,000 in EBITDA for fiscal year 2021”

 

Actual: all amounts measured on a trailing six (6) month basis:

 

A.	Net Income of Borrower	$ _____
B.	To the extent included in the determination of Net Income:
	1.         Interest Expense	$ _____
	2.         Depreciation expense	$ _____
	3.         Amortization expense	$ _____
	4.         To the extent deducted in the calculation of Net Income, federal, state and local income taxes, whether paid, payable or accrued	$ _____
	5.         Non-cash expenses reflected in Net Income in an amount not to exceed $2,500,000 in any fiscal year	$ _____
	6.         Non-cash stock compensation expense	$ _____
	7.         Non-recurring add-backs in an amount not to exceed $2,500,000 in any fiscal year	$ _____
	8.         Other add-backs to EBITDA approved by Bank on a case-by-case basis in its sole discretion (including non-recurring deal related costs, such approval not to be unreasonably withheld)	$ _____
	9.         The sum of lines 1 through 8	$ _____
C.	EBITDA (line A plus line B.9)	_____

Is line C at least (loss not worse than) $ _____________?

 

_____ No, not in compliance

_____ Yes, in compliance

III.

Streamline Period (Liquidity Ratio or Uncapped Availability Ratio)

 

Was the Liquidity Ratio set forth in line H above greater than 1.75:1:00 for each consecutive day in the immediately preceding calendar month?

 

_____ No, not in Streamline Period

_____ Yes, in Streamline Period

 

Uncapped Availability Ratio:

 

A.	Borrowing Base	$ ____
B.	Aggregate value of all Obligations of Borrower to Bank including the amount of all outstanding Letters of Credit, but excluding all Obligations under the Mezzanine Loan Agreement	$ ____
C.	Uncapped Availability Ratio (line A divided by line B)	_____

 

Was the Uncapped Availability Ratio set forth in line C above greater than 1.50:1:00 for each consecutive day in the immediately preceding calendar month?

 

_____ No, not in Streamline Period

_____ Yes, in Streamline Period

Schedule 2 to Sixth Amendment

 

Updated Perfection Certificate

 

(Attached.)

To: Silicon Valley Bank

Perfection Certificate

 

Notes:

 

1.

This is a form designed to be completed in Microsoft Word.

 

2.

If there is not enough space for your answer, use the continuation sheet at the end of this form or attach a separate Word document with the additional information.

 

3.

When completed, submit this form by e-mail or fax to Silicon Valley Bank. Please also print this form and submit a hard copy signed by an officer of the Company.

 

4.

This completed and executed certificate is a condition to closing and funding the loan. Information contained herein may have an impact on the drafting of the loan documents. The sooner this completed certificate is received by Silicon Valley Bank, the more likely it is that the transaction can be finalized in a timely manner.

 

PERFECTION CERTIFICATE

 

TO:

SILICON VALLEY BANK

 

The undersigned, the Vice President, Corporate Finance & Treasury of Outbrain Inc. (the “Company”), hereby represents and warrants to you on behalf of the Company as follows:

 

1.

NAMES OF THE COMPANY

 

a.            The name of the Company as it appears in its current Articles or Certificate of Incorporation is:

 

Outbrain Inc.

 

b.           The federal employer identification number of the Company is:

 

20 5391629

 

c.            The Company is formed under the laws of the State of

 

Delaware

 

d.           The organizational identification number issued to the Company under its jurisdiction of formation is:

 

4203949

 

e.            The Company transacts business in the following states (and/or countries) (list jurisdictions other than jurisdiction of formation):

 

Throughout the USA and internationally. The Company has offices in: New York, Illinois, California, Brazil, the United Kingdom, Spain, France, Germany, Italy, Israel, Slovenia, Netherlands, Belgium, Singapore, Japan and Australia. The Company’s data centers are located in: New Jersey, Illinois and California.

To: Silicon Valley Bank

Perfection Certificate

 

f.             The Company is duly qualified to transact business as a foreign entity in the following states (and/or countries) (list jurisdictions other than jurisdiction of formation):

 

The Company is duly qualified to transact business in the following states: California, Colorado, Delaware, Georgia, Illinois, Michigan, Minnesota, North Carolina, Ohio, Texas, Washington, New York

 

g.            Does the Company have any employee(s) performing work in the State of California?

 

Yes          ☒          No          ☐

 

h.            The following is a list of all other names (including fictitious names, d/b/a’s, trade names or similar names) currently used by the Company or used within the past five years:

 

Name	Period of Use	Note whether prior legal name, fictitious  name,  d/b/a,  trade name, etc.
N/A

 

h.            The following are the legal names and jurisdictions of formation of all entities which have been merged into the Company during the past five years:

 

Legal Name of Merged Entity	Entity Jurisdiction of Formation	Year of Merger
N/A

 

i.             The following are the legal names and addresses (including jurisdictions of formation) of all entities from whom the Company has acquired any personal property in a transaction not in the ordinary course of business during the past five years, together with the date of such acquisition and the type of personal property acquired (e.g., equipment, inventory, etc.):

 

Legal Name	Jurisdiction of Formation / Address	Date of Acquisition	Type of Property
Outbrain AMC LLC	Delaware	October 2015	IP, computers, and contracts
Monitization Advanced Advertising Technologies Ltd.	Israel	2018	IP, license to their AdNgin technology
Zemanta Holding USA, Inc.	Delaware	July 13, 2017
Ligatus GmbH	Germany	April 1, 2019

To: Silicon Valley Bank

Perfection Certificate

 

2.

EQUITY-RELATED MATTERS

 

a.

Is the Company publicly-traded or privately held?

 

Public ☐

Private ☑

 

b.

If public, provide the following information:

 

Date of Listing
Exchange (e.g., NASDAQ, NYSE, LSE, etc.)
Ticker/Trading symbol
Tax/Accounting Year
Is the Company current in its SEC and/or other reporting?
Last report filed

 

c.

If private, attach a current capitalization table as a schedule.

 

3.

PARENT/SUBSIDIARIES OF THE COMPANY

 

a.            The legal name of each subsidiary and parent of the Company is as follows. (A “parent” is an entity directly owning more than 50% of the outstanding capital stock of the Company. A “subsidiary” is an entity, 50% or more of the outstanding capital stock of which is directly owned by the Company.)

 

Name	Subsidiary/Parent	Fed. Employer ID No.
Outbrain UK Ltd	Sub ☑  Parent ☐
Outbrain Israel Ltd	Sub ☑  Parent ☐
Outbrain Singapore Pty. Ltd	Sub ☑  Parent ☐
Outbrain Australia PTY Ltd	Sub ☑  Parent ☐
Outbrain Monetizacao de Contuedo Ltda	Sub ☑  Parent ☐
Outbrain Japan KK	Sub ☑  Parent ☐
Outbrain Germany Gmbh	Sub ☑  Parent ☐
Outbrain New Zealand Limited	Sub ☑  Parent ☐
Outbrain India Private Limited	Sub ☑  Parent ☐
Outbrain AMC LLC	Sub ☑  Parent ☐
Zemanta Holding USA, Inc.	Sub ☑  Parent ☐
Ligatus GmbH	Sub ☑  Parent ☐
Ligatus, S.L.U. (Spain)	Sub ☑  Parent ☐
Ligatus S.r.l. (Italy)	Sub ☑  Parent ☐
Outbrain Netherlands B.V. (NL)	Sub ☑  Parent ☐
Outbrain Belgium BVBA (BE)	Sub ☑  Parent ☐
Outbrain France SAS (France)	Sub ☑  Parent ☐
New Ottawa, Inc.	Sub ☑  Parent ☐
Ottawa Merger Sub, Inc.	Sub ☑  Parent ☐

To: Silicon Valley Bank

Perfection Certificate

 

b.       The following is a list of the respective jurisdictions and dates of formation of the parent and each subsidiary of the Company:

 

Name	Jurisdiction	Date of Formation
Outbrain UK Ltd	United Kingdom	December 29, 2010
Outbrain Israel Ltd	Israel	September 5, 2006
Outbrain Singapore Pty. Ltd	Singapore	July 10, 2012
Outbrain Australia PTY Ltd	Australia	July 4, 2012
Outbrain Monetizacao de Contuedo Ltda	Brazil	April 18, 2013
Outbrain Japan KK	Japan	October 3, 2013
Outbrain India Private Limited	India	August 4, 2015
Outbrain Germany Gmbh	Germany	August 1, 2014
Outbrain New Zealand Limited	New Zealand	August 24, 2016
Outbrain AMC LLC	Delaware	September 10, 2015
Zemanta Holding USA, Inc.	Delaware	July 13, 2017
Ligatus GmbH	Germany	April 1, 2019
New Ottawa, Inc.	Delaware	September 27, 2019
Ottawa Merger Sub, Inc.	Delaware	September 27, 2019

 

c.       The following is a list of all other names (including fictitious names, d/b/a’s, trade names or similar names) currently used by each subsidiary of the Company or used during the past five years:

 

Name	Subsidiary
N/A

To: Silicon Valley Bank

Perfection Certificate

 

d.       The following are the names of all entities which have been merged into a subsidiary of the Company during the five years:

 

Name	Subsidiary
Visual Revenue Inc.	Visual Revenue LLC
Zemanta Holding USA, Inc.	Zemanta, Inc.
OBL Inc.; OBL Acquisition Inc.	Ligatus GmbH

 

e.       The following are the names and addresses of all entities from whom each subsidiary of the Company has acquired any personal property in a transaction not in the ordinary course of business during the past five years, together with the date of such acquisition and the type of personal property acquired (e.g., equipment, inventory, etc.):

 

Name	Address	Date of Acquisition	Type of Property	Subsidiary
Access Media Corp.		October 21, 2015	All tangible and intangible property	Outbrain AMC LLC
Zemanta, Inc.	N/A	July 13, 2017	All tangible and intangible property	Zemanta Holding USA,
Ligatus GmbH	N/A	April 1, 2019	All tangible and intangible property	Ligatus, S.L.U. (Spain); Ligatus S.r.l. (Italy); Outbrain Netherlands B.V. (NL); Outbrain Belgium BVBA (BE); Outbrain France SAS (France)

To: Silicon Valley Bank

Perfection Certificate

 

4.

LOCATIONS OF COMPANY AND ITS SUBSIDIARIES

 

a.        The Company and each of its subsidiaries maintain books or records at the following addresses:

 

Complete street and mailing address, including county	Name of Company/Subsidiary
39 W 13th Street, New York, New York 10011	Outbrain Inc.
	Outbrain AMC LLC
	Zemanta Holding USA, Inc.
100 New Oxford Street, 4th Floor London W1F 7TY, UK	Outbrain UK Ltd Outbrain Germany Gmbh
6 Arye Regev Street, 1st & 2nd Floor, Netanya, Israel 4250213	Outbrain Israel Ltd
	Outbrain Singapore Pty. Ltd
	Outbrain Australia PTY Ltd
	Outbrain New Zealand Ltd
	Outbrain India Private Limited
Rua Leopold Couto de Magalhães Jr. 758, 11o andar, São Paulo – SP – 04542-000 – Brazil	Outbrain Monetizacao de Contuedo Ltda
Ebisu SA building, 1-20-5 Ebisu nishi, Shibuya-ku, Tokyo	Outbrain Japan KK
Zemanta d.o.o. Celovska 32 SI-1000 Ljubljana Slovenia	Zemanta, Inc.
Christophstr. 19, 50670 Koln	Ligatus GmbH

 

b.       The Company and its subsidiaries own, lease, or occupy real property located at the following addresses and maintain equipment, inventory, or other property at such address:

 

Complete street and mailing address, including county	Name of Company/Subsidiary	Equipment/Inventory/other Collateral
13 W 39th Street, 3rd Floor New York, NY 10011	Outbrain Inc.	Office furniture & computer equipment
35-39 W 33rd Street, Apartments 4A, 6B, 7B, 8A, and 20A
150 North Wacker Drive, Chicago, IL 60606
“home” address: 2 Embarcadero Center, San Francisco, CA 94111 (WeWork)
175 High Holborn, London WC1V 7AA	Outbrain UK Ltd	Office furniture & computer equipment
Gran Vía, 30, Planta 5, Madrid Spain 28013
Oberanger 28, 80331 München
Via Nino Bixio 7, Milan, floor 3,
224 Faubourg Saint Honore, Paris, France

To: Silicon Valley Bank

Perfection Certificate

Joop van Den Endeplein 1, 1217 WJ Hilversum, Netherlands	Ligatus GmbH	Office furniture & computer equipment
10 rue chaptal, 75009 Paris
Christophstr. 19, 50670 Koln
Nieuwezijds Voorburgwal 162, Amsterdam
Louis Schmidtlaan 87 Blvd, 1040, Etterbeek (Belgium)
Via Sant’Antonio 5, 20122 Milano
6 Arye Regev Street, 1st 2nd, and 5th Fl., Netanya, Israel 4250213	Outbrain Israel Ltd	Office furniture & computer equipment
WeWork 71 Robinson, 71 Robinson Road, Singapore 068895	Outbrain Singapore Pty. Ltd	Office furniture & computer equipment
Unit 9, Corporate Park II, 9th Fl, Chembur, Mumbai 400071	Outbrain India Private Limited	Office furniture & computer equipment
28-111; 161 Castlereagh Street, Sydney, NSW 2000	Outbrain Australia PTY Ltd	Office furniture & computer equipment
Juscelino Kubitschek Avenue, 2041 – 12 floor – ZIP Code 04543-011 – São Paulo – SP - Brazil	Outbrain Monetizacao de Contuedo Ltda	Office furniture & computer equipment
Ebisu SA building, 1-20-5 Ebisu nishi, Shibuya-ku, Tokyo	Outbrain Japan KK	Office furniture & computer equipment
Outbrain Cage IE136 c/o ServerCentral, 2200 Busse Road, Elk Grove Village, IL, 60007	Outbrain Inc.	Data center / serving equipment
Outbrain / Internap, 1 North Enterprise Ave, Secaucus, NJ 07094
Raging Wire Data Centers 1625 National Dr (CA3) Sacramento, CA 95834
Zemanta d.o.o. Celovska 32 SI-1000 Ljubljana Slovenia	Zemanta, Inc.	Office furniture & computer equipment
Zemanta – Data centers:   Washington WDC-01 Data Center	Zemanta, Inc.	Data center / serving equipment

To: Silicon Valley Bank

Perfection Certificate

 

9651 Hornbaker Road Manassas, VA 20109, United States   Amsterdam AMS-01 Data Center J.W. Lucasweg 35, 2031 BE Haarlem, The Netherlands   Hong Kong HKG-10 Data Center 11 Chun Kwong Street, Tseung Kwan O Industrial Estate, New Territories, Hong Kong

 

c.      The following are the names and addresses of all warehousemen, bailees, or other third parties who have possession of any of the Company’s inventory, equipment, or other property or that of its subsidiaries:

 

Name and complete mailing address of third party	Description of assets held with third party including estimated FMV	Name of Company/Subsidiary
N/A

 

5.

SPECIAL TYPES OF COLLATERAL

 

a.           The Company and its subsidiaries own (or have any ownership interest in) the following kinds of assets. Overview explanation

 

Copyrights or copyright applications registered with the U.S. Copyright Office	Yes ☐	No ☑
Software registered with the U.S. Copyright Office	Yes ☐	No ☑
Software not registered with the U.S. Copyright Office	Yes ☐	No ☑
Patents and patent applications	Yes ☐	No ☐
Trademarks or trademark applications (including any service marks, collective marks and certification marks)	Yes ☑	No ☐
Licenses to use trademarks, patents and copyrights of others	Yes ☑	No ☐
Licenses, permits (including environmental), authorizations, or certifications issued by federal, state, or local governments issued to the Company and/or its subsidiaries or with respect to their assets, properties, or businesses	Yes ☐	No ☑
Stocks, bonds or other securities held by the Company or its subsidiaries in other entities (Company or sub is the stock owner)	Yes ☐	No ☑
Promissory notes, or other instruments or evidence of indebtedness issued in favor of the Company or any of its subsidiaries (Company or sub is the lender)	Yes ☐	No ☑
Leases of equipment, security agreements naming the Company or its subsidiaries as secured party or other chattel paper (Company or sub is the lessor/secured party)	Yes ☑	No ☑
Aircraft	Yes ☐	No ☑
Vessels, Boats or Ships	Yes ☐	No ☑
Railroad Rolling Stock	Yes ☐	No ☑
Motor Vehicles	Yes ☐	No ☑

To: Silicon Valley Bank

Perfection Certificate

 

If the answer is “yes” to any of the above questions, attach a Schedule 5(a) listing each asset owned by the Company and/or its subsidiaries (separately identified and scheduled for each entity) and identifying which party owns the asset, the relevant jurisdiction (such as IP registered in non-U.S. jurisdictions or the jurisdiction under which a motor vehicle is registered), each registration, application, or other identification number, and all other relevant information. In the cases of licenses, include the relevant parties and the specific property being licensed, and, if any licenses are material to the Company’s and/or any of its subsidiaries’ business, provide copies of such licenses.

 

b.       The following are all banks, brokerages, or financial institutions at which the Company and its subsidiaries maintain deposit or securities accounts:

 

Institution Name and Address	Account Number	Average Monthly Balance in Account	Name of Account Owner
Silicon Valley Bank 3003 Tasman Drive, Santa Clara, CA 95054	3300992448	$102,875 USD	Outbrain Inc.
	6600000031	$13,907.077 USD
	3301163387	ZBA
	00500009274	$488,260 AUD
	00500009240	$590,245 SGD
	0050009255	ILS 158,840
	00500009289	$41,528.00 CAD
	0500138806	5,165,347 Euro
HSBC 133 Regent Street, UK W1B 4HX, UK	84028820	€35,069	Outbrain UK Ltd
	189/8843/005	€20,993
	84028839	€0
	74400725	€346,495
	71478822	€ 7,660,675
	73930660	€ 100,538
	73930679	€ 150,184
	74201124	£ 668,809
	6414	€ 516,419
	71481369	$1,478,205 USD
Leumi Bank	744-111100/30	ILS 5,251,511	Outbrain Israel Ltd

To: Silicon Valley Bank

Perfection Certificate

 

HSBC 133 Regent Street, UK W1B 4HX, UK	011-472891-001	$294,791 AUD	Outbrain Australia PTY Ltd
	011-472891-091	$0 USD
OCBC 65 Chulia St. Singapore	641795349001	$134,333 SGD	Outbrain Singapore Pty. Ltd
	503134744301	$33,201 USD
Shinsei Bank 4-3, 2 chrome, Muromachi, Nihombashi, Chuo-ku, Tokyo 103-8303	4006398575	426,397,188 JPY	Outbrain Japan KK
	4006491641	$1,143,070 USD
Banco Itau Av. Jardim Japao, 1420 Jardim Brasil, Sao Paulo - SP	61895-6	BRL 17,460,551	Outbrain Monetizacao de Contuedo Ltda
HSBC Trinkaus & Burkhardt AG Königsallee 21/23 40212 Düsseldorf Germany	1/4009/019	€ 104,921	Outbrain Germany Gmbh
Axis Bank Block No 3.Ground Floor, 120,Dinshaw Vachha Road Opp K.C.College, Churchgate Mumbai 400020	917020063559067	INR 47,905,452	Outbrain India
UniCredit Banka Slovenija Smartinska 140 SI 1000 Ljubjana	SI56 2900 0005 0148 954	€ 307,077	Zemanta d.o.o
Silicon Valley Bank 3003 Tasman Drive, Santa Clara, CA 95054	3300961446 3301299706 3301140229	$3,317,052 USD $0 $232 USD	Outbrain Inc (Zemanta)
Deutsche Bank Alter Wall 53 Street 20457 Hamburg	20070000/03019860000	€ 473,305	Ligatus GmbH
Deutsche Bank Sussrsale de Paris 23-25 Avene Franklin Roosevelt Paris 75008	10510092002	€165,153	Outbrain France SAS
Deutsche Bank Via Flippo Turati 25-27 Milan, Italy 20121	460770152	€31,903	Ligatus S.R.L
Deutsche Bank	BE85826000600306	€77,943	Outbrain Belgium BVBA
Deutsche Bank	00190030614010220115	€20,771	Ligatus SL
ING Antwoordnummer 6135 8900VC Leeuwarden, Netherlands	652280420	€35,042	Outbrain Netherlands B.V.

To: Silicon Valley Bank

Perfection Certificate

 

[1]

Euro Limit €6,000,000 (€6.5M)

[2]

GBP Limit: £3,000,000 (£668K)

[3]

USD Limit: $2,500,000 ($1.4M)

[4]

Offshore Limit: 15,000,000 (totals USD $12.3M)

 

c.           The following is a list of all payment transmitters or services (including, but not limited to: PayPal, Stripe, Square, Dwolla, Bitcoin, or similar services) at or through which the Company and/or its subsidiaries hold, deposit, or transmit funds:

 

Name of Company/Subsidiary	Name of Payment Transmitter/Service	Type of Account	Account ID/Name	Average Monthly Balance in Account
N/A

 

d.            Does or is it contemplated that the Company will regularly receive letters of credit from customers or other third parties to secure payments of sums owed to the Company? The following is a list of letters of credit naming the Company as “beneficiary” thereunder:

 

LC Number	Name of LC Issuer	LC Applicant
N/A

 

6.

DEBT/ENCUMBRANCES

 

a.            The Company and its subsidiaries have the following outstanding debt for money borrowed (whether or not convertible) (please attach copies of all instruments evidencing the debt):

 

Name and Address of Lender	Original Principal Amount/ Principal Outstanding	Maturity Date	Secured/Unsecured (if secured, complete 6(b))
Silicon Valley Bank   3003 Tasman Drive; Santa Clara, CA 95054	0.00	November 2, 2021	Secured
Dell Financial Services   One Dell Way Round Rock, TX	$7.5M	Various (3 year lease terms)	Secured

 

Do not list debt that is to be repaid prior to or concurrently with the SVB loan.

To: Silicon Valley Bank

Perfection Certificate

 

b.       The Company’s and its subsidiaries’ properties are subject to the following liens or encumbrances:

 

Name of Holder of Lien/Encumbrance	Description of Property Encumbered	Name of Company/Subsidiary
Spansion Israel Ltd.	Lien on rent deposit	Outbrain Israel LTD
The New School	LOC issued by SVB $1,150,000 re: year of rent	Outbrain Inc.
SVF North Wacker Chicago	LOC issued by SVB $19,521 for Chicago office	Outbrain Inc.
HSBC	Bank Guarantee for €346,333 for German and French offices	Outbrain UK Ltd.
Dell Financial Services	Data center equipment	Outbrain Inc.

 

Do not list liens that are to be terminated prior to or concurrently with the SVB loan.

 

7.

GOVERNMENT REGULATION

 

The Company and its subsidiaries are subject to regulation by the following federal, state or local government entity or any department, agency, or instrumentality thereof:

 

Name of Regulatory Entity	Description of Regulation	Company/Subsidiary
N/A

 

8.             LITIGATION

 

a.        The following is a complete list of pending and threatened litigation or claims involving amounts claimed against the Company in an indefinite amount or in excess of $50,000 in each case:

 

1.       On April 18, 2019, an Application For The Approval of a Class Action Lawsuit (“Application”) was filed against, inter alia, Outbrain Inc. and Outbrain Israel Ltd., with the District Court of Tel Aviv – Jaffa in Israel, alleging violations of Israel’s Consumer Protection Law. The claim is on account of advertising on publishers sites, which the plaintiffs allege is not sufficiently labeled to allow the reader to distinguish between articles (editorial) and promotional content. As of the date of this report, the litigation is in preliminary stages and we are therefore unable to reasonably estimate the possible loss or range of loss, if any.

 

2.       In connection with debt collection efforts against Superbalife International, LLC, the Company’s debt collection agency (Szabo) filed on October 31, 2019, a formal claim against Superbalife to recover the unpaid debt. On January 31, 2020, Superbalife filed a cross-complaint alleging that Outbrain did not deliver on the services it promised (claims include beach of covenant of good faith and fair dealing, fraud, negligent misrepresentation and unjust enrichment). Outbrain believes the debt is legitimately owed to us and these counter-claims have no merit. The litigation is in preliminary stages and we are therefore unable to reasonably estimate the possible loss or range of loss, if any.

To: Silicon Valley Bank

Perfection Certificate

 

b.            The following are the only claims which the Company has against others (other than claims on accounts receivable), which the Company is asserting or intends to assert, and in which the potential recovery exceeds $50,000:

 

(see above)

 

9.

TAXES

 

The following taxes are currently outstanding and unpaid:

 

Assessing Authority	Amount and Description
None	n/a

 

10.

INSURANCE BROKER

 

The following broker handles the Company’s property and liability insurance:

 

Broker	Contact	Telephone	Fax	Email
Rollins Insurance / Brown & Brown of NY, Inc.	John P. Moccia	914-406-8314	914-337-1596	jmoccia@bbinsy.com

 

11.

OFFICERS OF THE COMPANY AND ITS SUBSIDIARIES

 

The following are the names and titles of the officers of the Company and its subsidiaries.

 

Office/Title	Name of Officer	Name of Company/Subsidiary
Co-CEO	Yaron Galai	Outbrain Inc.
Co-CEO	David Kostman	Outbrain Inc.
CFO	Elise Garafalo	Outbrain Inc.
CTO	Ori Lahav	Outbrain Inc.

To: Silicon Valley Bank

Perfection Certificate

 

N/A – No officers	Outbrain UK Ltd
	Outbrain Israel Ltd
	Outbrain Singapore Pty. Ltd
	Outbrain Australia PTY Ltd
	Outbrain Monetizacao de Contuedo Ltda
	Outbrain Japan KK
	Outbrain India Private Limited
	Outbrain New Zealand Ltd
	Outbrain Germany Gmbh
	Outbrain AMC LLC
	Zemanta Holding USA, Inc.
	Ligatus GmbH

 

12.

IRS FORM W9

 

The Company’s completed and executed IRS Form W9 is attached hereto as Exhibit A.

 

13.

LEGAL COUNSEL

 

The following attorney(s) will represent the Company in connection with the loan documents:

 

Name of Attorney	Name of law firm / address	Telephone	Fax	Email
Miriam Cohen	Loeb & Loeb LLP	212-407-4103	646.417.7487	mcohen@loeb.com

 

14.

BENEFICIAL OWNERSHIP INFORMATION

 

a.

Is the Company any of the following:

 

(i)

a public company or an issuer of securities that are registered with the Securities and Exchange Commission under Section 12 of the Securities Exchange Act of 1934 or that is required to file reports under Section 15(d) of that Act;

 

(ii)

an investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940;

To: Silicon Valley Bank

Perfection Certificate

 

(iii)

an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940; or

 

(iv)

a pooled investment vehicle operated or advised by a regulated financial institution (including an SEC-registered investment adviser)?

 

Yes     ☐

No     ☒

 

If yes, no further information is required for Sections 14(b), 14(c) or 14(d) below. If no, continue to Section 14(b).

 

b.       Is the Company a pooled investment vehicle that is not operated or advised by a regulated financial institution?

 

Yes     ☐

No     ☒

 

If yes, skip to Section 14(d) below. If no, continue to Section 14(c).

 

c.         Does any individual, directly or indirectly (for example, if applicable, through such individual’s equity interests in the Company’s parent entity), through any contract, arrangement, understanding, relationship or otherwise, own 25% or more of the equity interests of the Company:

 

Yes     ☐

No     ☒

 

If yes, complete the following information. If no, continue to Section 14(d) below.

 

	Name	Date of birth	Residential address	For US Persons, Social Security Number: (non-US persons should provide SSN if available)	For Non-US Persons: Type of ID, ID number, country of issuance, expiration date	Percentage of ownership (if indirect ownership, explain structure)
1
2
3
4

 

d.       Identify one individual with significant responsibility for managing the Company, i.e., an executive officer or senior manager (e.g., Chief Executive Officer, President, Vice President, Chief Financial Officer, Treasurer, Chief Operating Officer, Managing Member or General Partner) or any other individual who regularly performs similar functions. If appropriate, an individual listed in Section 14(c) above may also be listed here.

To: Silicon Valley Bank

Perfection Certificate

 

	Name	Date of birth	Residential address	For US Persons, Social Security Number: (non-US persons should provide SSN if available)	For Non-US Persons: Type of ID, ID number, country of issuance, expiration date
1	David Kostman (Co- CEO)	12/31/1964	62 Beach Street, Apt 3D New York NY 10013	###-##-####   US Citizen

 

The Company acknowledges that SVB’s acceptance of this Perfection Certificate and any continuation pages does not imply any commitment on SVB’s part to enter into a loan transaction with the Company, and that any such commitment may only be made by an express written loan commitment, signed by one of SVB’s authorized officers

 

The undersigned hereby certifies, to the best of his or her knowledge, that the information set out in this Perfection Certificate is true, complete and correct.

 

Date: March 27, 2020

 

	By:	/s/ Barry Schofield
	Name:	Barry Schofield
	Its:	Vice President,
		Corporate Finance & Treasury
	E-mail:	bschofield@outbrain.com
	Phone:	646-586-8957
	Fax:

 

Continuation Page—Additional Information

 

To: Silicon Valley Bank

Perfection Certificate

 

Exhibit A

 

IRS Form W9

 

See attached.

OUTBRAIN CAP TABLE

 

Period End		31-Dec-19
Total Authorized		110,812,435			7,065,907			14,565,760			6,477,447			5,735,026			1,080,197			5,343,425			5,666,172			1,269,223
Stockholders		Common Stock			Series A			Series B			Series C			Series D			Series E			Series F			Series G			Series H			Total Preferred Stock			Total			% Outstanding  Shares Ownership			% Fully Diluted Ownership
Early Common Stockholders		4,034,620			-			-			-			-			-			-			-						-			4,034,620			5.37	%		4.30	%
Early Preferred Stockholders		7,174,385			742,836			862,645			798,529			35,350			-			119,269			385,300			-			2,943,929			10,118,314			13.45	%		10.78	%
Venture Capital Groups and Other Preferred Stockholders																													-
Marshfield Advisers, LLC																							1,699,851						1,699,851			1,699,851			2.26	%		1.81	%
MTS Investments Inc.		343,056			-			-			83,645			-			-			100,000			-						183,645			526,701			0.70	%		0.56	%
Provident Fund of the Employees of the Hebrew University of Jerusalem Ltd.		343,056			95,285			-			106,879			-			-			-			-						202,164			545,220			0.73	%		0.58	%
Startify A.S. (1992) Ltd. (fka Sigma Investments (1992) Ltd.)		74,517			-			-			-			-			-			-			-						-			74,517			0.10	%		0.08	%
Viola Ventures, III L.P.		-			-			7,282,880			1,784,105			814,239			-			298,174			566,617						10,746,015			10,746,015			14.29	%		11.45	%
Gemini		914,815			2,834,053			2,603,211			1,589,920			-			-			372,717			-						7,399,901			8,314,716			11.06	%		8.86	%
Harbourvest		-			-			-			-			-			-			2,415,207			-						2,415,207			2,415,207			3.21	%		2.57	%
Index		649,548			279,840			-			-			2,931,262			-			298,174			-						3,509,276			4,158,824			5.53	%		4.43	%
Lightspeed Venture Partners VII, L.P.		914,815			3,113,893			2,603,211			1,624,637			1,954,175			-			447,261			-						9,743,177			10,657,992			14.17	%		11.35	%
RH Internet II LLC		-			-			1,213,813			489,732			-			-			596,347			-						2,299,892			2,299,892			3.06	%		2.45	%
Susquehanna Growth Equity Fund IV, LLLP		-			-			-			-			-			-			-			1,903,821						1,903,821			1,903,821			2.53	%		2.03	%
Vintage		100,000			-			-			-			-			-			670,891			566,617						1,237,508			1,337,508			1.78	%		1.42	%
Nikkei Inc.		-			-			-			-			-			-			-			113,323						113,323			113,323			0.15	%		0.12	%
Dentsu Inc		-			-			-			-			-			-			-			296,684						296,684			296,684			0.39	%		0.32	%
Visual Revenue Stockholders (Acquisition)		65,208						-			-			-			1,080,197			-			-						1,080,197			1,145,405			1.52	%		1.22	%
Revee Stockholders (Acquisition)		532,713			-			-			-			-			-			-			-						-			532,713			0.71	%		0.57	%
Zemanta Stockholders (Acquisition)																										1,211,912			1,211,912			1,211,912			1.61	%		1.29	%
Gruner + Jahr GmbH (Acquisition)		5,206,593																											-			5,206,593			6.92	%		5.55	%
Gruner + Jahr GmbH (Loeb Escrow)		918,811																											-			918,811			1.22	%		0.98	%
Monetization Advanced Technologies LTD (Adngin)
(Acquisition)																										22,664			22,664			22,664			0.03	%		0.02	%
																													-
Current and Former Employees		6,921,198			-			-			-			-			-			-			-						-			6,921,198			9.20	%		7.37	%
Common Stock and Preferred Stock		28,193,335			7,065,907			14,565,760			6,477,447			5,735,026			1,080,197			5,318,040			5,532,213			1,234,576			47,009,166			75,202,501			100.00	%		80.11	%
																																-
Stock Options Outstanding																																8,171,008						8.70	%
Warrants																																1,070,852						1.14	%
Stock Awards, RSAs, RSUs Unvested																																4,373,427						4.66	%
SARs																																7,371						0.01	%
Shares Available for Issuance Under Option Plan																																5,048,216						5.38	%
Grand Total		28,193,335			7,065,907			14,565,760			6,477,447			5,735,026			1,080,197			5,318,040			5,532,213			1,234,576			47,009,166			93,873,375			100.00	%		100.00	%

Outbrain Patent Portfolio Report

 

Reference #	Type	Status	Country ID	Title	Serial #	Filed Date	Publication #	Publication Date	Patent #	Issue Date	Inventor Names Combined
26136-0003 L0002	UTL	ISSUED	US	SYSTEM AND METHOD FOR PROVIDING FEED-BASED ADVERTISEMENTS	13/676,471	11/14/2012	US-2013-0132191-A1	5/23/2013	10,354,274	7/16/2019	Galai, Yaron Sasson, David Hochman, Itai Elisha, Amit
26136-0009 L0009	UTL	ISSUED	US	SYSTEM AND METHOD FOR RANKING, ALLOCATION AND PRICING OF CONTENT RECOMMENDATIONS	14/055,291	10/16/2013			10,275,795	4/30/2019	Karidi, Ron Galai, Yaron
26136-0010 L0010	UTL	ISSUED	US	YIELDING CONTENT RECOMMENDATIONS BASED ON SERVING BY PROBABILISTIC GRADE PROPORTIONS	13/956,865	8/1/2013			10,304,081	5/28/2019	Boshy, Shlomy Shlomo, Yatir Ben Galai, Yaron
26136-0011 L0011	UTL	ISSUED	US	COLLABORATIVE FILTERING OF CONTENT RECOMMENDATIONS	14/193,900	2/28/2014			9,324,028	4/26/2016	Boshy, Shlomy Galai, Yaron
26136-0013	UTL	ISSUED	US	RECOMMENDATION SOURCE-RELATED USER ACTIVITY CALCULATOR	14/266,171	4/30/2014			9,432,471	8/30/2016	Boshy, Shlomy Galai, Yaron
26136-0021 L0021	UTL	ISSUED	US	Systems and Methods for Identifying and Measuring Trends in Consumer Content Demand Within Vertically Associated Websites and Related Content	12/367,968	2/9/2009	US 2009-0204478 A1	8/13/2009	10,269,024	4/23/2019	Kaib, Paul Edward Walker, Brent Allen Hofmann, Joshua Michael Freishtat, Gregg
26136-0026 L0023X1	UTL	ISSUED	US	Systems and Methods for Curating Content	12/965,417	12/10/2010	US 2011-0202827 A1	8/18/2011	10,607,235	3/31/2020	Freishtat, Gregg S. Kaib, Paul Edward
26136-0028 L0023X3	UTL	ISSUED	US	Systems and Methods for Presenting Content	12/965,440	12/10/2010	US 2011-0161479 A1	6/30/2011	9,396,485	7/19/2016	Freishtat, Gregg S. Kaib, Paul Edward
26136-0030 L0023X1X	UTL	ALLOWED	US	SYSTEMS AND METHODS FOR CURATING CONTENT	13/665,250	10/31/2012	US 2013-0060858 A1	3/7/2013			Freishtat, Gregg S. Kaib, Paul Edward Sehr, Daniel
26136-0034 L0034 TRK1	UTL	ISSUED	US	CONTENT POSITION RECOMMENDATIONS	14/312,948	6/24/2014			9,552,437	1/24/2017	Mortensen, Dennis R. Poon, Alex Vijayaraghavan, Varun
26136-0038	UTL	ISSUED	US	SYSTEM AND METHOD FOR PERSONALIZED CONTENT RECOMMENDATIONS	14/146,279	1/2/2014			10,521,824	12/31/2019	Boshy, Shlomy Galai, Yaron
26136-0041	UTL	ISSUED	US	METHOD FOR EXTRACTING A COMPACT REPRESENTATION OF THE TOPICAL CONTENT OF AN ELECTRONIC TEXT	10/350,869	1/24/2003			7,587,381	9/8/2009	Remy, Martin Nieker, Steven
26136-0043	UTL	ISSUED	US	CONTENT TITLE USER ENGAGEMENT OPTIMIZATION	14/529,667	10/31/2014			10,607,253	3/31/2020	Shachar, Amir Shlomo, Yatir Ben Bennett, Alexandra Selhi, Kevin S.
26136-0045	UTL	ISSUED	US	PROVISIONING PERSONALIZED CONTENT RECOMMENDATIONS	14/657,457	3/13/2015	US-2015-0269488-A1	9/24/2015	10,165,069	12/25/2018	Sternlicht, Daniel Tamir, Ido Hochman, Itai Porat, Ohad Ben Kuntsman, Romi
26136-0046	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,494	3/31/2015			D743431	11/17/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0047	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,500	3/31/2015			D743989	11/24/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0048	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,501	3/31/2015			D745032	12/8/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0049	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,506	3/31/2015			D743990	11/24/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0050	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,511	3/31/2015			D745033	12/8/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel

26136-0051	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,515	3/31/2015			D745034	12/8/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0052	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,517	3/31/2015			D745035	12/8/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0053	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,519	3/31/2015			D744517	12/1/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0054	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/522,526	3/31/2015			D743991	11/24/2015	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0056	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,937	10/9/2015			D759,097	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0057	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,940	10/9/2015			D759,098	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0058	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,942	10/9/2015			D759,099	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0059	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,943	10/9/2015			D759,100	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0061	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,961	10/9/2015			D759,105	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0063	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,951	10/9/2015			D759101	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0065	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,956	10/9/2015			D759,102	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0066	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,957	10/9/2015			D759,103	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0067	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,960	10/9/2015			D759,104	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0068	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,967	10/9/2015			D759,106	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0069	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,968	10/9/2015			D759,107	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0072	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,984	10/9/2015			D759,108	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0073	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE	29/541,991	10/9/2015			D759,109	6/14/2016	Pal, Savitha Thankam Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0074	DES	ISSUED	US	MOBILE DEVICE DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/548,888	12/17/2015			D775,152	12/27/2016	Perach, Ofer Knablein, Uta Erental, Amit
26136-0075	DES	ISSUED	US	MOBILE DEVICE DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/548,904	12/17/2015			D775,153	12/27/2016	Perach, Ofer Knablein, Uta Erental, Amit
26136-0076	DES	ISSUED	US	MOBILE DEVICE DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/548,907	12/17/2015			D775,154	12/27/2016	Perach, Ofer Knablein, Uta Erental, Amit
26136-0077	DES	ISSUED	US	MOBILE DEVICE DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/548,938	12/17/2015			D775,155	12/27/2016	Perach, Ofer Knablein, Uta Erental, Amit

26136-0078	DES	ISSUED	US	MOBILE DEVICE DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/548,945	12/17/2015			D775,156	12/27/2016	Perach, Ofer Knablein, Uta Erental, Amit
26136-0079	DES	ISSUED	US	MOBILE DEVICE DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/548,952	12/17/2015			D775,157	12/27/2016	Perach, Ofer Knablein, Uta Erental, Amit
26136-0082	DES	ISSUED	US	DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/554,194	2/9/2016			D800,738	10/24/2017	Xu, Eric Campbell, Anita Katherine
26136-0084	DES	ISSUED	EU	MOBILE DEVICE SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	001446025	2/19/2016			001446025	2/19/2016	Perach, Ofer Knablein, Uta Erental, Amit
26136-0086	DES	ISSUED	EU	ELECTRONIC DEVICE DISPLAY	001447353	3/31/2016			001447353	3/31/2016	Simchi, Shaked Solomon, Avi
26136-0087	DES	ISSUED	EU	DEVICE DISPLAY OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	001447361	3/31/2016			001447361	3/31/2016
26136-0090	UTL	PUBLISHED	US	SYSTEMS AND METHODS FOR PRESENTING CONTENT	15/170,229	6/1/2016	US 2016-0275127 A1	9/22/2016			Freishtat, Gregg S. Kaib, Paul Edward
26136-0091	UTL	ISSUED	US	USER ACTIVITY MEASUREMENT RELATING TO A RECOMMENDATION SOURCE	15/221,032	7/27/2016			9,787,788	10/10/2017	Boshy, Shlomy Galai, Yaron
26136-0092	DES	ISSUED	US	DEVICE DISPLAY OR PORTION THEREOF WITH A MESSAGING GRAPHICAL USER INTERFACE	29/582,646	10/28/2016			D832,291	10/30/2018	Pal, Savitha Thankam Regev, Oded Ben-Itzhak, Yuval
26136-0094	DES	ISSUED	EU	DEVICE DISPLAY OR PORTION THEREOF WITH A MESSAGING GRAPHICAL USER INTERFACE	001454078	11/3/2016			001454078	11/3/2016	Pal, Savitha Thankam Regev, Oded Ben-Itzhak, Yuval
26136-0099	DES	ISSUED	US	ELECTRONIC DEVICE DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/625,166	11/7/2017			D850,466	6/4/2019	Ari, Aynat Ben Aghion, Oren Elster, Uriel Zluf, Liron
26136-0100	DES	ISSUED	US	ELECTRONIC DEVICE DISPLAY OR PORTION THEREOF WITH ANIMATED GRAPHICAL USER INTERFACE	29/626,621	11/17/2017			D851,674	6/18/2019	Bass, Roy Sellam, Jonathan Raskin, Ela Eldar
26136-0101	UTL	PUBLISHED	US	USER LIFETIME REVENUE ALLOCATION ASSOCIATED WITH PROVISIONED CONTENT RECOMMENDATIONS	16/169,562	10/24/2018	US 2019-0058770 A1	2/21/2019			Tamir, Ido Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel
26136-0102	DES	ISSUED	EU	ELECTRONIC DEVICE DISPLAY SCREEN OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	005254174	5/1/2018			005254174	5/1/2018	Ari, Aynat Ben Aghion, Oren Elster, Uriel Zluf, Liron
26136-0103	DES	ISSUED	EU	ELECTRONIC DEVICE DISPLAY OR PORTION THEREOF WITH ANIMATED GRAPHICAL USER INTERFACE	005269222	5/15/2018			005269222	5/15/2018	Bass, Roy Sellam, Jonathan Raskin, Ela Eldar
26136-0104	UTL	ALLOWED	US	PROVISIONING PERSONALIZED CONTENT RECOMMENDATIONS	16/119,262	8/31/2018		12/27/2018			Bass, Roy Doody, Colin Gilad, Yaniv Sternlicht, Daniel Stern Tamir, Ido
26136-0106	DES	ISSUED	US	MOBILE DEVICE DISPLAY OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	29/667,883	10/25/2018			D871,436	12/31/2019	Galai, Yaron Ari, Aynat Ben Harari, Asaf
26136-0113	DES	PENDING	US	ELECTRONIC DEVICE DISPLAY OR PORTION THEREOF WITH AN ANIMATED GRAPHICAL USER INTERFACE	29/690,022	5/3/2019					Berkover, Natan Ozer, Hadas
26136-0114	DES	ISSUED	EU	DEVICE DISPLAY OR PORTION THEREOF WITH A GRAPHICAL USER INTERFACE	006396685	4/25/2019			006396685	4/25/2019	Galai, Yaron Ari, Aynat Ben Harari, Asaf
26136-0115	DES	PENDING	US	ELECTRONIC DEVICE DISPLAY OR PORTION THEREOF WITH AN ANIMATED GRAPHICAL USER INTERFACE	29/693,057	5/30/2019					Elisha, Amit Berkover, Natan Gurevitch, Sagiv Ozer, Hadas
26136-0116	DES	ISSUED	EU	ELECTRONIC DEVICE DISPLAY OR PORTION THEREOF WITH AN ANIMATED GRAPHICAL USER INTERFACE	006813838	9/4/2019			006813838	9/4/2019

26136-0119	DES	PENDING	US	ELECTRONIC DEVICE DISPLAY OR PORTION THEREOF WITH AN ANIMATED GRAPHICAL USER INTERFACE	29/692,251	5/23/2019					Berkover, Natan Ozer, Hadas
26136-0120	DES	ISSUED	EU	ELECTRONIC DEVICE DISPLAY OR PORTION THEREOF WITH AN ANIMATED GRAPHICAL USER INTERFACE	007082680	10/23/2019			007082680	10/23/2019	Elisha, Amit Berkover, Natan Gurevitch, Sagiv Ozer, Hadas

OUTBRAIN, INC’S ACTIVE TRADEMARK/SERVICE MARK

APPLICATIONS/REGISTRATIONS WORLDWIDE

(STATUS AS OF 03/26/2020)

 

	Mark		Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
1.	Amelia Face Logo		Argentina	Registered	3346871	15-Aug-2014	2750376	09-Jul-2015	9
2.	Amelia Face Logo		Argentina	Registered	3346872	15-Aug-2014	2750377	09-Jul-2015	35
3.	Amelia Face Logo		Australia	Registered	1641207	15-Aug-2014	1641207	10-Dec-2014	9, 35
4.	Amelia Face Logo		Brazil	Registered	908137680	18-Aug-2014	908137680	21-Feb-2017	9
5.	Amelia Face Logo		Brazil	Registered	908137761	18-Aug-2014	908137761	21-Feb-2017	35
6.	Amelia Face Logo		Canada	Registered	1689804	15-Aug-2014	TMA951429	05-Oct-2016	9, 35
7.	Amelia Face Logo		China	Registered	15172024	18-Aug-2014	15172024	07-Oct-2015	35
8.	Amelia Face Logo		China	Registered	17237263	18-Jun-2015	17237263	28-Aug-2016	42
9.	Amelia Face Logo		Costa Rica	Registered	2014007074	19-Aug-2014	240557	09-Jan-2015	9, 35
10.	Amelia Face Logo		European Union	Registered	13175823	15-Aug-2014	13175823	18-Mar-2015	9, 35, 42
11.	Amelia Face Logo		Hong Kong	Registered	303102948	15-Aug-2014	303102948	24-Apr-2015	9, 35
12.	Amelia Face Logo		Israel	Registered	271121	30-Dec-2014	271121	02-Jan-2017	9, 35
13.	Amelia Face Logo		Japan	Registered	691492014	18-Aug-2014	5761919	01-May-2015	9, 35
14.	Amelia Face Logo		Mexico	Registered	1517096	15-Aug-2014	1496202	14-Nov-2014	9
15.	Amelia Face Logo		Mexico	Registered	1517095	15 Aug-2014	1496201	14-Nov-2014	35
16.	Amelia Face Logo		Singapore	Registered	T1413031C	15-Aug-2014	T1413031C	26-Feb-2016	9, 35
17.	Amelia Face Logo		So. Korea	Registered	4520140006472	18-Aug-2014	4556340	20-May-2015	9, 35
18.	Amelia Face Logo		South Africa	Registered	201421736	15-Aug-2014	201421736	09-Feb-2017	9
19.	Amelia Face Logo		South Africa	Registered	201421737	15-Aug-2014	201421737	09-Feb-2017	35
20.	Amelia Face Logo		U.S.	Registered	86256857	18-Apr-2014	4767037	07-Jul-2015	35
21.	OUTBRAIN		Argentina	Registered	3087666	17-May-2011	3087666	29-Aug-2014	9
22.	OUTBRAIN		Argentina	Registered	3087667	17-May-2011	2521989	29-Aug-2012	35
23.	OUTBRAIN		Australia	Registered	1459321	10-Nov-2011	1459321	4-Dec-2013	9, 35
24.	OUTBRAIN		Brazil	Registered	831116641	13-Jul-2011	831116641	29-Oct-2014	9
25.	OUTBRAIN		Brazil	Registered	831029811	16-May-2011	831029811	19-Aug-2014	35
26.	OUTBRAIN		Brazil	Registered	831116633	13-Jul-2011	831116633	29-Oct-2014	35
27.	OUTBRAIN		Canada	Registered	1528118	17-May-2011	TMA883849	12-Aug-2014	9, 35
28.	OUTBRAIN		China	Registered	10221726	23-Nov-2011	10221726	28-Jan-2013	9
29.	OUTBRAIN		China	Registered	9474161	17-May-2011	9474161	07-Aug-2012	35
30.	OUTBRAIN		China	Registered	9474168	17-May-2011	9474168	14-Aug-2012	35
31.	OUTBRAIN		Costa Rica	Registered	2011012378	15-Dec-2011	218873	28-May-2012	35
32.	OUTBRAIN		Costa Rica	Registered	2011007934	18-Aug-2011	217902	26-Apr-2012	9, 35
33.	OUTBRAIN		European Union	Registered	10197812	16-Aug-2011	10197812	29-Mar-2012	9, 35, 42
34.	OUTBRAIN		Hong Kong	Registered	301919025	17-May-2011	301919025	30-Apr-2012	9, 35
35.	OUTBRAIN		India	Registered	2144776	16-May-2011	2144776	08-Sep-2017	9
36.	OUTBRAIN		India	Registered	2144775	16-May-2011	2144775	14-Apr-2018	35
37.	OUTBRAIN		India	Registered	2144777	16-May-2011	2144777	20-Oct-2017	35
38.	OUTBRAIN		Israel	Registered	271120	30-Dec-2014	271120	05-May-2016	9, 35
39.	OUTBRAIN		Japan	Registered	331602011	16-May-2011	5555557	8-Feb-2013	9, 35
40.	OUTBRAIN		Mexico	Registered	1178692	17-May-2011	1259647	10-Feb-2012	9
41.	OUTBRAIN		Mexico	Registered	1178685	17-May-2011	1178685	10-Jan-2012	35
42.	OUTBRAIN		Mexico	Registered	1178689	17-May-2011	1261913	23-Jan-2012	35

	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
43.	OUTBRAIN	Singapore	Registered	T1106400Z	16-May-2011	T1106400Z	16-May-2013	9, 35
44.	OUTBRAIN	So. Korea	Registered	4520110002052	16-May-2011	450042963	3-Jan-2013	9, 35
45.	OUTBRAIN	South Africa	Registered	201128578	09-Nov-2011	201125878	2-Apr-2014	9
46.	OUTBRAIN	South Africa	Registered	201128579	09-Nov-2011	201128579	2-Apr-2014	35
47.	OUTBRAIN	U.S.	Registered	85317579	10-May-2011	4070711	13-Dec-2011	9
48.	OUTBRAIN	U.S.	Registered	85179286	17-Nov-2010	4287469	12-Feb-2013	35
49.	OUTBRAIN	U.S.	Registered	85317587	10-May-2011	4287520	12-Feb-2013	35
50.	OUTBRAIN in Hebrew	Israel	Registered	281193	23-Dec-2015	281193	04-Sep-2018	9, 35
51.	OUTBRAIN with Amelia Face Logo	Argentina	Registered	3346869	15-Aug-2014	2750374	09-Jul-2015	9
52.	OUTBRAIN with Amelia Face Logo	Argentina	Registered	3346870	15-Aug-2014	2750375	09-Jul-2015	35
53.	OUTBRAIN with Amelia Face Logo	Australia	Registered	1641205	15-Aug-2014	1641205	10-Dec-2014	9, 35
54.	OUTBRAIN with Amelia Face Logo	Brazil	Registered	908137567	18-Aug-2014	908137567	21-Feb-2017	9
55.	OUTBRAIN with Amelia Face Logo	Brazil	Registered	908137648	18-Aug-2014	908137648	21-Feb-2017	35
56.	OUTBRAIN with Amelia Face Logo	Canada	Registered	1689803	15-Aug-2014	TMA951426	05-Oct-2016	9, 35
57.	OUTBRAIN with Amelia Face Logo	China	Registered	15172026	18-Aug-2014	15172026	07-Oct-2015	35
58.	OUTBRAIN with Amelia Face Logo	China	Registered	17237261	18-Jun-2015	17237261	28-Aug-2016	42
59.	OUTBRAIN with Amelia Face Logo	Costa Rica	Registered	20140007075	19-Aug-2014	240557	09-Jan-2015	9, 35
60.	OUTBRAIN with Amelia Face Logo	European Union	Registered	13175773	15-Aug-2014	13175773	19-Mar-2015	9, 35, 42
61.	OUTBRAIN with Amelia Face Logo	Hong Kong	Registered	303102957	15-Aug-2014	303102957	24-Apr-2015	9, 35
62.	OUTBRAIN with Amelia Face Logo	India	Registered	2794731	21-Aug-2014	2794731	30-Sep-2017	9, 35
63.	OUTBRAIN with Amelia Face Logo	Israel	Registered	271119	30-Dec-2014	271119	02-Jan-2017	9, 35
64.	OUTBRAIN with Amelia Face Logo	Japan	Registered	691482014	18-Aug-2014	5761918	01-May-2015	9, 35
65.	OUTBRAIN with Amelia Face Logo	Mexico	Registered	1517098	15-Aug-2014	1502114	10-Dec-2014	9

	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
66.	OUTBRAIN with Amelia Face Logo	Mexico	Registered	1517097	15-Aug-2014	1502113	10-Dec-2014	35
67.	OUTBRAIN with Amelia Face Logo	Singapore	Registered	T1413030E	15-Aug-2014	T1413030E	26-Feb-2016	9, 35
68.	OUTBRAIN with Amelia Face Logo	So. Korea	Registered	4520140006471	18-Aug-2014	4556341	20-May-2015	9, 35
69.	OUTBRAIN with Amelia Face Logo	South Africa	Registered	201421733	15-Aug-2014	201421733	09-Feb-2017	9
70.	OUTBRAIN with Amelia Face Logo	South Africa	Registered	201421734	15-Aug-2014	201421734	09-Feb-2017	35
71.	OUTBRAIN with Amelia Face Logo	U.S.	Registered	86256859	19-Apr-2014	4767038	07-Jul-2015	35
72.	RECOMMENDED BY with Amelia Face Logo Recommended by	Australia	Registered	1658565	15-Nov-2014	1658565	12-Jun-2015	9, 35
73.	RECOMMENDED BY with Amelia Face Logo Recommended by	Brazil	Registered	908606354	17-Nov-2014	908606354	16-May-2017	9
74.	RECOMMENDED BY with Amelia Face Logo Recommended by	Brazil	Registered	908606486	17-Nov-2014	908606486	10-Apr-2018	35
75.	RECOMMENDED BY with Amelia Face Logo Recommended by	Canada	Registered	1702831	14-Nov-2014	TMA1001431	24-Jul-2018	9, 35
76.	RECOMMENDED BY with Amelia Face Logo Recommended by	Canada	Registered	1702831	14-Nov-2014	TMA1001431	24-Jul-2018	9, 35
77.	RECOMMENDED BY with Amelia Face Logo Recommended by	China	Registered	16935305	13-May-2015	16935305	14-Jul-2016	35
78.	RECOMMENDED BY with Amelia Face Logo Recommended by	China	Registered	16935305	13-May-2015	16935305	14-Jul-2016	35
79.	RECOMMENDED BY with Amelia Face Logo Recommended by	China	Registered	19454817	29-Mar-2016	19454817	07-May-2017	42
80.	RECOMMENDED BY with Amelia Face Logo Recommended by	European Union	Registered	13463419	17-Nov-2014	13463419	30-Mar-2015	9, 35, 42
81.	RECOMMENDED BY with Amelia Face Logo Recommended by	India	Registered	2843636	17-Nov-2014	2843636	23-Oct-2017	9, 35
82.	RECOMMENDED BY with Amelia Face Logo Recommended by	Israel	Registered	271118	30-Dec-2014	271118	02-Jan-2017	9, 35
83.	RECOMMENDED BY with Amelia Face Logo Recommended by	Japan	Registered	201496872	17-Nov-2014	5783217	31-Jul-2015	9, 35
84.	RECOMMENDED BY with Amelia Face Logo Recommended by	Mexico	Registered	1549553	14-Nov-2014	1521704	12-Mar-2015	9

	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
85.	RECOMMENDED BY with Amelia Face Logo Recommended by	Mexico	Registered	1549556	14-Nov-2014	1530070	16-Apr-2015	35
86.	RECOMMENDED BY with Amelia Face Logo Recommended by	Singapore	Registered	40201500783U	18-Nov-2014	40201500783U	04-Jun-2015	9, 35
87.	RECOMMENDED BY with Amelia Face Logo Recommended by	U.S.	Registered	86454164	13-Nov-2014	5258538	08-Aug-2017	35
88.	SPHERE	U.S.	Pending	87794424	14-Feb-2018			9, 35
89.	SPHERE & Design	U.S.	Pending	87797955	14-Feb-2018			9, 35
90.	SPHERE BY OUTBRAIN & Design	U.S.	Pending	87797958	14-Feb-2018			9, 35
91.	SPHERE BY OUTBRAIN & Design	European Union	Registered	017967770	12-Oct-2018	017967770	26-Feb-2018	9, 35
92.	SPHERE BY OUTBRAIN & Design	Japan	Pending	2018-128510	15-Oct-2018			9, 35
93.	SPHERE BY OUTBRAIN & Design	U.S.	Pending	88076720	13-Aug-2018			9, 35
94.	YOU ARE WHAT YOU RECOMMEND	Argentina	Registered	3461867	02-Dec-2015	2853019	25-Nov-2016	9
95.	YOU ARE WHAT YOU RECOMMEND	Argentina	Registered	3461868	02-Dec-2015	2853020	25-Nov-2016	35
96.	YOU ARE WHAT YOU RECOMMEND	Australia	Registered	1706323	09-Jul-2015	1706323	15-Jan-2016	9, 35
97.	YOU ARE WHAT YOU RECOMMEND	Brazil	Registered	910355304	02-Dec-2015	910355304	14-Feb-2018	9
98.	YOU ARE WHAT YOU RECOMMEND	Brazil	Registered	910355363	02-Dec-2015	910355363	14-Feb-2018	35
99.	YOU ARE WHAT YOU RECOMMEND	Costa Rica	Registered	20150011598	02-Dec-2015	251839	29-Apr-2016	9, 35
100.	YOU ARE WHAT YOU RECOMMEND	European Union	Registered	14349005	09-Jul-2015	14349005	03-Nov-2015	9, 35, 42
101.	YOU ARE WHAT YOU RECOMMEND	Hong Kong	Registered	303468204	09-Jul-2015	303468204	18-Feb-2016	9, 35
102.	YOU ARE WHAT YOU RECOMMEND	India	Registered	3112931	02-Dec-2015	3112931	15-Dec-2017	9, 35
103.	YOU ARE WHAT YOU RECOMMEND	Israel	Registered	280438	02-Dec-2015	280438	09-Apr-2018	9, 35
104.	YOU ARE WHAT YOU RECOMMEND	Japan	Registered	1185782015	02-Dec-2015	5863021	01-Jul-2016	9, 35
105.	YOU ARE WHAT YOU RECOMMEND	Mexico	Registered	1635199	20-Jul-2015	1597564	19-Dec-2015	9
106.	YOU ARE WHAT YOU RECOMMEND	Mexico	Registered	1635200	20-Jul-2015	1663871	12-Aug-2016	35
107.	YOU ARE WHAT YOU RECOMMEND	New Zealand	Registered	1023064	10-Jul-2015	1023064	12-Jan-2016	9, 35
108.	YOU ARE WHAT YOU RECOMMEND	Singapore	Registered	40201521159X	02-Dec-2015	40201521159X	01-Jun-2016	9, 35
109.	YOU ARE WHAT YOU RECOMMEND	So. Korea	Registered	4520150011033	02-Dec-2015	4569325	11-Nov-2016	9, 35

	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
110.	YOU ARE WHAT YOU RECOMMEND	South Africa	Registered	201534740	02-Dec-2015	201534740	31-May-2018	9
111.	YOU ARE WHAT YOU RECOMMEND	South Africa	Registered	201534741	02-Dec-2015	201534741	31-May-2018	35
112.	YOU ARE WHAT YOU RECOMMEND	U.S.	Registered	86649618	02-Jun-2015	5032852	30-Aug-2017	9, 35
	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
113.	ZEMANTA	Australia	Registered	1988420	08-Feb-2019	1988420	16-Sep-2019	42
114.	ZEMANTA	Brazil	Registered	916707105	08-Feb-2019	916707105	22-Oct-2019	42
115.	ZEMANTA	Canada	Pending	1945223	08-Feb-2019			42
116.	ZEMANTA	China	Registered	36304890	08-Feb-2019	36304890	07-Nov-2019	42
117.	ZEMANTA	European Union	Registered	018020862	08-Feb-2019	018020862	25-Jun-2019	42
118.	ZEMANTA	Hong Kong	Registered	304824955	08-Feb-2019	304824955	10-Jul-2019	42
119.	ZEMANTA	Israel	Registered	313495	08-Feb-2019	313495	02-Dec-2019	42
120.	ZEMANTA	Japan	Allowed	2019-022886	08-Feb-2019			42
121.	ZEMANTA	Mexico	Registered	2163601	08-Feb-2019	1999348	13-May-2019	42
122.	ZEMANTA	Singapore	Registered	40201902866T	08-Feb-2019	40201902866T	01-Aug-2019	42
123.	ZEMANTA	So. Korea	Registered	40-2019-20029	08-Feb-2019	40-1574509	12-Feb-2020	42
124.	ZEMANTA	UK	Registered	3373814	08-Feb-2019	3373814	26-Apr-2019	42
125.	ZEMANTA	U.S.	Registered	88072287	08-Aug-2019	5848811	03-Sep-2019	42
	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
1.	L Design	European Union   Base of IR No 1318200	Registered	014522031	28-Aug-2015	014522031	04-May-2016	9, 16, 35, 38, 41, 42, 45
2.	L Design	Switzerland Designation   IR No  1318200 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered			1318200	24-Feb-2016	9, 16, 35, 38, 41, 42, 45
3.	L Design	Turkey Designation   IR No 1318200 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered			1318200	24-Feb-2016	9, 16, 35, 38, 41, 42, 45
4.	L Design	U.S. Designation   IR No 1318200 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered	79195803	24-Feb-2016	5488605	12-Jun-2018	9, 16, 35, 38, 41, 42, 45

	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
5.	L LIGATUS & Design	European Union   Base of IR No 1316654	Registered	014522049	28-Aug-2015	014522049	13-Apr-2017	9, 16, 35, 38, 41, 42, 45
6.	L LIGATUS & Design	Switzerland Designation   IR No 1316654 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered			1316654	24-Feb-2016	9, 16, 35, 38, 41, 42, 45
7.	L LIGATUS & Design	Turkey Designation   IR No 1316654 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered			1316654	24-Feb-2016	9, 16, 35, 38, 41, 42, 45
8.	L LIGATUS & Design	U.S. Designation   IR No 1316654 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered	79195107	24-Feb-2016	5298720	03-Oct-2017	9, 16,   35, 38, 41, 42,   45
9.	LIGATUS	Canada	Allowed	1759391	14-Dec-2015			09 16 35 36 38 42
10.	LIGATUS	Germany	Registered	305084291	15-Feb-2005	30508429	21-Apr-2005	9, 16, 35, 36, 38, 42
11.	LIGATUS	European Union   Base of IR No 1225159	Registered	004829396	28-Dec-2005	004829396	05-Apr-2007	9, 16, 35, 36, 38, 42
12.	LIGATUS	Switzerland Designation   IR No 1225159 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered			1225159	03-Jul-2014	9, 16, 35, 36, 38, 42

	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
13.	LIGATUS	Turkey Designation   IR No 1225159 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered			1225159	03-Jul-2014	9, 16, 35, 36, 38, 42
14.	LIGATUS	U.S. Designation   IR No 1225159 Int’l Reg (Madrid) Base: EU Designations: U.S., Switzerland, Turkey	Registered	79178257	23-Oct-2015’	5202120	16-May-2017	9, 16, 35, 36, 38, 42
15.	LIGATUS & Design	Germany   Base of IR No 1239745	Registered	305640747	31-Oct-2005	30564074	30-Mar-2006	9, 16, 35, 36, 38, 42
16.	LIGATUS & Design	European Union Designation   IR No 1239745 Int’l Reg (Madrid) Base: Germany Designations: EU, U.S., Switzerland, Turkey	Registered			1239745	03-Jul-2014	9, 16, 35, 36, 38, 42
17.	LIGATUS & Design	Switzerland Designation   IR No 1239745 Int’l Reg (Madrid) Base: Germany Designations: EU, U.S., Switzerland, Turkey	Registered			1239745	03-Jul-2014	9, 16, 35, 36, 38, 42
18.	LIGATUS & Design	Turkey Designation   IR No 1239745 Int’l Reg (Madrid) Base: Germany Designations: EU, U.S., Switzerland, Turkey	Registered			1239745	03-Jul-2014	9, 16, 35, 36, 38, 42

	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
19.	LIGATUS & Design	U.S. Designation   IR No 1239745 Int’l Reg (Madrid) Base: Germany Designations: EU, U.S., Switzerland, Turkey	Registered	79178993	23-Oct-2015’	5202125	16-May-2017	9, 16, 35, 36, 38, 42
20.	LIGATUS DIRECTADS	Germany   Base of IR No 1241574	Registered	307569004	30-Aug-2007	30756900	28-Nov-2007	9, 35, 38, 42, 45
21.	LIGATUS DIRECTADS	European Union Designation   IR No 1241574 Int’l Reg (Madrid) Base: Germany Designations: EU, Turkey	Registered			1241574	03-Jul-2014	9, 35, 35, 38, 42, 45
22.	LIGATUS DIRECTADS	Turkey Designation   IR No 1241574 Int’l Reg (Madrid) Base: Germany Designations: EU, Turkey	Registered			1241574	03-Jul-2014	9, 35, 35, 38, 42, 45
23.	REVENEE	Germany   Base of IR No 1419867	Registered	3020170254490	09-Oct-2017	302017025449	19-Oct-2017	9, 16, 35, 38, 41, 42, 45
24.	REVENEE	European Union Designation   IR No 1419867 Int’l Reg (Madrid) Base: Germany Designations: EU, UK, U.S., Switzerland	Registered			1419867	05-Apr-2018	9, 16, 35, 38, 41, 42, 45
25.	REVENEE	Switzerland Designation   IR No 1419867 Int’l Reg (Madrid) Base: Germany Designations: EU, UK, U.S., Switzerland	Registered			1419867	05-Apr-2018	9, 16, 35, 38, 41, 42, 45

	Mark	Country	Status	App. No.	File Date	Reg. No.	Reg. Date	Class
26.	REVENEE	UK Designation   IR No 1419867 Int’l Reg (Madrid) Base: Germany Designations: EU, UK, Switzerland	Registered			1419867	05-Apr-2018	9, 16, 35, 38, 41, 42, 45
27.	VEESEO	European Union   Base of IR No 1231702	Registered	009192428	07-Jun-2010	009192428	02-Nov-2010	9, 35, 42, 45
28.	VEESEO	Switzerland Designation   IR No. 1231702 Int’l Reg (Madrid) Base: EU Designations: Switzerland	Registered			1231702	22-Oct-2014	9, 35, 42, 45
29.	VEESEO	U.S. Designation   IR No. 1231702 Int’l Reg (Madrid) Base: EU Designations: Switzerland	Registered	79158675	22-Oct-2014	4961942	24-May-2016	9, 35, 42, 45
30.	VSEO	European Union	Registered	00992436	07-Jun-2010	009192436	02-Nov-2010	9, 35, 42, 45

Forn   W-9	Request for Taxpayer	Give Form to the
(Rev. October 2018)	Identification Number and Certification	requester. Do not
Department of the Treasury		send to the IRS.
Internal Revenue Service	► Go to www.irs.gov/FormW9 for instructions and the latest information.

	1  Name (as shown on your income tax return). Name is required on this line; do not leave this line blank.    Outbrain Inc.
	2  Business name/disregarded entity name, if different from above
	3  Check appropriate box for federal tax classification of the person whose name is entered on line 1. Check only one of the following seven boxes.						4 Exemptions (codes apply only to certain entities, not individuals; see instructions on page 3):
	☐  Individual/sole proprietor or Single-member LLC	þ  C Corporation	☐  Corporation	☐  Partnership		☐ Trust/estate	Exempt payee code (if any)
	☐  Limited liability company. Enter the tax classification (C=C corporation, S=S corporation, P=Partnership) ►
	Note: Check the appropriate box in the line above for the tax classification of the single-member owner. Do not check LLC if the LLC is classified as a single-member LLC that is disregarded from the owner unless the owner of the LLC is another LLC that is not disregarded from the owner for U.S. federal tax purposes. Otherwise, a single-member LLC that is disregarded from the owner should check the appropriate box for the tax classification of its owner.						Exemption from FATCA reporting code (if any)
	☐  Other (see instructions) ►						(Applies to accounts maintained outside the U.S.)
	5 Address (number, street, and apt. or suite no.) See instructions.    39 West 13th St 3rd Fl				Requester’s name and address (optional)
	6 City, state, and ZIP code    New York NY 10011
	7 List account number(s) here (optional)

Part I

Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. The TIN provided must match the name given on line 1 to avoidʚbackup withholding. For individuals, this is generally your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the instructions for Part I, later. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to qet a TIN, later.		Social security number
					-			-
		or
Note: If the account is in more than one name, see the instructions for line 1. Also see What Name and Number To Give the Requester for guidelines on whose number to enter.		Employer identification number
		2	0	-	5	3	9	1	6	2	9
Part II	Certification

Under penalties of perjury, I certify that:

 

1.

The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and

 

2.

I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and

 

3.

I am a U.S. citizen or other U.S. person (defined below); and

 

4.

The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

 

Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions for Part II, later.

 

Sign Here

Signature of U.S. person ►

/s/ Barry Schofield

Date►  3/27/2020

 

Cat. No. 10231X	Form W-9 (Rev. 10-2018)

Form W-9 (Rev. 10-2018)

Page 2

 

Form W-9 (Rev. 10-2018)

Page 3

 

Form W-9 (Rev. 10-2018)

Page 4

 

Form W-9 (Rev. 10-2018)

Page 5

 

Form W-9 (Rev. 10-2018)

Page 6

 

Schedule 3 to Sixth Amendment

Amendments to Articles of Incorporation

(Attached.)

Delaware

Page 1

The First State

 

I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS FILED FROM AND INCLUDING THE RESTATED CERTIFICATE OR A MERGER WITH A RESTATED CERTIFICATE ATTACHED OF “OUTBRAIN INC.” AS RECEIVED AND FILED IN THIS OFFICE.

 

THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:

 

RESTATED CERTIFICATE, FILED THE FIRST DAY OF APRIL, A.D. 2019, AT 1:20 O’CLOCK P.M.

 

	/s/ Jeffrey W. Bullock
	Jeffrey W. Bullock, Secretary of State

 

4203949 8100X SR# 20202135803

Authentication: 202584370 Date: 03-13-20

 

You may verify this certificate online at corp.delaware.gov/authver.shtml 

State of Delaware
Secretary of State
Division of Corporations
Delivered 01:20 PM 04/01/2019
FILED 01:20 PM 04/01/2019
SR 20192443449 - File Number 4203949

AMENDED AND RESTATED

 

CERTIFICATE OF INCORPORATION

 

OF

 

OUTBRAIN INC.

 

a Delaware corporation

 

The following Amended and Restated Certificate of Incorporation of Outbrain Inc. (the “Corporation”) (i) amends and restates the provisions of the Certificate of Incorporation of the Corporation originally filed with the Secretary of State of the State of Delaware on August 11, 2006, (ii) supersedes the original Certificate of Incorporation and all subsequent amendments and restatements thereto through the date hereof in their entirety, and (iii) was approved pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware.

 

ARTICLE I

 

The name of the Corporation is Outbrain Inc.

 

ARTICLE II

 

The address of the Corporation’s registered office in the State of Delaware is located at 251 Little Falls Drive, in the City of Wilmington, in the County of New Castle, in the State of Delaware 19808. The name of its registered agent at such address is Corporation Service Company.

 

ARTICLE III

 

The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

ARTICLE IV

 

A.       Classes of Stock. The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock”. The total number of shares of all classes of stock which the Corporation is authorized to issue is One Hundred Fifty Eight Million Fifteen Thousand Five Hundred Ninety Two (158,015,592) shares, of which (i) One Hundred Ten Million Eight Hundred Twelve Thousand Four Hundred Thirty Five (110,812,435) shares shall be Common Stock, par value $0.001 per share (“Common Stock”) and (ii) Forty Seven Million Two Hundred Three Thousand One Hundred Fifty Seven (47,203,157) shares shall be Preferred Stock, par value $0.001 per share, of which Seven Million Sixty-five Thousand Nine Hundred and Seven (7,065,907) shares are designated as Series A Preferred Stock (the “Series A Preferred”), Fourteen Million Five Hundred Sixty-five Thousand Seven Hundred Sixty (14,565,760) shares are designated as Series B Preferred Stock (the “Series B Preferred”), Six Million Four Hundred Seventy-seven Thousand Four Hundred Forty-seven (6,477,447) shares are designated as Series C Preferred Stock (the “Series C Preferred”), Five Million Seven Hundred Thirty-five Thousand and Twenty-six (5,735,026) shares are designated as Series D Preferred Stock (the “Series D Preferred”), One Million Eighty Thousand One Hundred Ninety-seven (1,080,197) shares are designated as Series E Preferred Stock (the “Series E Preferred”), Five Million Three Hundred Forty-three Thousand Four Hundred Twenty-five (5,343,425) shares are designated as Series F Preferred Stock (the “Series F Preferred”), Five Million Six Hundred Sixty-six Thousand One Hundred Seventy-two (5,666,172) shares are designated as Series G Preferred Stock (the “Series G Preferred”), and One Million Two Sixty Nine Thousand Two Hundred Twenty Three (1,269,223) shares are designated as Series H Preferred Stock (the “Series H Preferred”). The Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series F Preferred and Series G Preferred are referred to herein collectively as the “Senior Preferred Stock.” The Series E Preferred, Series H Preferred and the Common Stock are referred to herein collectively as the “Junior Stock.”

 

B.       Rights, Preferences and Restrictions of Preferred Stock. The rights, preferences, privileges and restrictions granted to and imposed on the Common Stock and the Preferred Stock are as set forth below in this Amended and Restated Certificate of Incorporation.

 

1.        Dividends. The holders of Senior Preferred Stock shall be entitled to receive, pro rata among themselves and on an as converted basis, noncumulative dividends, if and when declared by the Corporation’s Board of Directors (the “Board”), out of any funds legally available therefor, prior and in preference to any declaration or payment of any dividend according to the following preferences and rates: (i) first, and in preference and priority to any payment of any dividend on Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred or Junior Stock, the holders of shares of Series G Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series G Original Issue Price (as defined below) (the “Preferred G Dividend Preference”); (ii) second, following payment in full of the Preferred G Dividend Preference, and in preference and priority to any payment of any dividend on Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred or Junior Stock, the holders of shares of Series F Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series F Original Issue Price (as defined below) (the “Preferred F Dividend Preference”); (iii) third, following payment in full of the Preferred G Dividend Preference and the Preferred F Dividend Preference and in preference and priority to any payment of any dividend on Series C Preferred, Series B Preferred, Series A Preferred or Junior Stock, the holders of shares of Series D Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series D Original Issue Price (as defined below) (the “Preferred D Dividend Preference”); (iv) fourth, following payment in full of the Preferred G Dividend Preference, the Preferred F Dividend Preference and the Preferred D Dividend Preference, and in preference and priority to any payment of any dividend on Series B Preferred, Series A Preferred or Junior Stock, the holders of shares of Series C Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series C Original Issue Price (as defined below) (the “Preferred C Dividend Preference”); (v) fifth, following payment in full of the Preferred G Dividend Preference, the Preferred F Dividend Preference, the Preferred D Dividend Preference and the Preferred C Dividend Preference, and in preference and priority to any payment of any dividend on Series A Preferred or Junior Stock, the holders of shares of Series B Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series B Original Issue Price (as defined below) (the “Preferred B Dividend Preference”); (vi) sixth, following payment in full of the Preferred G Dividend Preference, the Preferred F Dividend Preference, the Preferred D Dividend Preference, the Preferred C Dividend Preference and the Preferred B Dividend Preference and in preference and priority to any payment of any dividend on Junior Stock, the holders of shares of Series A Preferred (by reason of their ownership thereof) shall be entitled to receive, ratably among themselves in proportion to the preferential amounts, a dividend up to an amount with respect to all dividends distributed, equal in the aggregate, to the Series A Original Issue Price (as defined below) (the “Preferred A Dividend Preference”); and (vii) seventh, following payment in full of the Preferred G Dividend Preference, the Preferred F Dividend Preference, the Preferred D Dividend Preference, the Preferred C Dividend Preference, the Preferred B Dividend Preference and the Preferred A Dividend Preference, all stockholders of the Corporation will participate on a pro rata basis in the receipt of any additional dividends on an as-converted basis.

2.           Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, distributions to the stockholders of the Corporation shall be made in the following order of preference:

 

(a)           First, the holders of shares of Series G Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to the Series G Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series G Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series G Preferred (the “Series G Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series G Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series G Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series G Preferred shall mean $8.8243 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series G Original Issue Price”).

 

(b)           Second, and after the Series G Preference has been paid in full, the holders of shares of Series F Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to two (2.0) times the Series F Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series F Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series F Preferred (the “Series F Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series F Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after distribution of the Series G Preference) shall be distributed ratably among the holders of the Series F Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series F Preferred shall mean $6.7075 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series F Original Issue Price”).

(c)           Third, and after the Series G Preference and the Series F Preference have been paid in full, the holders of shares of Series D Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series C Preferred, Series B Preferred, Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to the Series D Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series D Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series D Preferred (the “Series D Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series D Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after distribution of the Series G Preference and the Series F Preference) shall be distributed ratably among the holders of the Series D Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series D Preferred shall mean $6.1407 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series D Original Issue Price”).

 

(d)           Fourth, and after the Series G Preference, the Series F Preference and the Series D Preference have been paid in full, the holders of shares of Series C Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series B Preferred Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to the Series C Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series C Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series C Preferred (the “Series C Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series C Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after distribution of the Series G Preference, the Series F Preference and the Series D Preference) shall be distributed ratably among the holders of the Series C Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series C Preferred shall mean $1.6982 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series C Original Issue Price”).

 

(e)           Fifth, and after the Series G Preference, the Series F Preference, the Series D Preference and the Series C Preference have been paid in full, the holders of shares of Series B Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series A Preferred and Junior Stock by reason of their ownership thereof, an amount per share equal to the Series B Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series B Preferred pursuant to Section 1 hereinabove plus an amount equal to declared but unpaid dividends on each share of Series B Preferred (the “Series B Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series B Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after distribution of the Series G Preference, the Series F Preference, the Series D Preference and the Series C Preference) shall be distributed ratably among the holders of the Series B Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series B Preferred shall mean $0.82385 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series B Original Issue Price”).

(f)            Sixth, and after the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference and the Series B Preference have been paid in full, the holders of shares of Series A Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Junior Stock by reason of their ownership thereof, an amount per share equal to the Series A Original Issue Price for each such share, less cash dividends actually received in respect of such share of Series A Preferred pursuant to Section 1 hereinabove, plus an amount equal to declared but unpaid dividends on each share of Series A Preferred (the “Series A Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after the distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference and the Series B Preference) shall be distributed ratably among the holders of the Series A Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series A Preferred shall mean $0.7226 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series A Original Issue Price”).

 

(g)           Seventh, and after the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference and the Series A Preference have been paid in full, the holders of shares of Series E Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series H Preferred and Common Stock by reason of their ownership thereof, an amount per share equal to the Series E Original Issue Price for each such share (the “Series E Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series E Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after the distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference and the Series A Preference) shall be distributed ratably among the holders of the Series E Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series E Preferred shall mean $5.5545 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series E Original Issue Price”).

(h)          Eighth, and after the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference, the Series A Preference and the Series E Preference have been paid in full, the holders of shares of Series H Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the Series H Original Issue Price for each such share (the “Series H Preference”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series H Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation legally available for distribution (after the distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference, the Series A Preference and the Series E Preference) shall be distributed ratably among the holders of the Series H Preferred in proportion to the preferential amounts such holders are entitled to receive. The Original Issue Price of the Series H Preferred shall mean $8.8243 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like) (the “Series H Original Issue Price” and, together with the Series G Original Issue Price, the Series F Original Issue Price, the Series D Original Issue Price, the Series C Original Issue Price, the Series B Original Issue Price, the Series A Original Issue Price and the Series E Original Issue Price, each an “Original Issue Price”).

 

(i)           Ninth, upon the completion of the distribution required by subparagraphs (a), (b), (c), (d), (e), (f), (g) and (h) of this Section 2, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among the holders of Common Stock and to the holders of the Senior Preferred Stock other than the Series F Preferred (on an as-if converted basis) pro rata in proportion to the number of shares of Common Stock held by each holder.

 

(j)           Notwithstanding Sections 2(a) through 2(i) above:

 

(i)           Without giving effect to the distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference, the Series A Preference, the Series E Preference and the Series H Preference pursuant to Sections 2(a) through 2(i) above, if upon a pari passu pro rata distribution of all assets of the Corporation to all holders of shares of the Corporation on an as-if converted basis, the amount per share of Series G Preferred actually distributed to the holders of Series G Preferred (including, for the removal of doubt, cash dividends actually received by such holders of Series G Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series G Preferred) is (x) in the case of a liquidation, dissolution or winding up (including a Deemed Liquidation) occurring on or before February 9, 2016 (the “Series G First Anniversary Date”), greater than two hundred percent (200%) or (y) occurring after the Series G First Anniversary Date, greater than three hundred percent (300%) of the Series G Original Issue Price (each of (x) and (y) being referred to as the “Cap G Amount”), then all Senior Preferred Stock, including the Series F Preferred (which holders thereof, for the avoidance of doubt, shall receive at least two hundred percent (200%) of the Series F Original Issue Price pursuant to this subsection i), the Series E Preferred and the Series H Preferred, shall not be entitled to their respective preferences described in Sections 2(a) through 2(i) above, but rather to their pro rata share (on an as-if converted basis) of all assets, provided, however, that in such event, each holder of Series G Preferred actually receives an amount per share of Series G Preferred which (together, for the removal of doubt, with cash dividends actually received by such holders of Series G Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series G Preferred) is not less than the Cap G Amount.

(ii)           In addition, in the event that (1) a distribution of the pro rata share (on an as-if converted basis) of all assets is not effected pursuant to subsection i, above; (2) after distribution of the Series G Preference; and (3) without giving effect to the distribution of the Series F Preference, the Series D Preference, the Series C Preference, the Series B Preference, the Series A Preference, the Series E Preference and the Series H Preference pursuant to Sections 2(b) through 2(i) above, if upon a pari passu pro rata distribution of all remaining assets of the Corporation to all holders of shares of the Corporation on an as-if converted basis, the amount per share of Series D Preferred actually distributed to the holders of Series D Preferred (including, for the removal of doubt, cash dividends actually received by such holders of Series D Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series D Preferred) is greater than two hundred twenty five percent (225%) of the Series D Original Issue Price (the “Cap D Amount”), then all the Series F Preferred (which holders thereof, for the avoidance of doubt, shall receive at least two hundred percent (200%) of the Series F Original Issue Price pursuant to this subsection ii.), the Series C Preferred, the Series B Preferred, the Series A Preferred, the Series E Preferred and the Series H Preferred, shall not be entitled to their respective preferences described in Sections 2(b) through 2(i) above, but rather to their pro rata share (on an as-if converted basis) of all remaining assets, provided, however, that this subsection ii. shall apply to the holders of the Series F Preferred, the Series D Preferred, the Series C Preferred, the Series B Preferred, the Series A Preferred, the Series E Preferred and the Series H Preferred only if each holder of Series D Preferred actually receive an amount per share of Series D Preferred which (together, for the removal of doubt, with cash dividends actually received by such holders of Series D Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series D Preferred) is not less than the Cap D Amount.

 

(iii)         In addition, in the event that (1) a distribution is not effected pursuant to subsections i. or ii. above; (2) after distribution of the Series G Preference, the Series F Preference and the Series D Preference, and (3) without giving effect to the distribution of the Series C Preference, the Series B Preference, the Series A Preference, the Series E Preference and the Series H Preference pursuant to Sections 2(d) through 2(i) above, if upon a pari passu pro rata distribution of all remaining assets of the Corporation to all holders of shares of the Corporation on an as-if converted basis, the amount per share of Series C Preferred actually distributed to the holders of Series C Preferred (including, for the removal of doubt, cash dividends actually received by such holders of Series C Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series C Preferred), is greater than two hundred fifty percent (250%) of the Series C Original Issue Price (the “Cap C Amount”), then the Series C Preferred, the Series B Preferred, and the Series A Preferred shall not be entitled to their respective preferences described in Sections 2(d) through 2(i) above but rather to their pro rata share (on an as-if converted basis) of all remaining assets, provided, however, that this subsection iii. shall apply to the holders of Series C Preferred, Series B Preferred, and Series A Preferred only if each of the holders of Series C Preferred actually receives an amount per share of Series C Preferred which (together, for the removal of doubt, with cash dividends actually received by such holders of Series C Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series C Preferred) is not less than the Cap C Amount.

(iv)         In addition, in the event that (1) a distribution is not effected pursuant to subsections i., ii. or iii. above, (2) after distribution of the Series G Preference, the Series F Preference, the Series D Preference, the Series C Preference and the Series B Preference, and (3) without giving effect to the distribution of the Series A Preference, the Series E Preference and the Series H Preference pursuant to Sections 2(f) through 2(i) above, if upon a pari passu pro rata distribution of all remaining assets of the Corporation to all holders of shares of the Corporation on an as-if converted basis, the amount per share of Series A Preferred actually distributed to the holders of Series A Preferred (including, for the removal of doubt, cash dividends actually received by such holders of Series A Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each share of Series A Preferred), is greater than three hundred percent (300%) of the Series A Original Issue Price (the “Cap A Amount”), then the Series A Preferred shall not be entitled to their preference described in Section 2(f) above but rather to their pro rata share (on an as-if converted basis) of all remaining assets, provided, however, that this subsection v., shall apply to the holders of Series A Preferred only if each of the holders of Series A Preferred actually receives an amount per share of Series A Preferred which (together, for the removal of doubt, with cash dividends actually received by such holders of Series A Preferred pursuant to Section 1 above, less an amount equal to declared but unpaid dividends on each Series A Preferred) is not less than the Cap A Amount.

 

(v)          Finally, for purposes of determining the amount each holder of shares of Series E Preferred or Series H Preferred is entitled to receive upon a liquidation, dissolution or winding up of this Corporation, either voluntary or involuntary, including a Deemed Liquidation, each such holder of shares of Series E Preferred or Series H Preferred shall be deemed to have converted (regardless of whether such holder actually converted) such holder’s shares of Series E Preferred or Series H Preferred into shares of Common Stock immediately prior to such liquidation, dissolution or winding up, either voluntary or involuntary, including a Deemed Liquidation, if, as a result of an actual conversion, such holder would receive, in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert such shares of Series E Preferred or Series H Preferred into shares of Common Stock. If any such holder shall be deemed to have converted shares of Series E Preferred or Series H Preferred into Common Stock pursuant to this subsection v., then such holder shall not be entitled to receive any distribution that would otherwise be made to holders of Series E Preferred or Series H Preferred that have not converted (or have not been deemed to have converted) into shares of Common Stock.

 

(k)         For purposes of this Section 2, a liquidation, dissolution or winding up of the Corporation shall be deemed to be occasioned by, and to include (each of the below events, a “Deemed Liquidation”), (x) in the event of a consolidation, merger or reorganization of the Corporation with or into, or a sale, transfer, or other disposition of all or substantially all of the Corporation’s assets or intellectual property, or substantially all of the Corporation’s issued and outstanding capital stock, to, any other corporation, or any other entity or person, other than a wholly-owned subsidiary of the Corporation, excluding a transaction in which stockholders of the Corporation prior to the transaction will maintain voting control of the resulting entity after the transaction (provided, however, that shares of the surviving entity held by stockholders of the Corporation acquired by means other than the exchange or conversion of the shares of the Corporation shall not be used in determining if the stockholders of the Corporation own more than fifty percent (50%) of the voting power of the surviving entity (or its parent), but shall be used for determining the total outstanding voting power of the surviving entity); (y) in the event that pursuant to a transaction or series of related transactions, other than a transaction that is a bona fide equity financing with the primary purpose of raising capital for the Corporation, a person or entity acquires fifty percent (50%) or more of the issued and outstanding shares of the Corporation or the right to appoint or elect at least fifty percent (50%) or more of the members of the Board; or (z) in the event the Corporation transfers or grants a perpetual exclusive license of all or substantially all of the Corporation’s intellectual property. An IPO (as defined below) shall not be considered a liquidation, dissolution or winding up of the Corporation pursuant to this Section 2.

(1)          In any of such events, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board. Any securities shall be valued as follows:

 

(A)         Securities not subject to an investment letter or other similar restrictions on free marketability shall be valued as follows:

 

(1)           If traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty (30) day period ending three (3) days prior to the closing; 

 

(2)           if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing; and

 

(3)           if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board.

 

(B)         in the event the requirements of this Section 2 are not complied with, the Corporation shall forthwith either:

 

(1)           cause such closing to be postponed until such time as the requirements of this Section 2 have been complied with; or

 

(2)           cancel such transaction, in which event the rights, preferences and privileges of the holders of the Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in subsection 2(k)(ii) hereof.

 

(C)         Securities subject to an investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be valued in such a manner as to make an appropriate discount from the market value determined in good faith as above in (A)(1), (A)(2) or (A)(3) to reflect the approximate fair market value thereof, as determined by the Board.

(ii)           The Corporation shall give each holder of record of Preferred Stock written notice of such impending transaction not later than ten (10) days prior to the stockholder meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction whichever notice date is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction, the provisions of this Section 2, and the amounts anticipated to be distributed to holders of each outstanding series and class of capital stock of the Corporation pursuant to this Section 2, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than ten (10) days after the Corporation has given the first notice provided for herein or sooner than ten (10) days after the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock that are entitled to such notice rights or similar notice rights and that represent at least a majority of the voting power of all then outstanding shares of such Preferred Stock (voting together as a single class on an as converted basis).

 

(iii)          Notwithstanding anything to the contrary contained herein, in the event of a Deemed Liquidation, if any portion of the consideration payable to the stockholders of the Corporation is placed into escrow and/or is payable to the stockholders of the Corporation subject to contingencies, the Merger Agreement (or other agreement effecting such Deemed Liquidation) shall provide that (a) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with subsections 2(a) through 2(i) above as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation and (b) any additional consideration which becomes payable to the stockholders of the Corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with subsections 2(a) through 2(i) above after taking into account the previous payment of the Initial Consideration as part of the same transaction.

 

3.            Conversion. The holders of Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

(a)         Right to Convert. Each share of Preferred Stock shall be convertible, without payment of additional consideration by the holder thereof at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the applicable Original Issue Price by the Conversion Price (as defined below) applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion.

 

The conversion price per share for each share of Preferred Stock shall initially be equal to the applicable Original Issue Price of such share of Preferred Stock (the “Conversion Price”); provided, however, that the Conversion Price shall be subject to adjustment as set forth in this Section3.

(b)          Automatic Conversion.

 

(i)           All shares of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price at the time in effect for such Preferred Stock, immediately prior to the earlier of: (i) the closing of the Corporation’s initial underwritten public offering of its Common Stock pursuant to an effective registration statement under the United States Securities Act of 1933, as amended (the “Act”), or equivalent law of another jurisdiction (an “IPO”) yielding at least US $30 million net to the Corporation (a “Qualified IPO”); or (ii) the written election of the holders of the majority in interest of the Corporation’s issued and outstanding Senior Preferred Stock, provided that with respect to the conversion of Series G Preferred, as long as any originally issued shares of Series G Preferred remains outstanding the written consent of the holders of at least fifty-one percent (51 %) of the outstanding shares of Series G Preferred (the “Series G Investor Majority”) shall also be required, and provided further that with respect to the conversion of the Series F Preferred, as long as any of the originally issued shares of Series F Preferred remain outstanding the written consent of the holders of at least fifty-one percent (51%) of the outstanding shares of Series F Preferred (the “Series F Investor Majority”) shall also be required, and provided further that with respect to the conversion of the Series D Preferred, as long as any of the originally issued shares of Series D Preferred remain outstanding the written consent of the holders of at least sixty percent (60%) of the outstanding shares of Series D Preferred (the “Series D Investor Majority”) shall also be required.

 

(ii)           Notwithstanding the foregoing and without amending or derogating in any way from the definition of the term “Qualified IPO”, with respect to the conversion of the Series G Preferred, Series F Preferred and Series D Preferred upon a Qualified IPO (and with respect to the Series G Preferred, upon any IPO), the following provisions shall apply: (w) the Conversion Price of the Series G Preferred shall be determined as follows: (A) if the price of the shares sold by the underwriters to the public before deducting underwriting discounts and related offering costs for such Qualified IPO (the “IPO Price”) is equal to or greater than $8.8243 (as adjusted for any stock splits, recapitalizations, stock dividends or the like including without limitation any adjustment pursuant to this subsection (ii)), the Conversion Price then in effect for the Series G Preferred shall not be affected thereby, and (B) if the IPO price is less than $8.8243 per share (as adjusted for any stock splits, recapitalizations, stock dividends or the like including without limitation any adjustment pursuant to this subsection (ii)), the Conversion Price then in effect for the Series G Preferred shall be reduced to the IPO Price concurrently with the closing of the IPO; (x) the Conversion Price of the Series F Preferred shall be determined as follows: (A) if the IPO Price is at least two (2.0) times the Series F Original Issue Price, the Conversion Price then in effect for the Series F Preferred shall not be affected thereby; and (B) if the IPO Price is less than two (2.0) times the Series F Original Issue Price, the Conversion Price shall be the lower of (i) the Conversion Price then in effect for the Series F Preferred, and (ii) the Series F Original Issue Price multiplied by a fraction, the denominator of which is the Series F Preference and the numerator of which is the IPO Price; and (y) the Conversion Price of the Series D Preferred shall be determined as follows: (A) if the IPO Price is at least one and one-half (1.5) times the Series D Original Issue Price, the Conversion Price then in effect for the Series D Preferred shall not be affected thereby; (B) if the IPO Price is less than one and one-half (1.5) times the Series D Original Issue Price and the original Conversion Price has not otherwise been subject to adjustment, the Conversion Price shall be two-thirds (2/3) of the original Conversion Price; and (C) if the IPO Price is less than one and one-half (1.5) times the Series D Original Issue Price and the original Conversion Price has otherwise been subject to adjustment, the Conversion Price shall be the lower of (i) the Conversion Price then in effect for the Series D Preferred, and (ii) two-thirds (2/3) of the original Conversion Price. For the removal of doubt, to the extent that Conversion Price for any of the Series G Preferred, Series F Preferred or Series D Preferred is adjusted pursuant to sub-sections (w)(B), (x)(B), (y)(B) or (y)(C) above respectively, then any such adjustment to the Conversion Price of the Series G Preferred, Series F Preferred or Series D Preferred shall be iterative (i.e. a circular calculation shall be employed) so that each of the Series G Preferred, Series F Preferred and Series D Preferred shall following all such adjustments receive its full entitlement pursuant to sub-sections (w)(B), (x)(B), (y)(B) or (y)(C) above.

(c)          Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred Stock, and shall give written notice to the Corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. If the conversion is in connection with an underwritten offering of securities registered pursuant to the Act, the conversion, unless otherwise designated by the holder, will be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock upon conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of such sale of securities. In the event of an automatic conversion pursuant to Section 3(b), the outstanding shares of Preferred Stock shall be converted automatically without any further action by the holder of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or the transfer agent for such Preferred Stock; and the Corporation shall not be obligated to issue certificates evidencing such Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred Stock are either delivered to the Corporation or the transfer agent for such Preferred Stock as provided above, or the holder notifies the Corporation or the transfer agent for such Preferred Stock that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable thereafter, issue and deliver to such address as the holder may direct, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled.

 

(d)          Conversion Price Adjustments of Preferred Stock for Certain Splits and Combinations. The applicable Conversion Price for each series of Preferred Stock shall be subject to adjustment from time to time as follows:

 

(i)            In the event the Corporation should at any time or from time to time after the date upon which any shares of Preferred Stock were first issued (the “Purchase Date”) fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock or for the determination of the outstanding shares of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock without payment of any consideration by such holder for the additional shares of Common Stock and without any comparable payment or distribution to the holders of Preferred Stock, then, as of such record date (or the date of such dividend, distribution, split or subdivision if no record date is fixed), the Conversion Price of each series of Preferred Stock then in effect shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase of the aggregate of shares of Common Stock outstanding.

(ii)           If the number of shares of Common Stock outstanding at any time after the Purchase Date is decreased by a combination of the outstanding shares of Common Stock or reverse stock split, then, as of the record date of such combination or reverse stock split, the Conversion Price of each series of Preferred Stock then in effect shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in outstanding shares.

 

(e)          Other Distributions. In the event the Corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 3(g)(iii) and excluding any repurchases of securities by the Corporation not made on a pro rata basis from all holders of any class of the Corporation’s securities, then, in each such case for the purpose of this subsection 3(e), the holders of the Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of the Corporation into which their shares of Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of the Corporation entitled to receive such distribution.

 

(f)           Recapitalizations, Merger and Consolidations. If at any time or from time to time there shall be a recapitalization of the Common Stock or a merger or consolidation of the Corporation with or into another corporation (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in Section 2 or this Section 3), provision shall be made so that the holders of the Preferred Stock shall thereafter be entitled to receive upon conversion of the Preferred Stock the number of shares of stock or other securities or property of the Corporation or otherwise, which a holder of Common Stock deliverable upon conversion immediately prior to such recapitalization, merger or consolidation would have been entitled to receive on such recapitalization, merger or consolidation. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3(f) with respect to the rights of the holders of the Preferred Stock after the recapitalization, merger or consolidation to the end that the provisions of this Section 3 (including adjustment of the Conversion Price of each series of Preferred Stock then in effect and the number of shares purchasable upon conversion of the Preferred Stock) shall be applicable after that event as nearly equivalently as may be practicable.

 

(g)          Adjustments to Conversion Price of Senior Preferred Stock for Dilutive Issues. The Conversion Price of each series of Senior Preferred Stock shall be subject to further adjustments from time to time as follows:

(i)            Special Definitions. For purposes of this Section 3(g), the following definitions shall apply:

 

(A)         “Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (as defined below).

 

(B)          “Convertible Securities” shall mean any Preferred Stock or other securities (including convertible debt) convertible into or exchangeable for Common Stock, but excluding Options.

 

(C)          “Additional Shares of Common” shall mean all shares of Common Stock issued (or, pursuant to Section 3(g)(iii), deemed to be issued) by the Corporation after the filing of this Amended and Restated Certificate of Incorporation (the “Filing Date”), other than shares of Common Stock issued, issuable or, pursuant to Section 3(g)(iii) herein, deemed to be issued:

 

(1)           upon conversion of shares of Preferred Stock;

 

(2)           to officers, directors or employees of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a stock grant, option plan or purchase plan or other stock incentive program or arrangement approved by the Board for employees, officers, directors or consultants of the Corporation;

 

(3)           upon exercise of options or warrants outstanding as of the date of adoption of this Amended and Restated Certificate of Incorporation;

 

(4)           as a dividend or distribution on the Preferred Stock;

 

(5)           in connection with any transaction for which adjustment is made pursuant to Section 3(d)(i), 3(d)(ii), or 3(f) hereof;

 

(6)           without derogating from the adjustments to the Conversion Price of the Series G Preferred, the Series F Preferred and the Series D Preferred pursuant to Section 3(b)(ii), in connection with a sale to the public in an IPO;

 

(7)           securities issued in connection with a bona fide business acquisition of or by the Corporation, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise approved by the Board; or

 

(8)           securities of the Corporation regarding which the Series G Investor Majority determine are not Additional Shares of Common, provided that (i) in the event that such issuance is at a price per share lower than the Conversion Price of the Series F Preferred then in effect, the approval of the Series F Investor Majority (voting as a separate class) shall be required as well, (ii) in the event that such issuance is at a price per share lower than the Conversion Price of the Series D Preferred then in effect, the approval of the Series D Investor Majority (voting as a separate class) shall be required as well, (iii) in the event that such issuance is at a price per share lower than the Conversion Price of the Series C Preferred then in effect, the approval of the holders of the majority of the issued and outstanding shares of Series C Preferred (voting as a separate class) shall be required as well, (iv) in the event that such issuance is at a price per share lower than the Conversion Price of the Series B Preferred then in effect, the approval of the holders of the majority of the issued and outstanding shares of Series B Preferred (voting as a separate class) shall be required as well, and (v) in the event that such issuance is at a price per share lower than the Conversion Price of the Series A Preferred then in effect, the approval of the holders of the majority of the issued and outstanding shares of Series A Preferred (voting as a separate class) shall be required as well.

(ii)           No Adjustment of Conversion Price. No adjustment in the Conversion Price of any series of Senior Preferred Stock shall be made in respect of the issuance of Additional Shares of Common unless the consideration per share for an Additional Share of Common issued or deemed to be issued by the Corporation is less than the applicable Conversion Price for such series of Senior Preferred Stock in effect on the date of, and immediately prior to such issue.

 

(iii)          Options and Convertible Securities. Except as provided in Section 3(g)(i)(C)(2) above, in the event that the Corporation at any time or from time to time after the Filing Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities (excluding, for the removal of doubt, those described in Sections 3(g)(i)(C)(l) through 3(g)(i)(C)(7)), shall be deemed to be Additional Shares of Common issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date; provided, however, that Additional Shares of Common shall not be deemed to have been issued unless the consideration per share of such Additional Shares of Common would be less than the applicable Conversion Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common are deemed to be issued:

 

(A)          no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities, in each case, pursuant to their respective terms;

 

(B)          if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

(C)          upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:

 

(1)           in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange;

 

(2)           in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation upon the issue of the Convertible Securities with respect to which such Options were actually exercised; and

 

(3)           no readjustment pursuant to clauses (1) or (2) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price in effect immediately prior to the adjustment for which such readjustment is made (without giving effect to any prior adjustments that are no longer in effect), or (ii) the applicable Conversion Price that would have resulted from other issuances of Additional Shares of Common between the original adjustment date and such readjustment date.

 

(D)          in the case of an Option which expires by its terms not more than thirty (30) days after the date of issue thereof, no adjustment of the Conversion Price shall be made until the expiration or exercise of such Option, whereupon such adjustment shall be made in the same manner provided in clause (C) above.

 

(iv)        Adjustment of Conversion Price of the Senior Preferred Stock Upon Issuance of Additional Shares of Common. In the event that the Corporation shall at any time after the Filing Date issue Additional Shares of Common (including Additional Shares of Common deemed to be issued pursuant to Section 3(g)(iii) (x) without consideration, or (y) for a consideration per share less than the applicable Conversion Price of a series of Senior Preferred Stock (the “Affected Class”) in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price of the Affected Class(es) shall be reduced, concurrently with such issue to a price (calculated to the nearest cent) determined by multiplying the applicable Conversion Price of the Affected Class(es) theretofore in effect by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common so issued would purchase at such Conversion Price of the applicable Affected Class(es) in effect immediately prior to such issue, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common so issued; provided, however, that, for the purposes of this Section 3(g)(iv),all shares of Common Stock issuable upon exercise, conversion or exchange of outstanding Options or Convertible Securities, as the case may be, shall be deemed to be outstanding (except as set forth in Section 3(g)(v) below), and immediately after any Additional Shares of Common are deemed issued pursuant to Section 3(g)(iii), such Additional Shares of Common shall be deemed to be outstanding, and provided further that the Conversion Price of any Affected Class shall not be so reduced at such time if the amount of such reduction would be an amount less than $0.01, but any such amount shall be carried forward and reduction thereto with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any amount or amounts so carried forward, shall aggregate $0.01 or more.

(v)         In calculating the number of shares of Common Stock outstanding immediately prior to the issuance of the Additional Shares of Common, any Common Stock issuable upon conversion of the Senior Preferred Stock resulting from the amendment in the applicable Conversion Price provided for in subsection (iv) above being triggered due to such specific issuance, shall not be taken into consideration. For the avoidance of doubt, any previous adjustments to the Conversion Price prior to such issuance shall be taken into consideration.

 

(vi)        Determination of Consideration. For purposes of this Section 3(g), the consideration received by the Corporation for the issue of any Additional Shares of Common shall be computed as follows:

 

(A)         Cash and Property. Such consideration shall:

 

(1)           insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;

 

(2)           insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue if publicly traded or as determined by the Board.

 

(B)         Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common deemed to have been issued pursuant to Section 3(g)(iii), relating to Options and Convertible Securities, shall be determined by dividing (x) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by (y) the maximum number of shares of Common Stock issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, as determined in Section 3(g)(iii) hereof.

 

(h)           No Impairment. The Corporation will not, by amendment of its Amended and Restated Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Preferred Stock against impairment.

(i)           No Fractional Shares and Certificate as to Adjustment.

 

(i)            No fractional shares shall be issued upon the conversion of any share or shares of the Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

 

(ii)          Upon the occurrence of each adjustment or readjustment of the Conversion Price of the Preferred Stock pursuant to Section 3, the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the reasonable written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for the Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of Preferred Stock.

 

(j)           Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall notify each holder of Preferred Stock in writing, at least ten (10) days prior to the date specified therein, specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

 

(k)          Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, in addition to such other remedies as shall be available to the holder of such Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of common stock to such number of shares as shall be sufficient for such purposes.

(I)           Special Adjustment of Series G Preferred Stock Conversion Price. Solely with respect to the Series G Preferred and not with respect to any other series of Senior Preferred Stock, the Series E Preferred or the Series H Preferred, if the Conversion Price of the Series D Preferred or Series F Preferred is decreased by amendment (a “Ratchet Amendment”) of this Amended and Restated Certificate of Incorporation (in which the Series G Preferred is not entitled to vote pursuant to the last sentence of Section 4(a) hereof), the Conversion Price of the Series G Preferred in effect immediately prior to such Ratchet Amendment shall be reduced, concurrently with such issue, so that the Series G Percentage shall be the same immediately before and immediately after such Ratchet Amendment. For the purpose of this provision: “Series G Percentage” shall mean the percentage of the total number of shares of Common Stock outstanding immediately prior to the Ratchet Amendment into which the Series G Preferred would convert at the Conversion Rate then applicable to the Series G Preferred; provided, however, that, for the purposes of such calculation all shares of Common Stock issuable upon exercise, conversion or exchange of outstanding Options or Convertible Securities, as the case may be, shall be deemed to be outstanding (except as set forth in Section 3(g)(v)).

 

4.            Voting Rights.

 

(a)          General Voting Rights. Each holder of shares of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Preferred Stock could be converted and shall have voting rights and powers equal to the voting rights and powers of the Common Stock (except as otherwise expressly provided herein or as required by law, voting together with all other classes of Preferred Stock and with the Common Stock as a single class) and shall be entitled to notice of any stockholder meeting in accordance with the Bylaws of the Corporation. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). Each holder of Common Stock shall be entitled to one (1) vote for each share of Common Stock held. For avoidance of any doubt and without derogating from the generality of the above, except as otherwise required by law or as set forth herein, holders of Preferred Stock and Common Stock shall vote together as a single class at all times. Notwithstanding the foregoing, the Series G Preferred shall not be entitled to vote on an amendment to this Amended and Restated Certificate of Incorporation for the purpose of effecting a Ratchet Amendment.

 

(b)          Required Class Vote. Until the consummation of an IPO, the consent of the holders of a majority in interest of the Senior Preferred Stock (voting together as a single class on an as converted basis) shall be required for (which matters shall apply, mutatis mutandis, to the Corporation’s subsidiaries):

 

(i)           creating or issuing any class or series of shares or other securities having rights or a preference equal or superior to the Series G Preferred, Series F Preferred or Series D Preferred;

 

(ii)           the merger, consolidation, acquisition or other reorganization of the Corporation, or sale, lease, other disposition of, or pledge or grant of any security interest in all or substantially all of the Corporation’s assets or shares or otherwise effecting a Deemed Liquidation;

 

(iii)          an increase in the number of the Corporation’s directors above nine, decrease in the number of the Corporation’s directors below nine or change in the manner by which the composition of the Board is determined, other than as agreed in Section 7 of that certain Amended and Restated Stockholders’ Agreement dated as of April 1, 2019 (the “Stockholders’ Agreement”) whereby the director nominated by certain of the Series G Preferred holders shall resign upon the effectiveness of the registration statement for an IPO pursuant to the pre-signed letter of resignation delivered to the Company, which will become effective immediately prior to the effectiveness of the registration statement for the Company’s IPO;

(iv)       the increase of the size of the pool (i.e. the number of shares of Common Stock reserved for issuance upon exercise of options) for options to employees, directors, consultants and advisors (the “Pool”) or grant options or other equity based awards to any employee, officer, director, consultant or advisor outside the Pool;

 

(v)        any transaction with any stockholder, director or officer or any affiliate thereof (except for employment agreements and stock option agreements with individuals other than the Founders (as such term is defined in the Stockholders’ Agreement), approved in compliance with the law and the restrictive provisions otherwise set forth herein); and

 

(vi)         the liquidation, dissolution or winding up of the Corporation or termination of the Corporation’s activities.

 

In addition, until the consummation of an IPO and in addition to any other rights provided by law, the following provisions shall apply:

 

(x) as long as at least a majority of the originally issued shares of Series G Preferred remain outstanding, the consent of the Series G Investor Majority shall be required for any action which (by merger, reclassification or otherwise) (i) alters, amends or changes the rights, preferences or privileges of the Series G Preferred differently than the other series of Senior Preferred Stock in a manner that is adverse to the Series G Preferred, (ii) increases the number of authorized or issued shares of Series G Preferred, (iii) alters, amends, removes or waives any rights of the Series G Preferred under Section B(2) of ARTICLE IV (B) (Liquidation Preference), (iv) alters, amends, removes or waives any rights of the Series G Preferred under Section B(3) of ARTICLE IV(B) (Conversion), (v) amends or removes the definition of the Series G Investor Majority set forth herein or (vi) amends this subsection (x); and

 

(y) as long as at least a majority of the originally issued shares of Series F Preferred remain outstanding, the consent of the Series F Investor Majority shall be required for any action which (by merger, reclassification or otherwise) (i) alters, amends or changes the rights, preferences or privileges of the Series F Preferred differently than the other series of Senior Preferred Stock in a manner that is adverse to the Series F Preferred, (ii) increases the number of authorized or issued shares of Series F Preferred, (iii) alters, amends, removes or waives any rights of the Series F Preferred under Section B(2) of ARTICLE IV(B) (Liquidation Preference), (iv) alters, amends, removes or waives any rights of the Series F Preferred under Section B(3) of ARTICLE IV(B) (Conversion), (v) amends the definition of the Series F Investor Majority set forth herein or (vi) amends this subsection (y); and

(z) as long as the originally issued shares of Series D Preferred remain outstanding, the consent of the Series D Investor Majority shall be required for any action which (by merger, reclassification or otherwise) (i) alters, amends or changes the rights, preferences or privileges of the Series D Preferred differently than the other series of Senior Preferred Stock in a manner that is adverse to the Series D Preferred, (ii) increases the number of authorized or issued shares of Series D Preferred, (iii) alters, amends, removes or waives any rights of the Series D Preferred under Section B(2) of ARTICLE IV(B) (Liquidation Preference), (iv) alters, amends, removes or waives any rights of the Series D Preferred under Section B(3) of ARTICLE IV(B) (Conversion), (v) amends the definition of the Series D Investor Majority set forth herein or (vi) amends this subsection (z);

 

provided, that, notwithstanding the foregoing or anything else contained herein and for the removal of doubt: (i) no provision herein grants the holders of the Series G Preferred, Series F Preferred and/or Series D Preferred (or any part thereof) the ability or right to prevent the Corporation from consummating a Qualified IPO, including the adoption of an amended and restated Certificate of Incorporation to be effective no earlier than the closing of such Qualified IPO, that has been approved by a majority of the members of the Corporation’s Board, and (ii) authorizing or issuing by the Corporation of any new class or series of shares (including a class or a series with rights and preferences inferior, equal or superior to the rights of the Series G Preferred, Series F Preferred or Series D Preferred, as applicable) shall not by itself be deemed to alter, change amend or waive the rights, preferences and/or privileges of the Series G Preferred, Series F Preferred or Series D Preferred.

 

In addition, until the consummation of and IPO and in addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of at least two directors designated by the holders of the Senior Preferred Stock, appoint or remove the Corporation’s Chief Executive Officer or determine his employment terms.

 

Any altering or changing of the rights, preferences and/or privileges of the Series G Preferred, Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred, Series E Preferred or Series H Preferred, shall require the consent of the Series G Investor Majority and/or the Series F Investor Majority and/or the Series D Investor Majority and/or the holders of a majority of the Series C Preferred and/or Series B Preferred and/or Series A Preferred and/or Series E Preferred and/or Series H Preferred, as the case may be, voting separately on an as-converted basis, provided, however, that creating, authorizing or issuing by the Corporation of any new class or series of shares (including a class or a series with rights and preferences inferior, equal or superior to the rights of the Series G Preferred, Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred, Series E Preferred and/or Series H Preferred) shall not by itself be deemed as a change in the rights, preferences and/or privileges of the Series G Preferred, Series F Preferred, Series D Preferred, Series C Preferred, Series B Preferred, Series A Preferred, Series E Preferred or Series H Preferred.

 

(c)           Status of Converted Preferred Stock. In the event any shares of Preferred Stock shall be converted pursuant to Section 3, the shares so converted shall be cancelled and shall not thereafter be issuable by the Corporation.

5.            Common Stock.

 

(a)           Dividend Rights. Subject to Section 1 of ARTICLE IV(B), dividends may be paid on the Common Stock as and when declared by the Board, subject to the prior dividend rights of the Senior Preferred Stock. Such dividends shall be distributed among the holders of Common Stock pro rata in proportion of the number of shares of Common Stock held by each (assuming conversion of all such Preferred Stock).

 

(b)          Liquidation Rights. Upon the liquidation, dissolution or winding up of the Corporation, the assets of the Corporation shall be distributed as provided in Section 2 of ARTICLE IV (B) hereof.

 

(c)          Redemption. The Common Stock is not redeemable.

 

(d)          Voting Rights. The holder of each share of Common Stock shall have the right to one (1) vote, and shall be entitled to notice of any stockholder meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote upon such matters and in such manner as is otherwise provided herein or as may be provided by law. Notwithstanding the foregoing, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares of Common Stock then outstanding) by an affirmative vote of the holders of a majority of the stock of the Corporation (voting as a single class on an as -converted basis), irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware.

 

6.            Preemptive Rights. The holders of Senior Preferred Stock shall have such preemptive rights as set forth in that certain Amended and Restated Investors’ Rights Agreement dated February 9, 2015, among the Corporation and certain of its stockholders, as amended from time to time.

 

ARTICLE V

 

The Corporation is to have perpetual existence.

 

ARTICLE VI

 

Except as otherwise provided in this Amended and Restated Certificate of Incorporation, the Board may make, repeal, alter, or rescind any or all of the Bylaws of the Corporation, provided, however, that no such repeal, alteration or rescission to the Bylaws of the Corporation shall be made if its effect is to delegate any of the powers vested within the Board to any committee or sub-committee of the Board, unless such repeal, alteration or rescission to the Bylaws of the Corporation, as the case may be, is consented to in writing by at least two of the directors designated by the holders of Senior Preferred Stock.

 

ARTICLE VII

 

The Board shall consist of up to nine (9) directors. The directors shall be appointed as follows: (i) the holders of the Junior Stock, voting together as a single class, shall be entitled to elect two (2) directors to the Board, (ii) the holders of Senior Preferred Stock, voting together as a single class, shall be entitled to elect six (6) directors to the Board and (iii) Gruner + Jahr GmbH (“G+J”), so long as G+J continues to hold capital stock of the Company that represents at least 5% of the issued and outstanding shares of stock of the Company on a fully diluted basis, shall be entitled to elect one (1) director to the Board. Each committee of the Board shall include at least two of the directors designated by the holders of Senior Preferred Stock.

In the event of any vacancy in the office of a director elected by an entity or by the holders of a particular class or series of stock, the vacancy may be filled only by such entity or the vote of the holders of such class or series of stock (unless such vacancy resulted from circumstances requiring a resignation pursuant to Section 7 of the Stockholders’ Agreement, in which case the vacancy may be filled by a vote of the holders of Senior Preferred Stock, voting together as a single class). Any director who shall have been elected by an entity or by the holders of a particular class or series of stock may be removed without cause by, and only by, such entity or the applicable vote of the holders of shares of such class or series of stock (unless such removal resulted from circumstances requiring a resignation pursuant to Section 7 of the Stockholders’ Agreement which resignation has not occurred, in which case such removal may effected by a vote of the holders of Senior Preferred Stock, voting together as a single class).

 

At any meeting (or in a written consent in lieu thereof) held for the purpose of electing directors, the presence in person or by proxy (or the written consent) of the holders of at least a majority in interest of the then outstanding shares of the respective class(es) of the Corporation’s stock designated for appointment of a director as set forth above, shall constitute a quorum for the election of directors to be elected by such class(es).

 

A vacancy in any directorship elected by the holders of the Junior Stock shall be filled only by vote or written consent of the holders of the Junior Stock, consenting or voting, as the case may be, separately. The directors to be elected by the holders of the Junior Stock, voting separately as one class, shall serve for terms extending from the date of their election and qualification and until their respective successors have been elected and qualified.

 

A vacancy in any directorship elected by the holders of a specific class of Senior Preferred Stock shall be filled only by vote or written consent of the holders of such specific class of Senior Preferred Stock, consenting or voting, as the case may be, separately as one class. The directors to be elected by the holders of the Senior Preferred Stock, voting separately as one class, shall serve for terms extending from the date of their election and qualification until the time of the next succeeding annual meeting of stockholders and until their successors have been elected and qualified.

 

ARTICLE VIII

 

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws of the Corporation.

 

ARTICLE IX

 

To the fullest extent permitted by the General Corporation Law of Delaware, as the same may be amended from time to time, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law of Delaware is hereafter amended to authorize, with or without the approval of a corporation’s stockholders, further reductions in the liability of the corporation’s directors for breach of fiduciary duty, then a director of the Corporation shall not be liable for any such breach to the fullest extent permitted by the General Corporation Law of Delaware as so amended.

Any repeal or modification of the foregoing provisions of this ARTICLE IX or by operation of law, shall not adversely affect any right or protection of a director of the Corporation with respect to any acts or omissions of such director occurring prior to such repeal or modification.

 

ARTICLE X

 

To the fullest extent permitted by applicable law, the Corporation shall provide indemnification of (and advancement of expenses to) directors, officers, employees and other agents of the Corporation (and any other persons to which Delaware law permits the Corporation to provide indemnification), through Bylaw provisions, agreements with any such director, officer, employee or other agent or other person, vote of stockholders or disinterested directors, or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the Delaware General Corporation Law, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to a corporation, its stockholders and others.

 

Any repeal or modification of any of the foregoing provisions of this ARTICLE X, by amendment of this ARTICLE X or by operation of law, shall not adversely affect any right or protection of a director, officer, employee or other agent or other person existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director, officer or agent occurring prior to such repeal or modification.

 

ARTICLE XI

 

Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.

ARTICLE XII

 

The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation.

IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer of the Corporation, hereby certifies that the facts hereinabove stated are truly set forth, and accordingly executes this Amended and Restated Certificate of Incorporation this 1st day of April, 2019.

 

OUTBRAIN INC.

 

/s/ Yaron Galai

 

By: Yaron Galai, Chief Executive Officer

 

 

Certificate Of Completion
Envelope Id: D601DA716BCC41AE86B13E1E853E9B92		Status: Completed
Subject: Outbrain DocuSIgn
Source Envelope:
Document Pages: 81	Signatures: 4	Envelope Originator:
Certificate Pages: 5	Initials: 0	Stephen Queenan
AutoNav: Enabled		3003 Tasman Drive
EnvelopeId Stamping: Enabled		Santa Clara, CA 95054
Time Zone: (UTC-08:00) Pacific Time (US & Canada)		Squeenan@mofo.com
		IP Address: 204.130.5.8

 

Record Tracking
Status: Original  3/27/2020 1:30:53 PM	Holder: Stephen Queenan  Squeenan@mofo.com	Location: DocuSign
Signer Events	Signature	Timestamp
Barry Schofield bschofield@outbrain.com VP, Corporate Finance & Treasury	/s/ Barry Schofield	Sent: 3/27/2020 1:46:49 PM Viewed: 3/27/2020 2:28:04 PM Signed: 3/27/2020 2:28:49 PM
Outbrain Inc Security Level: Email, Account Authentication (None), Access Code	Signature Adoption: Pre-selected Style Using IP Address: 174.192.16.208
Electronic Record and Signature Disclosure: Accepted: 3/27/2020 2:28:04 PM ID: b32438f4-d9a6-4783-bd55-47efac6ce6cf		Sent: 3/27/2020 2:28:55 PM Viewed: 3/27/2020 2:29:31 PM Signed: 3/27/2020 2:30:16 PM
Michael Bozicas mbozicas@svb.com Security Level: Email, Account Authentication (None)	/s/ Michael Bozicas
	Signature Adoption: Pre-selected Style Using IP Address: 104.129.198.124
Electronic Record and Signature Disclosure: Accepted: 3/27/2020 2:29:31 PM ID: 88cb2301-364e-46dc-9910-0768f794ff7d
In Person Signer Events	Signature	Timestamp
Editor Delivery Events	Status	Timestamp
Agent Delivery Events	Status	Timestamp
Intermediary Delivery Events	Status	Timestamp
Certified Delivery Events	Status	Timestamp
Carbon Copy Events	Status	Timestamp
Witness Events	Signature	Timestamp
Notary Events	Signature	Timestamp
Envelope Summary Events	Status	Timestamps
Envelope Sent	Hashed/Encrypted	3/27/2020 2:28:55 PM

 

Envelope Summary Events	Status	Timestamps
Certified Delivered	Security Checked	3/27/2020 2:29:32 PM
Signing Complete	Security Checked	3/27/2020 2:30:16 PM
Completed	Security Checked	3/27/2020 2:30:16 PM
Payment Events	Status	Timestamps
Electronic Record and Signature Disclosure

Electronic Record and Signature Disclosure created on: 2/6/2015 10:07:01 AM

Parties agreed to: Barry Schofield, Michael Bozicas

 

ELECTRONIC RECORD AND SIGNATURE DISCLOSURE 

From time to time, Global Loans (we, us or Company) may be required by law to provide to you certain written notices or disclosures. Described below are the terms and conditions for providing to you such notices and disclosures electronically through your DocuSign, Inc. (DocuSign) Express user account. Please read the information below carefully and thoroughly, and if you can access this information electronically to your satisfaction and agree to these terms and conditions, please confirm your agreement by clicking the ‘I agree’ button at the bottom of this document. 

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If you decide to receive notices and disclosures from us electronically, you may at any time change your mind and tell us that thereafter you want to receive required notices and disclosures only in paper format. How you must inform us of your decision to receive future notices and disclosure in paper format and withdraw your consent to receive notices and disclosures electronically is described below. 

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All notices and disclosures will be sent to you electronically 

Unless you tell us otherwise in accordance with the procedures described herein, we will provide electronically to you through your DocuSign user account all required notices, disclosures, authorizations, acknowledgements, and other documents that are required to be provided or made available to you during the course of our relationship with you. To reduce the chance of you inadvertently not receiving any notice or disclosure, we prefer to provide all of the required notices and disclosures to you by the same method and to the same address that you have given us. Thus, you can receive all the disclosures and notices electronically or in paper format through the paper mail delivery system. If you do not agree with this process, please let us know as described below. Please also see the paragraph immediately above that describes the consequences of your electing not to receive delivery of the notices and disclosures electronically from us.

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Exhibit 10.6

 

FIFTH AMENDMENT

TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Fifth Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into this 2^nd day of November, 2018, by and between SILICON VALLEY BANK (“Bank”) and OUTBRAIN INC., a Delaware corporation (“Borrower”) whose address is 39 West 13^th Street, 3^rd Floor, New York, New York 10011.

 

Recitals

 

A.           Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of September 15, 2014, as amended by that certain First Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of November 20, 2014, as further amended by that certain Second Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of January 27, 2016, as further amended by that certain Third Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of August 25, 2016, and as further amended by that certain Fourth Amendment to Amended and Restated Loan and Security Agreement dated as of October 6, 2016 (as amended, and as the same may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”).

 

B.           Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

C.           Borrower has requested that Bank amend the Loan Agreement to make certain revisions to the Loan Agreement as more fully set forth herein.

 

D.           Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

 

Agreement

 

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.           Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

 

2.           Amendments to Loan Agreement.

 

2.1         Section 2.3 (Overadvances). Section 2.3 is amended by deleting the reference to “the Default Rate” therein and inserting in lieu thereof “a per annum rate equal to the rate that is otherwise applicable to Advances plus five percent (5.00%)”.

2.2         Section 2.5 (Fees). The Loan Agreement shall be amended by inserting the following new subsection (e) in Section 2.5 immediately following subsection (d):

 

“(e) 2018 Commitment Fee. A fully-earned non-refundable commitment fee (the “2018 Commitment Fee”) of One Hundred Two Thousand Five Hundred Dollars ($102,500.00), due and payable as follows:

 

(i)       Thirty Four Thousand One Hundred Sixty Six and 67/100 Dollars ($34,166.67) on the Fifth Amendment Effective Date;

 

(ii)       Thirty Four Thousand One Hundred Sixty Six and 67/100 Dollars ($34,166.67) on the earliest to occur of (A) the first anniversary of the Fifth Amendment Effective Date, (B) the occurrence of an Event of Default, or (C) the termination of this Agreement; and

 

(ii)       Thirty Four Thousand One Hundred Sixty Six and 66/100 Dollars ($34,166.66) on the earliest to occur of (A) the second anniversary of the Fifth Amendment Effective Date, (B) the occurrence of an Event of Default, or (C) the termination of this Agreement.”

 

2.3       Section 3.2 (Conditions Precedent to all Credit Extensions). Subsections (a) and (b) of Section 3.2 are deleted in their entirety and replaced with the following:

 

“(a)        timely receipt of the Credit Extension request and any materials and documents required by Section 3.4;

 

(b)         the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the proposed Credit Extension and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and”

2.4         Section 3.4 (Procedures for Borrowing). Section 3.4 is deleted in its entirety and replaced with the following:

 

“3.4       Procedures for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, to obtain an Advance, Borrower (via an individual duly authorized by an Administrator) shall notify Bank (which notice shall be irrevocable) by electronic mail by 12:00 p.m. Eastern time on the Funding Date of the Advance. Such notice shall be made by Borrower through Bank’s online banking program, provided, however, if Borrower is not utilizing Bank’s online banking program, then such notice shall be in a written format acceptable to Bank that is executed by an Authorized Signer. Bank shall have received satisfactory evidence that the Board has approved that such Authorized Signer may provide such notices and request Advances. In connection with any such notification, Borrower must promptly deliver to Bank by electronic mail or through Bank’s online banking program such reports and information, including without limitation, sales journals, cash receipts journals, accounts receivable aging reports, as Bank may request in its reasonable discretion. Bank shall credit proceeds of an Advance to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from an Authorized Signer or without instructions if the Advances are necessary to meet Obligations which have become due.”

 

2.5         Section 6.2(a) (Financial Statements, Reports, Certificates). Subsection (a) of Section 6.2 is amended in its entirety and replaced with the following:

 

“(a) a Borrowing Base Report (and any schedules related thereto including any other information requested by Bank with respect to Borrower’s Accounts) (i) with each request for an Advance and (ii) within seven (7) Business Days after the end of each month;” Days after the end of each month;”

 

2.6         Section 6.2(m) (Financial Statements, Reports, Certificates). The following new subsection (m) is inserted in Section 6.2 immediately following subsection (l):

 

“(m) prompt written notice of any changes to the beneficial ownership information set out in Section 14 of the Perfection Certificate. Borrower understands and acknowledges that Bank relies on such true, accurate and up-to- date beneficial ownership information to meet Bank’s regulatory obligations to obtain, verify and record information about the beneficial owners of its legal entity customers.”

 

2.7         Section 6.3 (Accounts Receivable). Subsection (c) of Section 6.3 is deleted in its entirety and replaced with the following:

 

“(c)       Collection of Accounts. Borrower shall direct Account Debtors to deliver or transmit all proceeds of Accounts into a “blocked account” as specified by Bank (either such account, the “Cash Collateral Account”). Whether or not an Event of Default has occurred and is continuing, Borrower shall promptly deliver all payments on and proceeds of Accounts to the Cash Collateral Account. Subject to Bank’s right to maintain a reserve pursuant to Section 6.3(g), all amounts received in the Cash Collateral Account shall be (i) when a Streamline Period is not in effect, applied to immediately reduce the Obligations under the Revolving Line (unless Bank, in its sole discretion, at times when an Event of Default exists, elects not to so apply such amounts), or (ii) when a Streamline Period is in effect, transferred on a daily basis to Borrower’s operating account with Bank. Borrower hereby authorizes Bank to transfer to the Cash Collateral Account any amounts that Bank reasonably determines are proceeds of the Accounts (provided that Bank is under no obligation to do so and this allowance shall in no event relieve Borrower of its obligations hereunder).”

2.8         Section 6.3 (Accounts Receivable). Subsection (e) of Section 6.3 is deleted in its entirety and replaced with the following:

 

“(e)        Verifications; Confirmations; Credit Quality; Notifications. Bank may, from time to time upon prior written notice to Borrower, (i) verify and confirm directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or such other name as Bank may choose, and notify any Account Debtor of Bank’s security interest in such Account and/or (ii) in Bank’s good faith business judgment, conduct a credit check of any Account Debtor to approve any such Account Debtor’s credit.”

 

2.9         Section 6.3 (Accounts Receivable). Section 6.3 is hereby amended by inserting the following new subsection (g) thereto:

 

“(g)        Reserves. Notwithstanding any terms in this Agreement to the contrary, at times when an Event of Default exists, Bank may in its commercially reasonable judgment hold any proceeds of the Accounts and any amounts in the Cash Collateral Account that are not applied to the Obligations pursuant to Section 6.3(e) above (including amounts otherwise required to be transferred to Borrower’s operating account with Bank when a Streamline Period is in effect) as a reserve to be applied to any Obligations regardless of whether such Obligations are then due and payable.”

 

2.10       Section 6.6 (Access to Collateral; Books and Records). Section 6.6 is amended in its entirety and replaced with the following:

 

“6.6 Access to Collateral; Books and Records. At reasonable times, on five (5) Business Days’ notice (provided no notice is required if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy Borrower’s Books. The foregoing inspections and audits shall be conducted at Borrower’s expense and no more often than once every twelve (12) months (or more frequently as Bank in its reasonable discretion determines that conditions warrant) unless an Event of Default has occurred and is continuing in which case such inspections and audits shall occur as often as Bank shall determine is necessary. The charge therefor shall be $1,000 per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than five (5) Business Days in advance, and Borrower cancels or seeks to or reschedules the audit with less than five (5) Business Days written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank a fee of $2,000 plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling.”

2.11       Section 6.9 (Financial Covenants). Section 6.9 is amended in its entirety and replaced with the following:

 

“6.9      Financial Covenants.

 

(a)          Liquidity Ratio. Maintain at all times, to be certified to Bank as of the last day of each month, a Liquidity Ratio of greater than 1.15 to 1.00. In connection therewith, Borrower shall also comply with the requirement set forth in the definition of Quick Assets.

 

(b)          EBITDA. Achieve, measured as of the last day of each period set forth below on a trailing six (6) month basis, EBITDA of at least (loss not worse than) the following amounts:

 

Period		Minimum EBITDA (maximum loss)
September 30, 2018		($1,000,000)
December 31, 2018		$1,500,000
March 31, 2019		$4,000,000
June 30, 2019		$3,500,000
September 30, 2019		$2,500,000
December 31, 2019		$7,500,000
March 31, 2020 and thereafter		To be mutually agreed upon by Bank and Borrower prior to February 28, 2020 which amount will be at least $15,000,000 for each fiscal year and will be based upon projections prepared by Borrower”

 

2.1         Section 6.14 (Online Banking). Section 6.14 is hereby inserted immediately following Section 6.13:

 

“6.14 Online Banking.

 

(a)          Utilize Bank’s online banking platform for all matters requested by Bank which shall include, without limitation, uploading information pertaining to Accounts and Account Debtors, requesting approval for exceptions, requesting Credit Extensions, and uploading financial statements and other reports required to be delivered by this Agreement (including, without limitation, those described in Section 6.2 of this Agreement).

(b)          Comply with the terms of Bank’s Online Banking Agreement as in effect from time to time and ensure that all persons utilizing Bank’s online banking platform are duly authorized to do so by an Administrator. Bank shall be entitled to assume the authenticity, accuracy and completeness on any information, instruction or request for a Credit Extension submitted via Bank’s online banking platform and to further assume that any submissions or requests made via Bank’s online banking platform have been duly authorized by an Administrator.”

 

2.2         Section 7.3 (Mergers or Acquisitions). Section 7.3 is amended in its entirety and replaced with the following:

 

“7.3       Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary), other than Permitted Acquisitions. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.”

 

2.3         Section 8.2(a) (Covenant Default). Subsection (a) of Section 8.2 is amended in its entirety and replaced with the following:

 

“(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.5, 6.7, 6.8, 6.9, 6.10(b), 6.12, 6.13 or violates any covenant in Section 7; or”

 

2.4         Section 9.2 (Power of Attorney). Section 9.2 is deleted in its entirety and replaced with the following:

 

“9.2     Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable following the occurrence of an Event of Default, to: (a) endorse Borrower’s name on any checks, payment instruments, or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) demand, collect, sue, and give releases to any Account Debtor for monies due, settle and adjust disputes and claims about the Accounts directly with Account Debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Bank’s or Borrower’s name, as Bank chooses); (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and the Loan Documents have been terminated. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations (other than contingent obligations for which no claim has been made) have been fully repaid and performed and the Loan Documents have been terminated.”

2.5         Section 13 (Definitions). The preamble in the definition of Eligible Accounts set forth in Section 13.1 is deleted in its entirety and replaced with the following:

 

“Eligible Accounts” means Accounts owing to Borrower which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3, that have been, at the option of Bank, confirmed in accordance with Section 6.3(e) of this Agreement, and are due and owing from Account Debtors deemed creditworthy by Bank in its good faith business judgment. Bank reserves the right at any time after the Effective Date, upon advance written notice to Borrower, to adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts shall not include:”

 

2.6         Section 13.1 (Definitions). In the definition of “Permitted Investments” the following new subsection (d) is inserted in Section 13.1 immediately following subsection (c) thereof:

 

“(d) Investments constituting Permitted Acquisitions.”

 

2.7         Section 13.1 (Definitions). The Loan Agreement shall be amended by inserting the following new definitions in Section 13.1, each in the appropriate alphabetical order:

 

“2018 Commitment Fee” is defined in Section 2.5(e).

 

“Acquisition” means the purchase or other acquisition (whether by merger, consolidation or otherwise) by Borrower of all or substantially all of the assets, stock or other equity interests of a Person.

 

“Administrator” is an individual that is named (a) as an “Administrator” in the “SVB Online Services” form completed by Borrower with the authority to determine who will be authorized to use SVB Online Services (as defined in Bank’s Online Banking Agreement as in effect from time to time) on behalf of Borrower; and (b) as an Authorized Signer of Borrower in an approval by the Board.

 

“Board” is Borrower’s board of directors.

 

“Borrowing Base Report” is that certain report of the value of certain Collateral in the form specified by Bank to Borrower from time to time.

“EBITDA” means, for any measurement period, the sum of (i) Net Income, plus (ii) Interest Expense, plus (iii) to the extent deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (iv) to the extent deducted in the calculation of Net Income, federal, state and local income taxes, whether paid, payable or accrued, plus (v) all non-cash expenses reflected in Net Income in an amount not to exceed $2,500,000 in any fiscal year, plus (vi) non-cash stock compensation expense, plus (vii) non- recurring add-backs in an amount not to exceed $2,500,000 in any fiscal year, plus (viii) other add-backs to EBITDA approved by Bank on a case-by-case basis in its sole discretion (including non-recurring deal related costs, such approval not to be unreasonably withheld).

 

“Fifth Amendment Effective Date” is November 2, 2018.

 

“Interest Expense” means, for any measurement period, interest expense (whether cash or non-cash) determined in accordance with GAAP for the relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower, including, without limitation or duplication, all commissions, discounts, amortization of debt discounts, or related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types).

 

“Liquidity Ratio” is, on any date of determination, the ratio of (i) the sum of (a) Quick Assets minus (b) Borrower’s accounts payable minus (c) traffic acquisition cost accruals, to (ii) the aggregate amount of all Obligations.

 

“Net Income” means, for any measurement period, the net profit (or loss), after provision for taxes, of Borrower for such period taken as a single accounting period.

 

“Permitted Acquisition” or “Permitted Acquisitions” is any Acquisition by Borrower, provided, that each of the following shall be applicable to each such Acquisition:

 

(a)          no Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition;

 

(b)          the assets acquired in such Acquisition are in the same or similar line of business as Borrower is in as of the Effective Date or reasonably related thereto;

 

(c)          the target in such Acquisition, if such Acquisition is a stock acquisition, shall be an entity organized under the laws of any State in the United States and shall have a principal place in the United States;

(d)          if the Acquisition includes a merger of Borrower, Borrower shall remain a surviving entity after giving effect to such Acquisition;

 

(e)           Borrower shall provide Bank with written notice of the proposed Acquisition at least ten (10) Business Days prior to the anticipated closing date of the proposed Acquisition, and not less than five (5) Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the acquisition agreement and all other material documents relative to the proposed Acquisition (or if such acquisition agreement and other material documents are not in final form, drafts of such acquisition agreement and other material documents; provided, that Borrower shall deliver final forms of such acquisition agreement and other material documents promptly upon completion);

 

(f)           the total consideration, including cash and the value of any noncash consideration, does not exceed Five Million Dollars ($5,000,000) in the aggregate during any fiscal year for all Acquisitions;

 

(g)          after giving effect to the consummation of the Acquisition, Borrower shall be in pro forma compliance with the financial covenants set forth in Section 6.9 for at least twelve (12) months after the date of such Acquisition;

 

(h)          the Acquisition shall not constitute an Unfriendly Acquisition; and

 

(i)           the entity or assets acquired in such Acquisition shall not be subject to any Lien other than (x) the first-priority Liens granted in favor of Bank, if applicable and (y) Permitted Liens.

 

“Specified Affiliate” is any Person (a) more than ten percent (10.0%) of whose aggregate issued and outstanding equity or ownership securities or interests, voting, non-voting or both, are owned or held directly or indirectly, beneficially or of record, by Borrower, and/or (b) whose equity or ownership securities or interests representing more than ten percent (10.0%) of such Person’s total outstanding combined voting power are owned or held directly or indirectly, beneficially or of record, by Borrower.

 

“Unfriendly Acquisition” is any Acquisition that has not, at the time of the first public announcement of an offer relating thereto, been approved by the board of directors (or other legally governing body) of the Person to be acquired.

 

2.8         Section 13.1 (Definitions). The following terms and their definitions set forth in Section 13.1 are amended in their entirety and replaced with the following:

 

“Account” is, as to any Person, any “account” of such Person as “account” is defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to such Person.

“Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members. For purposes of the definition of Eligible Accounts, Affiliate shall include a Specified Affiliate.

 

“Borrowing Base” is eighty percent (80%) of Eligible Accounts, as determined by Bank from Borrower’s most recent Borrowing Base Report (and as may subsequently be updated by Bank based upon information received by Bank including, without limitation, Accounts that are paid and/or billed following the date of the Borrowing Base Report); provided, however, that Bank has the right, after consultation with Borrower, to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the Collateral or its value.

 

“Eligible Foreign Accounts” are Accounts which are billed from and/or payable to Borrower in the United States, but which are owing from an Account Debtor which has its principal place of business in Canada, the United Kingdom, Japan, Italy, France, Germany, Australia, Israel or Singapore, and are otherwise Eligible Accounts; provided, in no event shall the aggregate amount of such Eligible Foreign Accounts included in the Borrowing Base constitute more than thirty-five percent (35%) of all Eligible Accounts included in the Borrowing Base.

 

“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, the 2016 Commitment Fee, the 2018 Commitment Fee, Bank Expenses, and other amounts Borrower owes Bank now or later, under this Agreement or the other Loan Documents, including, without limitation, interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.

 

“Quick Assets” is, on any date of determination, the sum of Borrower’s (i) unrestricted and unencumbered cash (of which at least Twelve Million Five Hundred Thousand Dollars ($12,500,000) must be in Deposit Accounts in the name of Borrower maintained at Bank), plus (ii) net billed accounts receivable determined according to GAAP.

 

“Revolving Line Maturity Date” is November 2, 2021.

 

“Streamline Period” is, on and after the Fifth Amendment Effective Date, provided no Event of Default has occurred and is continuing, the period (a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has maintained either (i) a Liquidity Ratio of greater than 1.75 to 1.00, for each consecutive day in the immediately preceding calendar month, or (ii) an Uncapped Availability Ratio greater than 1.50 to 1.00, for each consecutive day in the immediately preceding calendar month, in each case as determined by Bank in its reasonable discretion (the “Streamline Threshold”); and (b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, and (ii) the first day thereafter in which Borrower fails to maintain the Streamline Threshold, as determined by Bank in its reasonable discretion. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Threshold (i) with respect to the Liquidity Ratio, as of the last day of the immediately preceding calendar month or (ii) for the Uncapped Availability Ratio, each consecutive day for one (1) calendar month, as determined by Bank in its reasonable discretion, prior to entering into a subsequent Streamline Period. Borrower shall give Bank prior written notice of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period shall commence on the first day of the monthly period following the date the Bank determines, in its reasonable discretion, that the Streamline Threshold has been achieved.

 

2.9         Section 13.1 (Definitions). The following terms and their definitions set forth in Section 13.1 are deleted in their entirety:

 

“Adjusted Quick Ratio” is the ratio of (a) Quick Assets to (b) Current Liabilities minus the current portion of Deferred Revenue.

 

“Current Liabilities” are all obligations and liabilities of Borrower to Bank, plus, without duplication, the aggregate amount of Borrower’s Total Liabilities that mature within one (1) year but excluding (i) intercompany payables, (ii) statutory severance required in Israel and (iii) the Obligations under the Mezzanine Loan Agreement.

 

“Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness.

 

“Transaction Report” is that certain report of transactions and schedule of collections on Bank’s standard form.

 

2.10       Exhibit B (Compliance Certificate). The Compliance Certificate appearing as Exhibit B to the Loan Agreement is amended in its entirety and replaced with the Compliance Certificate in the form of Exhibit B attached hereto.

 

3.           Limitation of Amendments.

 

3.1          The amendments set forth in Section 2 above are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

3.2          This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

4.            Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

4.1          Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

4.2          Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

 

4.3          The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect, except that the Certificate of Incorporation was amended and restated pursuant to the Amended and Restated Certificate of Incorporation dated February 11, 2015;

 

4.4          The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

 

4.5          The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6          The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and

 

4.7          This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

5.            Ratification of Intellectual Property Security Agreement. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Intellectual Property Security Agreement dated as of November 20, 2014 between Borrower and Bank, as supplemented by that certain First Supplement to Intellectual Property Security Agreement between Borrower and Bank dated as of January 27, 2016, and as further supplemented by that certain Second Supplement to Intellectual Property Security Agreement between Borrower and Bank dated as of August 9, 2016, and acknowledges, confirms and agrees that said Intellectual Property Security Agreement (a) contains an accurate and complete listing of all Intellectual Property Collateral, as defined in said Intellectual Property Security Agreement, and (b) shall remain in full force and effect.

 

6.            Updated Perfection Certificate. Borrower has delivered an updated Perfection Certificate in connection with this Amendment dated as of the date hereof (the “Updated Perfection Certificate”), which Updated Perfection Certificate shall supersede in all respects that certain Perfection Certificate dated as of October 6, 2016. Borrower agrees that all references in the Loan Agreement to “Perfection Certificate” shall hereinafter be deemed to be a reference to the Updated Perfection Certificate.

 

7.            Integration. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

 

8.            Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

9.            Effectiveness. As a condition precedent to the effectiveness of this Amendment and the Bank’s obligation to make further Advances under the Revolving Line, the Bank shall have received the following documents prior to or concurrently with this Amendment, each in form and substance acceptable to Bank:

 

9.1         this Amendment duly executed by each party hereto;

 

9.2         copies, certified by a duly authorized officer of Borrower, to be true and complete as of the date hereof, of each of (but only to the extent modified or amended since last delivered to Bank) (i) the governing documents of Borrower as in effect on the date hereof, (ii) the resolutions of Borrower authorizing the execution and delivery of this Amendment, the other documents executed in connection herewith and Borrower’s performance of all of the transactions contemplated hereby, and (iii) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be so authorized on behalf of Borrower;

 

9.3         a good standing certificate of Borrower, certified by the Secretary of State of the state of incorporation of Borrower, and each jurisdiction in which Borrower is qualified to do business, dated as of a date no earlier than thirty (30) days prior to the date hereof;

9.4          certified copies, dated as of a recent date, of financing statement and other lien searches of Borrower, as Bank may request and which shall be obtained by Bank, accompanied by written evidence (including any UCC termination statements) that the Liens revealed in any such searched either (i) will be terminated prior to or in connection with the Agreement, or (ii) in the sole discretion of Bank, will constitute Permitted Liens;

 

9.5          evidence satisfactory to Bank that the insurance policies require for Borrower are in fully force and effect, together with appropriate evidence showing lender loss payable and additional insured clauses or endorsements in favor of Bank;

 

9.6          the Updated Perfection Certificate;

 

9.7          Borrower’s payment of (i) the portion of the 2018 Commitment Fee due on the Fifth Amendment Effective Date, and (ii) Bank’s legal fees and expenses incurred in connection with this Amendment; and

 

9.8          such additional documents as Bank may reasonably request to effectuate the terms of this Amendment.

 

[Signature page follows.]

 

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

 

BANK			BORROWER
SILICON VALLEY BANK			OUTBRAIN INC.
By:	/s/ Dylan Wong		By:	/s/ Barry Schofield
Name:	Dylan Wong		Name:	Barry Schofield
Title:	Vice President		Title:	VP, Corporate Finance & Treasurer

 

[Signature page to Fifth Amendment
to Amended and Restated Loan and Security Agreement ]

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO:              SILICON VALLEY BANK	Date: ______________________
FROM:       OUTBRAIN INC.

 

The undersigned, in his or her capacity as authorized officer of Outbrain Inc. (“Borrower”) and not in her or her individual capacity certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”): (1) Borrower is in complete compliance for the period ending ________________ with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants	Required	Complies
Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes  No
Annual financial statement (CPA Audited) + CC	FYE within 180 days	Yes  No
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes  No
A/R & A/P Agings	Monthly within 30 days	Yes  No
Borrowing Base Reports	Monthly within 7 Business Days and each request for an Advance	Yes  No
Projections	FYE within 30 days	Yes  No
409A Report	As completed, but at least annually	Yes  No
Capitalization Table	As updated, but at least annually	Yes  No
The following Intellectual Property was registered (or a registration application submitted) after the Effective Date (if no registrations, state “None).

Financial Covenants	Required	Actual	Complies
Maintain as indicated:
Liquidity Ratio	1.15:1.00	:1.00	Yes  No
EBITDA	*	$	Yes  No

* See Section 6.9(b)

 

Streamline Period		Applies
Liquidity Ratio > 1.75:1.00 or Uncapped Availability Ratio > 1.50:1.00	Prime + 0.25%	Yes  No
Liquidity Ratio ≤ 1.75:1.00 and Uncapped Availability Ratio ≤ 1.50:1.00	Prime + 0.75%	Yes  No

 

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

 

 

 

 

Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

I.	Liquidity Ratio (Section 6.9(a))

 

Required:

Maintain at all times, to be certified to Bank as of the last day of each month, a Liquidity Ratio of greater than 1.15 to 1.00. In connection therewith, Borrower shall also comply with the requirement set forth in the definition of Quick Assets.

 

Actual:

 

A.	Aggregate value of Borrower’s unrestricted and unencumbered cash		$____
B.	Aggregate value of Borrower’s net billed accounts receivable, determined according to GAAP		$____
C.	Quick Assets (the sum of lines A and B)		$____
D.	Aggregate value of accounts payable of Borrower		$____
E.	Aggregate value of traffic acquisition cost accruals		$____
F.	Line C minus line D minus line E		$____
G.	Aggregate value of all Obligations		$____
H.	Liquidity Ratio (line E divided by line G)		_____

 

Is line H greater than 1.15:1:00?

 

_______ No, not in compliance		_________ Yes, in compliance

Is the unrestricted and unencumbered cash of Borrower in Deposit Accounts at Bank equal to or greater than $12,500,000?

 

_______ No, not in compliance		_________ Yes, in compliance

II.       EBITDA (Section 6.9(b))

 

Required:

Achieve, measured as of the last day of each period set forth below on a trailing six (6) month basis, EBITDA of at least (loss not worse than) the following amounts:

 

Period		Minimum EBITDA (maximum loss)
September 30, 2018		($1,000,000)
December 31, 2018		$1,500,000
March 31, 2019		$4,000,000
June 30, 2019		$3,500,000
September 30, 2019		$2,500,000
December 31, 2019		$7,500,000
March 31, 2020 and thereafter		To be mutually agreed upon by Bank and Borrower prior to February 28, 2020 which amount will be at least $15,000,000 for each fiscal year and will be based upon projections prepared by Borrower

Actual:

 

A.	Net Income of Borrower		$_____
B.	To the extent included in the determination of  Net Income.
	1.         Interest Expense		$_____
	2.         Depreciation expense		$_____
	3.         Amortization expense		$_____
	4.         To the extent deducted in the calculation of Net Income, federal, state and local income taxes, whether paid, payable or accrued, plus (v) all non-cash expenses reflected in Net Income, including non-cash stock compensation expense		$_____
	5.         Non-cash expenses reflected in Net Income in an amount not to exceed $2,500,000 in any fiscal year		$_____
	6.         Non-cash stock compensation expense		$_____
	7.         Non-recurring add-backs in an amount not to exceed $2,500,000 in any fiscal year		$_____
	8.         Other add-backs to EBITDA approved by Bank on a case-by-case basis in its sole discretion (including non-recurring deal related costs, such approval not to be unreasonably withheld)		$_____
	9.         The sum of lines 1 through 8		$_____

C.       EBITDA (line A plus line B.9)

_____

 

Is line C at least (loss not worse than) $______________?

 

_______No, not in compliance

______Yes, in compliance

III.

Streamline Period (Liquidity Ratio or Uncapped Availability Ratio)

 

Was the Liquidity Ratio set forth in line H above greater than 1.75:1:00 for each consecutive day in the immediately preceding calendar month?

 

_______ No, not in Streamline Period

______ Yes, in Streamline Period

 

Uncapped Availability Ratio:

 

A.	Borrowing Base		$_____
B.	Aggregate value of all Obligations of Borrower to Bank including the amount of all outstanding Letters of Credit, but excluding all Obligations under the Mezzanine Loan Agreement		$_____
C.	Uncapped Availability Ratio (line A divided by line B)		_____

 

Was the Uncapped Availability Ratio set forth in line C above greater than 1.50:1:00 for each consecutive day in the immediately preceding calendar month?

 

_______ No, not in Streamline Period

______ Yes, in Streamline Period

 

Exhibit 10.7

 

FOURTH AMENDMENT
TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Fourth Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into this 6^th day of October, 2016, by and between SILICON VALLEY BANK (“Bank”) and OUTBRAIN INC., a Delaware corporation (“Borrower”) whose address is 39 West 13^th Street, 3^rd Floor, New York, New York 10011.

 

Recitals

 

A.             Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of September 15, 2014, as amended by that certain First Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of November 20, 2014, as further amended by that certain Second Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of January 27, 2016, and as further amended by that certain Third Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of August 25, 2016 (as the same may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”).

 

B.             Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

C.             Borrower has requested that Bank amend the Loan Agreement to (i) extend the maturity date and (ii) make certain other revisions to the Loan Agreement as more fully set forth herein.

 

D.             Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

 

Agreement

 

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.             Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

2.             Amendments to Loan Agreement.

 

2.1         Section 2.5 (Fees). The Loan Agreement shall be amended by inserting the following new clause (d) to appear at the end of Section 2.5 thereof:

 

(d)           2016 Commitment Fee. A fully-earned non-refundable commitment fee (the “2016 Commitment Fee”) of Eighty-Seven Thousand Five Hundred Dollars ($87,500.00), which shall be payable as follows:

 

(i)      Twenty-Nine Thousand One Hundred Sixty-Six and 66/100 Dollars ($29,166.66) due and payable on the 2016 Effective Date;

 

(ii)     Twenty-Nine Thousand One Hundred Sixty-Six and 66/100 Dollars ($29,166.66) due and payable on the earliest to occur of (A) October 6, 2017, (B) the occurrence of an Event of Default, or (C) the termination of this Agreement; and

 

(iii)    Twenty-Nine Thousand One Hundred Sixty-Six and 66/100 Dollars ($29,166.66) due and payable on the earliest to occur of (A) October 6, 2018, (B) the occurrence of an Event of Default, or (C) the termination of this Agreement.

 

2.2         Section 6.8(a) (Operating Accounts). Section 6.8(a) is amended in its entirety and replaced with the following:

 

(a)           Maintain all of its and all of its Subsidiaries’ depository, operating and securities/investments accounts with Bank and/or Bank’s Affiliates with the exception of (i) the Offshore Accounts and (ii) Outbrain UK may maintain up to seven (7) multi-currency accounts at HSBC Bank (the “HSBC Accounts”), and the aggregate value in such HSBC Accounts shall not exceed (x) Six Million Euros (€6,000,000.00), (y) Three Million British Pounds Sterling (£3,000,000.00), and (z) Two Million Five Hundred Thousand Dollars ($2,500,000.00), provided, that if any such HSBC Account contains assets in excess of such thresholds for five (5) or more consecutive Business Days, Borrower shall cause Outbrain UK to transfer any such excess to an account of Outbrain UK maintained at Bank or Bank’s Affiliates.

 

2.3         Section 6.9 (Financial Covenants). Section 6.9 is amended in its entirety and replaced with the following:

 

6.9          Financial Covenant – Adjusted Quick Ratio. Maintain, tested as of the last day of each month, calculated on a consolidated basis with respect to Borrower and its Subsidiaries, an Adjusted Quick Ratio of at least 1.00 to 1.00.

 

2.4         Section 13.1 (Definitions). Clause (e) of the definition of “Eligible Accounts” appearing in Section 13.1 of the Loan Agreement is hereby amended in its entirety and replaced with the following:

 

(e)           Accounts owing from an Account Debtor which does not have its principal place of business in the United States (except for Eligible Foreign Accounts), unless otherwise approved by Bank in writing on a case-by-case basis in its sole and absolute discretion;

2.5         Section 13.1 (Definitions). Clause (c) of the definition entitled “Permitted Investments” appearing in Section 13.1 of the Loan Agreement is hereby amended in its entirety and replaced with the following:

 

(c)           Investments by Borrower (i) in Foreign Subsidiaries not to exceed Thirteen Million Seven Hundred Fifty Thousand Dollars ($13,750,000.00) in any fiscal quarter of Borrower and (ii) in Subsidiaries not to exceed Fifty-Five Million Dollars ($55,000,000.00) in the aggregate in any fiscal year (including Investments made pursuant to (i) hereof).

 

2.6         Section 13.1 (Definitions). The following terms and their definitions set forth in Section 13.1 are amended in their entirety and replaced with the following:

 

“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, the 2016 Commitment Fee, Bank Expenses, and other amounts Borrower owes Bank now or later, under this Agreement or the other Loan Documents, including, without limitation, interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.

 

“Offshore Accounts” are accounts maintained by Borrower’s Subsidiaries outside the United States and United Kingdom with financial institutions other than Bank or Bank’s Affiliates, provided that the maximum balance maintained in such accounts does not exceed: (i) on or before December 31, 2016, the aggregate amount of Twenty Million Dollars ($20,000,000.00) at any time and (ii) on and after January 1, 2017, the aggregate amount of Fifteen Million Dollars ($15,000,000.00) at any time.

 

“Prime Rate” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; and provided further that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors).

 

“Quick Assets” is, on any date, Borrower’s consolidated, unrestricted cash (of which at least Fifteen Million Dollars ($15,000,000.00) must be in accounts in the name of Borrower at Bank) plus net billed accounts receivable, determined according to GAAP.

 

“Revolving Line Maturity Date” is October 6, 2019.

“Streamline Period” is, on and after the 2016 Effective Date, provided no Event of Default has occurred and is continuing, the period (a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has maintained either (i) an Adjusted Quick Ratio of greater than 1.10 to 1.00, as of the last day of the immediately preceding calendar month, or (ii) an Uncapped Availability Ratio greater than 1.50 to 1.00, for each consecutive day in the immediately preceding calendar month, in each case as determined by Bank in its reasonable discretion (the “Streamline Threshold”); and (b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, and (ii) the first day thereafter in which Borrower fails to maintain the Streamline Threshold, as determined by Bank in its reasonable discretion. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Threshold (i) with respect to the Adjusted Quick Ratio, as of the last day of the immediately preceding calendar month and (ii) for the Uncapped Availability Ratio, each consecutive day for one (1) calendar month, as determined by Bank in its reasonable discretion, prior to entering into a subsequent Streamline Period. Borrower shall give Bank prior written notice of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period shall commence on the first day of the monthly period following the date the Bank determines, in its reasonable discretion, that the Streamline Threshold has been achieved.

 

2.7         Section 13.1 (Definitions). The Loan Agreement shall be amended by inserting the following new definitions to appear alphabetically in Section 13.1 thereof:

 

“2016 Commitment Fee” is defined in Section 2.5(d).

 

“2016 Effective Date” is October 6, 2016.

 

“Eligible Foreign Accounts” are Accounts which are billed from and/or payable to Borrower in the United States, but which are owing from an Account Debtor which has its principal place of business in Canada, the United Kingdom, Japan, Italy, France, Germany, Australia, Israel or Singapore, and are otherwise Eligible Accounts; provided, in no event shall the aggregate amount of such Eligible Foreign Accounts included in the Borrowing Base constitute more than twenty-five percent (25.0%) of all Eligible Accounts included in the Borrowing Base.

 

2.8         Exhibit B (Compliance Certificate). Schedule 1 to the Compliance Certificate is amended in its entirety and replaced with the Schedule 1 in the form of Schedule A attached hereto.

3.

Limitation of Amendments.

 

3.1         The amendments set forth in Section 2 above are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

3.2         This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

4.             Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

4.1         Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

4.2         Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

 

4.3         The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect, except that the Certificate of Incorporation was amended and restated pursuant to the Amended and Restated Certificate of Incorporation dated February 11, 2015;

 

4.4         The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

 

4.5         The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6         The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and

 

4.7         This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

5.             Ratification of Intellectual Property Security Agreement. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Intellectual Property Security Agreement dated as of November 20, 2014 between Borrower and Bank, as supplemented by that certain First Supplement to Intellectual Property Security Agreement between Borrower and Bank dated as of January 27, 2016, and as further supplemented by that certain Second Supplement to Intellectual Property Security Agreement between Borrower and Bank dated as of August 9, 2016, and acknowledges, confirms and agrees that said Intellectual Property Security Agreement (a) contains an accurate and complete listing of all Intellectual Property Collateral, as defined in said Intellectual Property Security Agreement, and (b) shall remain in full force and effect.

 

6.             Updated Perfection Certificate. Borrower has delivered an updated Perfection Certificate in connection with this Amendment dated as of the date hereof (the “Updated Perfection Certificate”), which Updated Perfection Certificate shall supersede in all respects that certain Perfection Certificate dated as of August 9, 2016. Borrower agrees that all references in the Loan Agreement to “Perfection Certificate” shall hereinafter be deemed to be a reference to the Updated Perfection Certificate.

 

7.             Post-Closing Deliverables. Within ninety (90) days after the 2016 Effective Date, Bank shall have received in form and substance satisfactory to Bank, a bailee waiver in favor of Bank for Raging Wire Data Centers, 1625 National Drive (CA3), Sacramento, California 95834, together with the duly executed original signatures thereto.

 

8.             Integration. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

 

9.             Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

10.           Effectiveness. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto and (b) Borrower’s payment of Bank’s legal fees and expenses incurred in connection with this Amendment.

 

[Signature page follows.]

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

 

BANK			BORROWER
SILICON VALLEY BANK			OUTBRAIN INC.
By:	/s/ Claudia Canales		By:	/s/ Barry Schofield

 

Name:

Claudia Canales

Name:

Barry Schofield

 

Title:

Director

Title:

VP, Corporate Finance & Treasurer

 

[Signature page to Fourth Amendment to Amended and Restated Loan and Security Agreement]

SCHEDULE A

 

Schedule 1 to Compliance Certifícate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

I.

Adjusted Quick Ratio (Section 6.9)

 

Required:

1.00:1.00

 

Actual:

 

A.	Aggregate value of Borrower’s consolidated, unrestricted cash (must include at least $15,000,000.00 in accounts in the name of Borrower at Bank)		$
B.	Aggregate value of Borrower’s consolidated net billed accounts receivable, determined according to GAAP		$
C.	Quick Assets (the sum of lines A and B)		$
D.	Aggregate value of all Obligations of Borrower to Bank		$
E.	Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, not otherwise reflected in line D above, that matures within one (1) year but excluding (i) intercompany payables, (ii) statutory severance required in Israel and (iii) Obligations under the Mezzanine Loan Agreement		$
F.	Current Liabilities (the sum of lines D and E)		$
G.	Aggregate value of current portion of all amounts received or invoiced by Borrower in advance of performance under contracts and not yet recognized as revenue		$
H.	Line F minus G		$
I.	Adjusted Quick Ratio (line C divided by line H)

 

Is line I equal to or greater than 1.00:1:00?

 

_______   No, not in compliance

_______   Yes, in compliance

II.

Performance Pricing (Adjusted Quick Ratio or Uncapped Availability Ratio)

 

Was the Adjusted Quick Ratio set forth in line I above greater than 1.10:1:00 for each consecutive day in the immediately preceding calendar month?

 

_______   No, not in Streamline Period

_______   Yes, in Streamline Period

 

Uncapped Availability Ratio:

 

A.	Borrowing Base		$
B.	Aggregate value of all Obligations of Borrower to Bank including the amount of all outstanding Letters of Credit, but excluding all Obligations under the Mezzanine Loan Agreement		$
C.	Uncapped Availability Ratio (line A divided by line B)

 

Was the Uncapped Availability Ratio set forth in line C above greater than 1.50:1:00 for each consecutive day in the immediately preceding calendar month?

 

_______   No, not in Streamline Period

_______   Yes, in Streamline Period

 

Exhibit 10.8

 

THIRD AMENDMENT
TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Third Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into this 25^th day of August, 2016, by and between SILICON VALLEY BANK (“Bank”) and OUTBRAIN INC., a Delaware corporation (“Borrower”) whose address is 39 West 13^th Street, 3^rd Floor, New York, New York 10011.

 

Recitals

 

A.           Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of September 15, 2014, as amended by that certain First Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of November 20, 2014, and as further amended by that certain Second Amendment to Amended and Restated Loan and Security Agreement by and between Borrower and Bank dated as of January 27, 2016 (as the same may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”).

 

B.           Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

C.           Borrower has requested that Bank amend the Loan Agreement to (i) extend the maturity date, and (ii) make certain other revisions to the Loan Agreement as more fully set forth.

 

D.           Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

 

Agreement

 

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.           Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

 

2.           Amendment to Loan Agreement.

 

2.1          Section 13.1 (Definitions). The following term and its definition set forth in Section 13.1 is amended in its entirety and replaced with the following:

 

“Revolving Line Maturity Date” is October 15, 2016.

3.           Limitation of Amendments.

 

3.1          The amendments set forth in Section 2 above are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

3.2          This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

4.           Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

4.1          Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

4.2          Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

 

4.3          The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect, except that the Certificate of Incorporation was amended and restated pursuant to the Amended and Restated Certificate of Incorporation dated February 11, 2015;

 

4.4          The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

 

4.5          The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6          The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and

4.7          This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

5.           Integration. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

 

6.           Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

7.           Effectiveness. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto and (b) Borrower’s payment of Bank’s legal fees and expenses incurred in connection with this Amendment.

 

[Signature page follows.]

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

 

BANK				BORROWER
SILICON VALLEY BANK				OUTBRAIN INC.
By:	/s/ Michael Moretti			By:	/s/ Barry Schofield
Name:		Michael Moretti		Name:		Barry Schofield
Title:		Managing Director		Title:		VP, Corporate Finance & Treasurer

Exhibit 10.9

 

SECOND AMENDMENT

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Second Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into this 27^th day of January, 2016, by and between SILICON VALLEY BANK (“Bank”) and OUTBRAIN INC., a Delaware corporation (“Borrower”) whose address is 39 West 13^th Street, 3^rd Floor, New York, New York 10011.

 

Recitals

 

A.           Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of September 15, 2014, as amended by that certain First Amendment to Amended and Restated Loan and Security Agreement dated as of November 20, 2014 (as amended, and as the same may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”). Bank and Borrower have also entered into that certain Mezzanine Loan and Security Agreement dated as of November 20, 2014 (as amended, and as the same may from time to time be further amended, modified, supplemented or restated, the “Mezzanine Loan Agreement”).

 

B.            Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

C.            Borrower has requested that Bank amend the Loan Agreement to (i) amend the definition of Streamline Period, and (ii) make certain other revisions to the Loan Agreement as more fully set forth herein.

 

D.            Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

 

Agreement

 

Now, Therefore,in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.             Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

 

2.             Amendments to Loan Agreement.

 

2.1           Section 6.8(a) (Operating Accounts). Section 6.8(a) is amended in its entirety and replaced with the following:

 

“(a)           Maintain all of its and all of its Subsidiaries’ depository, operating and securities/investments accounts with Bank and/or Bank’s Affiliates with the exception of (i) the Offshore Accounts and (ii) Outbrain UK may maintain up to seven (7) multi-currency accounts at HSBC Bank (the “HSBC Accounts”), and the aggregate value in such HSBC Accounts shall not exceed (x) Two Million Seven Hundred Fifty Thousand Euros (€2,750,000), (y) One Million Seven Hundred Fifty Thousand British Pounds Sterling (£1,750,000), and (z) Seven Hundred Fifty Thousand Dollars ($750,000), provided, that if any such HSBC Account contains assets in excess of such thresholds for five (5) or more consecutive Business Days, Borrower shall cause Outbrain UK to transfer any such excess to an account of Outbrain UK maintained at Bank or Bank’s Affiliates.”

2.2           Section 13 (Definitions). The following new terms and their respective definitions are inserted into Section 13.1, each in the appropriate alphabetical order:

 

“HSBC Accounts” is defined in Section 6.8(a).

 

“Outbrain UK” means Outbrain UK Ltd., a company organized under the laws of England and Wales, and a wholly-owned Subsidiary of Borrower.

 

“Second Amendment Effective Date” is January 27, 2016.

 

“Uncapped Availability Ratio” is the result of (a) the Borrowing Base, divided by (b) the aggregate amount of all Obligations, including, without limitation, the aggregate amount of all outstanding Letters of Credit, but excluding all Obligations under the Mezzanine Loan Agreement.

 

2.3           Section 13 (Definitions). The following terms and their respective definitions set forth in Section 13.1 are amended in their entirety and replaced with the following:

 

“Current Liabilities” are all obligations and liabilities of Borrower to Bank, plus, without duplication, the aggregate amount of Borrower’s Total Liabilities that mature within one (1) year but excluding (i) intercompany payables, (ii) statutory severance required in Israel and (iii) the Obligations under the Mezzanine Loan Agreement.

 

“Streamline Period” is, on and after the Second Amendment Effective Date, provided no Event of Default has occurred and is continuing, the period (a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has, for each consecutive day in the immediately preceding calendar month, maintained either (i) an Adjusted Quick Ratio of greater than 1.10 to 1.00 or (ii) an Uncapped Availability Ratio greater than 1.50 to 1.00, in each case as determined by Bank in its reasonable discretion (the “Streamline Threshold”); and (b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, and (ii) the first day thereafter in which Borrower fails to maintain the Streamline Threshold, as determined by Bank in its reasonable discretion. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Threshold each consecutive day for one (1) calendar month, as determined by Bank in its reasonable discretion, prior to entering into a subsequent Streamline Period. Borrower shall give Bank prior written notice of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period shall commence on the first day of the monthly period following the date the Bank determines, in its reasonable discretion, that the Streamline Threshold has been achieved.

2.4            Exhibit B (Compliance Certificate). The Compliance Certificate is amended in its entirety and replaced with the Compliance Certificate in the form of Exhibit B attached hereto.

 

3.            Limitation of Amendments.

 

3.1           The amendments set forth in Section 2 above are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

3.2            This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

4.            Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

4.1            Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

4.2              Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

 

4.3               The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect, except that the Certificate of Incorporation was amended and restated pursuant to the Amended and Restated Certificate of Incorporation dated February 11, 2015;

 

4.4              The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

 

4.5              The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

4.6               The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and

 

4.7               This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

5.            Ratification of Intellectual Property Security Agreement. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Intellectual Property Security Agreement dated as of November 20, 2014 between Borrower and Bank, and acknowledges, confirms and agrees that said Intellectual Property Security Agreement (a) contains an accurate and complete listing of all Intellectual Property Collateral, as defined in said Intellectual Property Security Agreement, except to the extent amended as set forth on Schedule 1 attached hereto, and (b) shall remain in full force and effect.

 

6.            Updated Perfection Certificate. Borrower has delivered an updated Perfection Certificate with this Amendment dated as of the Second Amendment Effective Date (the “Updated Perfection Certificate”) which Updated Perfection Certificate shall supersede in all respects that certain Perfection Certificate dated as of November 20, 2014. Borrower agrees that all references in the Loan Agreement to “Perfection Certificate” shall hereinafter be deemed to be a reference to the Updated Perfection Certificate.

 

7.            No Defenses of Borrower. Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.

 

8.            Integration. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

9.             Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

10.           Effectiveness. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, (b) Bank’s receipt of the Updated Perfection Certificate, in form and substance reasonably acceptable to Bank, duly executed by Borrower, (c) Bank’s receipt of that certain Consent Agreement, in form and substance reasonably acceptable to Bank, duly executed by Borrower, (d) Bank’s receipt of a First Supplement to Intellectual Property Security Agreement, in form and substance reasonably acceptable to Bank, duly executed by Borrower, and (e) Borrower’s payment of Bank’s legal fees and expenses incurred in connection with this Amendment.

 

[Signature page follows.]

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

 

BANK			BORROWER
SILICON VALLEY BANK			OUTBRAIN INC.
By:	/s/ Claudia Canales		By:	/s/ Barry Schofield
Name:	Claudia Canales		Name:	Barry Schofield
Title:	Director		Title:	VP, Corporate Finance & Treasurer

Schedule 1

 

Updates to Intellectual Property Security Agreement

 

Title	Application Number(s)	Filing Date	Patent Number(s)
Content Title User Engagement Optimization	U.S. Appl. No. 14/529,667 (26136-43)	10/31/2014	N/A
Display Screen or Portion thereof with Graphical User Interface	N/A	3/31/2015	US Design Patents D743,431 D743,989 D743,990 D743,991 D744,517 D745,032 D745,033 D745,034 D745,035.
Display Screen or Portion Thereof with Graphical User Interface	29/541,937 (26136-56) 29/541,940 (26136-57) 29/541,942 (26136-58) 29/541,943 (26136-59) 29/541,946 (26136-60) 29/541,961 (26136-61) 29/541,950 (26136-62) 29/541,951 (26136-63) 29/541,953 (26136-64) 29/541,956 (26136-65) 29/541,957 (26136-66) 29/541,960 (26136-67) 29/541,967 (26136-68) 29/541,968 (26136-69) 29/541,979 (26136-70) 29/541,981 (26136-71) 29/541,984 (26136-72) 29/541,991 (26136-73)	10/9/2015	N/A
Inappropriate Content Filtering	U.S. Appl. No. 14/885,595 (26136-55)	10/16/2015	N/A
Computer-implemented Method and System for Assigning Yield and Revenue Values to Web Page Content in Real Time	U.S. Appl. No. 14/737,280	6/11/2015	N/A
Mobile Device Screen or Portion Thereof with a Graphical User Interface	29/548,888 (26136-74) 29/548,904 (26136-75) 29/548,907 (26136-76) 29/548,938 (26136-77) 29/548,945 (26136-78) 29/548,952 (26136-79)	12/17/2015	N/A
Electronic Device Display or Portion Thereof with a Graphical User Interface	29/550,819 (26136-80)	1/7/2016	N/A
Provisioning Personalized Content Recommendations	14/657,457 (26136-45)	3/13/15	N/A

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO:	SILICON VALLEY BANK	Date: ___________________
FROM:	OUTBRAIN INC.

 

The undersigned, in his or her capacity as authorized officer of Outbrain Inc. (“Borrower”) and not in her or her individual capacity certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”): (1) Borrower is in complete compliance for the period ending__________________ with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants	Required	Complies
Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes No
Annual financial statement (CPA Audited) + CC	FYE within 180 days	Yes No
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes No
A/R & A/P Agings	Monthly within 30 days	Yes No
Transaction Reports	Monthly within 30 days and each request for an Advance	Yes No
Projections	FYE within 30 days	Yes No
409A Report	As completed, but at least annually	Yes No
Capitalization Table	As updated, but at least annually	Yes No
The following Intellectual Property was registered (or a registration application submitted) after the Effective Date (if no registrations, state “None).

 

Financial Covenant	Required	Actual	Complies
Maintain as indicated:
Minimum Adjusted Quick Ratio	1.00:1.00	_____:1.0	Yes    No

 

Performance Pricing		Applies
Adjusted Quick Ratio > 1.10:1.00 or Uncapped Availability Ratio > 1.50:1.00	Prime + 0.25%	Yes    No
Adjusted Quick Ratio ≤ 1.10:1.00 and Uncapped Availability Ratio ≤ 1.50:1.00	Prime + 0.75%	Yes    No

 

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

 

 

 

Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

I.             Adjusted Quick Ratio (Section 6.9(a))

 

Required:             1.00:1.00

 

Actual:

 

A.	Aggregate value of Borrower’s consolidated, unrestricted cash	$
B.	Aggregate value of Borrower’s consolidated net billed accounts receivable, determined according to GAAP	$
C.	Quick Assets (the sum of lines A and B)	$
D.	Aggregate value of all Obligations of Borrower to Bank	$
E.	Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, not otherwise reflected in line D above, that matures within one (1) year but excluding (i) intercompany payables, (ii) statutory severance required in Israel and (iii) Obligations under the Mezzanine Loan Agreement	$	______
F.	Current Liabilities (the sum of lines D and E)	$
G.	Aggregate value of current portion of all amounts received or invoiced by Borrower in advance of performance under contracts and not yet recognized as revenue	$	______
H.	Line F minus G	$
I.	Adjusted Quick Ratio (line C divided by line H)

 

Is line I equal to or greater than 1.00:1:00?

 

No, not in compliance

Yes, in compliance

II.            Performance Pricing (Adjusted Quick Ratio or Uncapped Availability Ratio)

 

Was the Adjusted Quick Ratio set forth in line I above greater than 1.10:1:00 for each consecutive day in the immediately preceding calendar month?

 

No, not in Streamline Period

Yes, in Streamline Period

 

Uncapped Availability Ratio:

 

A.	Borrowing Base	$
B.	Aggregate value of all Obligations of Borrower to Bank including the amount of all outstanding Letters of Credit, but excluding all Obligations under the Mezzanine Loan Agreement	$	______
C.	Uncapped Availability Ratio (line A divided by line B)

 

Was the Uncapped Availability Ratio set forth in line C above greater than 1.50:1:00 for each consecutive day in the immediately preceding calendar month?

 

______ No, not in Streamline Period

______ Yes, in Streamline Period

 

Exhibit 10.10

 

FIRST AMENDMENT
TO
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

 

This First Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into this 20^th day of November, 2014, by and between SILICON VALLEY BANK (“Bank”) and OUTBRAIN INC., a Delaware corporation (“Borrower”) whose address is 39 West Thirteenth Street, Third Floor, New York City, New York 10011.

 

Recitals

 

A.           Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of September 15, 2014 (as the same may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”).

 

B.           Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

C.           Borrower has requested that Bank amend the Loan Agreement to (i) amend the Collateral, and (ii) make certain other revisions to the Loan Agreement as more fully set forth herein.

 

D.           Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

 

Agreement

 

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.            Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

 

2.            Amendments to Loan Agreement.

 

2.1       Section 3.5 (Post-Closing Requirements). Section 3.5 is amended in its entirety and replaced with the following:

 

“3.5 Post-Closing Requirements. Bank shall have received, in form and substance satisfactory to Bank, within ninety (90) days after the 2014 Effective Date, a landlord’s consent in favor of Bank for Borrower’s leased locations at (i) 2200 Busse Road, Elk Grove, Illinois 60007, and (ii) 600 West Seventh Street, Los Angeles, California 90017, by the respective landlord thereof, together with the duly executed original signatures thereto.”

2.2       Section 6.2(d) (Financial Statements, Reports, Certificates). Section 6.2(d) is amended in its entirety and replaced with the following:

 

“(d) within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with all of the terms and conditions of this Agreement (except as specifically noted therein), and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank may reasonably request;”

 

2.3       Section 6.2(f) (Financial Statements, Reports, Certificates). The following text set forth in Section 6.2(f) is amended in its entirety and replaced with the following:

 

“Notwithstanding the foregoing, Borrower shall provide Bank, on or before November 12, 2014, with Borrower’s audited consolidated financial statements for the fiscal years ended 2012 and 2013;”

 

2.4       Section 6.2 (Financial Statements, Reports, Certificates). The Loan Agreement shall be amended by (i) deleting “and” at the end of clause (i), (ii) changing “.” to “; and” at the end of clause (j), and (iii) inserting the following new clauses (k) and (1) to appear at the end of Section 6.2 thereof:

 

“(k)      as long as Borrower is a privately held company, as soon as available after completion, and at least annually, any 409A valuation report prepared by or at the direction of Borrower; and

 

(1)        contemporaneously with any updates or changes thereto, and at least annually, an updated capitalization table.”

 

2.5       Section 6.8 (Operating Accounts). Section 6.8 is amended in its entirety and replaced with the following:

 

“6.8     Operating Accounts.

 

(a)        Maintain all of its and all of its Subsidiaries’ depository, operating and securities/investment accounts with Bank and/or Bank’s Affiliates with the exception of the Offshore Accounts.

 

(b)        Provide Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account not located at Bank and/or Bank’s Affiliates (other than (i) Offshore Accounts and (ii) the Permitted Accounts, provided such Permitted Accounts shall be closed and all balances maintained in such Permitted Accounts transferred to accounts in the name of Borrower maintained with Bank and/or Bank’s Affiliates no later than January 31, 2015) that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such.”

2.6       Section 6.10 (Protection and Registration of Intellectual Property Rights). The Loan Agreement shall be amended by renaming Section 6.10 as “Protection and Registration of Intellectual Property Rights” and inserting the following new subsection (c) to appear at the end of Section 6.10 thereof:

 

“          (c) To the extent not already disclosed in writing to Bank, if Borrower (i) obtains any Patent, registered Trademark, registered Copyright, registered mask work, or any pending application for any of the foregoing, whether as owner, licensee or otherwise (other than as licensee of software commercially available to the public), or (ii) applies for any Patent or the registration of any Trademark, then Borrower shall promptly provide written notice thereof to Bank and shall execute such intellectual property security agreements and other documents and take such other actions as Bank may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Bank in such property other than with respect to any “intent-to-use” Trademark application for which a statement of use has not been filed. If Borrower decides to register any Copyrights or mask works in the United States Copyright Office, Borrower shall: (x) provide Bank with at least five (5) days prior written notice of Borrower’s intent to register such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such other actions as Bank may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Bank in the Copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the Copyright or mask work application(s) with the United States Copyright Office. Borrower shall promptly provide to Bank copies of all applications that it files for Patents or for the registration of Trademarks, Copyrights or mask works, together with evidence of the recording of the intellectual property security agreement required for Bank to perfect and maintain a first priority perfected security interest in such property.”

2.7        Section 8.6 (Other Agreements). Section 8.6 is amended in its entirety and replaced with the following:

 

“8.6     Other Agreements. There is, under any agreement to which Borrower is a party with a third party or parties (other than the Mezzanine Loan Agreement), (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of One Hundred Thousand Dollars ($100,000.00), or (b) any breach or default by Borrower, the result of which could have a material adverse effect on Borrower’s business;”

 

2.8        Section 13 (Definitions). The following provision appearing as clause (a) in the definition of Permitted Indebtedness set forth in Section 13.1 is amended in its entirety and replaced with the following:

 

“(a)       Borrower’s Indebtedness to Bank under this Agreement, the Mezzanine Loan Agreement, and the other Loan Documents;”

 

2.9        Section 13 (Definitions). The following provision appearing as clause (a) in the definition of Permitted Liens set forth in Section 13.1 is amended in its entirety and replaced with the following:

 

“(a)       Liens existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement, the Mezzanine Loan Agreement, and the other Loan Documents;”

 

2.10      Section 13 (Definitions). The following terms and their respective definitions set forth in Section 13.1 are amended in their entirety and replaced with the following:

 

“            “Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Perfection Certificate, any Bank Services Agreement, the IP Security Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower or any guarantor, and any other present or future agreement by Borrower and/or guarantor with or for the benefit of Bank in connection with this Agreement or Bank Services, all as amended, restated, or otherwise modified.”

 

“            “Quick Assets” is, on any date, Borrower’s consolidated, unrestricted cash plus net billed accounts receivable, determined according to GAAP.”

 

2.11      Section 13 (Definitions). The Loan Agreement shall be amended by inserting the following new definitions to appear alphabetically in Section 13.1 thereof:

 

“            “2014 Effective Date” means November 20, 2014.”

 

“            “IP Security Agreement” is that certain Intellectual Property Security Agreement executed and delivered by Borrower to Bank dated as of the 2014 Effective Date, as the same may be amended, modified, supplemented or restated from time to time.”

“            “Mezzanine Loan Agreement” means that certain Mezzanine Loan and Security Agreement between Borrower and Bank dated as of the 2014 Effective Date, as may be amended, modified, supplemented or restated from time to time.”

 

“            “Permitted Accounts” means, collectively, (a) Borrower’s account nos. xxxx3005 and xxxx9361 maintained with Comerica Bank, N.A., and (b) Borrower’s account no. xxxx0494 maintained with Citibank, N.A.”

 

2.12      Exhibit A (Collateral Description). The Loan Agreement shall be amended by substituting the Collateral description appearing on Exhibit A thereto for the Collateral description appearing on Schedule 1 hereto. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations and the performance of each of Borrower’s duties under the Loan Documents, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.

 

2.13      Exhibit B (Compliance Certificate). The Compliance Certificate is amended in its entirety and replaced with the Compliance Certificate in the form of Schedule 2 attached hereto.

 

3.

Limitation of Amendments.

 

3.1       The amendments set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

3.2       This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

4.           Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

4.1       Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

4.2       Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

4.3       The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

4.4       The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

 

4.5       The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6       The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and

 

4.7       This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

5.            Updated Perfection Certificate. Borrower has delivered an updated Perfection Certificate in connection with this Amendment dated as of November 20, 2014 (the “Updated Perfection Certificate”), which Updated Perfection Certificate shall supersede in all respects that certain Perfection Certificate dated as of September 15, 2014. Borrower agrees that all references in the Loan Agreement to “Perfection Certificate” shall hereinafter be deemed to be a reference to the Updated Perfection Certificate.

 

6.            Integration. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

 

7.            Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

8.            Effectiveness. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, and (b) Borrower’s payment of Bank’s legal fees and expenses incurred in connection with this Amendment.

 

[Signature page follows.]

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

 

BANK		BORROWER
SILICON VALLEY BANK		OUTBRAIN INC.

By:	/s/ Claudia Canales		By:	/s/ Yaron Galai
Name:	Claudia Canales		Name:	Yaron Galai
Title:	Director		Title:	CEO

Schedule 1

 

EXHIBIT A – COLLATERAL DESCRIPTION

 

The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:

 

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, Deposit Accounts, certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and

 

all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

 

Notwithstanding the foregoing, the Collateral does not include any of the following: (a) more than 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any Foreign Subsidiary which shares entitle the holder thereof to vote for directors or any other matter; (b) rights held under a license that are not assignable by their terms without the consent of the licensor thereof (but only to the extent such restriction on assignment is enforceable under applicable law); (c) any interest of Borrower as a lessee or sublessee under a real property lease or an Equipment lease if Borrower is prohibited by the terms of such lease from granting a security interest in such lease or under which such an assignment or Lien would cause a default to occur under such lease (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-407(a) of Article/Division 9 of the Code); provided, however, that upon termination of such prohibition, such interest shall immediately become Collateral without any action by Borrower or Bank; or (d) any intent-to-use trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the United States Patent and Trademark Office or otherwise.

Schedule 2

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO:	SILICON VALLEY BANK	Date: ___________________
FROM:	OUTBRAIN INC.

 

The undersigned, in his or her capacity as authorized officer of Outbrain Inc. (“Borrower”) and not in her or her individual capacity certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”): (1) Borrower is in complete compliance for the period ending___________________ with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants	Required	Complies
Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes  No
Annual financial statement (CPA Audited) + CC	FYE within 180 days	Yes   No
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes  No
A/R & A/P Agings	Monthly within 30 days	Yes  No
Transaction Reports	Monthly within 30 days and each request for an Advance	Yes  No
Projections	FYE within 30 days	Yes  No
409A Report	As completed, but at least annually	Yes  No
Capitalization Table	As updated, but at least annually	Yes   No
The following Intellectual Property was registered (or a registration application submitted) after the Effective Date (if no registrations, state “None).

Financial Covenant	Required	Actual	Complies
Maintain as indicated:
Minimum Adjusted Quick Ratio	1.00:1.00	_____:1.0	Yes  No
Performance Pricing			Applies
Adjusted Quick Ratio > 1.10:1.00	Prime + 0.25%		Yes  No
Adjusted Quick Ratio < 1.10:1.00	Prime + 0.75%		Yes  No

 

The following financial covenant analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

 

 

 

 

OUTBRAIN INC.			BANK USE ONLY
			Received by:
By:					authorized Signer
Name:			Date:
Title:

			Verified:
					authorized Signer
			Date:
			Compliance Status:      Yes     No

Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

I.

Adjusted Quick Ratio (Section 6.9(a))

 

Required:

1.00:1.00

 

Actual:

 

A	Aggregate value of Borrower’s consolidated, unrestricted cash		$_______
B.	Aggregate value of Borrower’s consolidated net billed accounts receivable, determined according to GAAP		$_______
C.	Quick Assets (the sum of lines A and B)		$_______
D.	Aggregate value of all Obligations of Borrower to Bank		$_______
E.	Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, not otherwise reflected in line D above, that matures within one (1) year but excluding intercompany payables and statutory severance required in Israel		$_______
F.	Current Liabilities (the sum of lines D and E)		$_______
G.	Aggregate value of current portion of all amounts received or invoiced by Borrower in advance of performance under contracts and not yet recognized as revenue		$_______
H.	Line F minus G		$_______
I	Adjusted Quick Ratio (line C divided by line H)		_______

 

Is line I equal to or greater than 1.00:1:00?

 

_______   No, not in compliance

_______  Yes, in compliance

 

Exhibit 21.1

 

ENTITY	JURISDICTION OF FORMATION OR ORGANIZATION
Outbrain Israel Ltd.	Israel
Outbrain UK Limited	United Kingdom
Outbrain Italy SRL	Italy
Outbrain Spain S.L.	Spain
Outbrain Germany GmbH	Germany
Outbrain India Private Limited	India
Outbrain Services Monetizacao de Conteudo LTDA (b/b/a Outbrain Brasil)	Brazil
Outbrain Japan KK	Japan
Outbrain Australia PTY Ltd	Australia
Outbrain New Zealand Limited	New Zealand
Outbrain Singapore Pte. Ltd.	Singapore
Zemanta Holding USA LLC	USA
Zemanta Inc.	USA
Zemanta Limited UK	United Kingdom
Zemanta d.o.o (Slovenia)	Slovenia
OBL Inc.	USA
OBL Acquisition Inc.	USA
Ligatus GmbH	Germany
Outbrain Belgium BVBA (Belgium)	Belgium
Outbrain Netherlands B.V. (Netherlands)	Netherlands
Outbrain France SAS	France
Outbrain AMC LLC (Revee)	USA
New Ottawa Inc.	USA
Ottawa Merger Sub Inc.	USA