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Exhibit 10.1
 
EXECUTION VERSION
 
 
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
 
BY AND BETWEEN
 
YOU ON DEMAND HOLDINGS, INC.,
 
AND
 
C MEDIA LIMITED
 
DATED: July 5, 2013

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TABLE OF CONTENTS
 
ARTICLE 1 DEFINITIONS
1
1.1
Definitions
1
ARTICLE 2 PURCHASE AND SALE OF SERIES D PREFERRED STOCK
8
2.1
Purchase and Sale of Series D Preferred Stock
8
2.2
Certification of Designation
9
2.3
Closing
9
2.4
Use of Proceeds
9
2.5
Additional Issuances; Adjustment
9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
10
3.1
Corporate Existence and Power
10
3.2
Subsidiaries
10
3.3
Corporate Authorization; No Contravention
11
3.4
Governmental Authorization; Third Party Consents
11
3.5
Binding Effect
12
3.6
Capitalization of the Company and its Subsidiaries
12
3.7
Commission Documents; Sarbanes-Oxley Compliance
13
3.8
Absence of Certain Developments
14
3.9
Indebtedness; No Undisclosed Liabilities
14
3.1
Compliance with Laws; Licenses
15
 3.11
Litigation
15
 3.12
Material Contracts
15
 3.13
Environmental
16
 3.14
Taxes
17
 3.15
Title to Property and Assets; Leases
18
 3.16
Compliance with ERISA
18
 3.17
Labor Relations; Employees
19
 3.18
Certain Payments
20
 3.19
Insurance
20
3.2
Intellectual Property
20
 3.21
Affiliate Transactions
21
 3.22
Investment Company Act
21
 3.23
Private Offering
22
 3.24
Board Approval; Stockholder Approval
22

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 3.25
Series D Preferred Stock
22
 3.26
No Brokers or Finders
23
 3.27
Disclosure
23
 3.28
Suitability
23
 3.29
Off Balance Sheet Arrangements
23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
23
4.1
Existence and Power
23
4.2
Authorization; No Contravention
23
4.3
Governmental Authorization; Third Party Consents
24
4.4
Binding Effect
24
4.5
Investment Representations.
24
4.6
Receipt of Information
25
4.7
No Brokers or Finders
25
4.8
Sufficient Funds
25
4.9
Litigation
25
4.1
No General Solicitation.
25
 4.11
Prohibited Transactions.
25
 4.12
Reliance on Exemptions.
25
ARTICLE 5 COVENANTS
26
5.1
Conduct of Business
26
5.2
No Solicitation
28
5.3
Regulatory Approval; Litigation
30
5.4
Access.
30
5.5
Employee Benefits Matters
31
5.6
Payment of Dividends
31
5.7
Consents
32
5.8
Legends
32
5.9
Redemption
32
5.1
Budget
32
 5.11
Series E Financing
32
 5.12
Non-Solicitation
32
 5.13
Shareholder Approval
33
ARTICLE 6 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO CLOSE
33
6.1
Conditions to Closing
33

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ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE
35
7.1
Conditions to Closing
35
ARTICLE 8 REGISTRATION RIGHTS; RIGHT OF FIRST OFFER; OTHER AGREEMENTS OF THE
COMPANY
36
8.1
Registration Rights
36
8.2
Other Registration Rights
37
8.3
Rule 144
37
8.4
Availability of Common Stock
38
8.5
No Rights Plan
38
ARTICLE 9 INDEMNIFICATION
38
9.1
Indemnification
38
9.2
Terms of Indemnification
38
ARTICLE 10
39
 10.1
Termination of Agreement
39
 10.2
Effect of Termination.
39
ARTICLE 11 MISCELLANEOUS
39
 11.1
Survival
39
 11.2
Fees and Expenses
40
 11.3
Notices
40
 11.4
Successors and Assigns
41
 11.5
Amendment and Waiver
41
 11.6
Counterparts
41
 11.7
Headings
41
 11.8
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial
41
 11.9
Severability
42
 11.1
Entire Agreement
42
  11.11
Further Assurances
42
  11.12
Public Announcements
42
  11.13
Specific Performance
43
  11.14
Subsidiaries
43

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Exhibits
 
Exhibit A – Series D Certificate of Designation
 
Exhibit B – Budget
 
Exhibit C – Series E Preferred Stock Purchase Agreement
 
Exhibit D – Series E Certificate of Designation
 
Exhibit E – Forms of Legal Opinions
 
Exhibit F – Board of Directors (Phase 1)
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SERIES D PREFERRED STOCK PURCHASE AGREEMENT
 
SERIES D PREFERRED STOCK PURCHASE AGREEMENT, dated as of July 5, 2013 (as the
same may be amended, supplemented or modified in accordance with the terms
hereof, this “Agreement”), by and between YOU On Demand Holdings, Inc., a Nevada
corporation (the “Company”) and C Media Limited (the “Purchaser”).
 
WHEREAS, the Company proposes to issue and sell to the Purchaser, and the
Purchaser proposes to buy, for an aggregate purchase price of $4,000,000, an
aggregate of 2,285,714 shares (subject to adjustment pursuant to Section 2.5) of
Series D 4% Convertible Preferred Stock, par value $0.001 per share (the “Series
D Preferred Stock”); and
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows:
 
ARTICLE 1
 
DEFINITIONS
 
1.1               Definitions.  As used in this Agreement, and unless the
context requires a different meaning, the following terms shall have the
meanings set forth below:
 
“Accredited Investor” has the meaning assigned to such term in Section 4.5(b)
 
“Acquisition Proposal” has the meaning assigned to such term in Section 5.2.
 
“Actions” means actions, causes of action, suits, claims, complaints, demands,
litigations or legal, administrative or arbitral proceedings.
 
“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person and, for purposes of Section 3.21 only, with
respect to any individual, the spouse, parent, sibling, child, step-child,
grandchild, niece or nephew of such individual or the spouse thereof and any
trust for the benefit of such Stockholder or any of the foregoing.  For the
purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person,
whether through the ownership of Voting Securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.
 
“Agreement” has the meaning assigned to such term in the Preamble.
 
“associate” has the meaning assigned in Rule 12b-2 promulgated by the Commission
under the Exchange Act.
 
“beneficially own” with respect to any securities means having “beneficial
ownership” of such securities as determined pursuant to Rule 13d-3 under the
Exchange Act, as in effect on the date hereof.
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“Board of Directors” means either the board of directors of the Company or any
duly authorized committee thereof.
 
“Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day
on which banking institutions in New York City are authorized or obligated by
Law or executive order to remain closed.
 
“Bylaws” means the bylaws of the Company, as the same may have been amended and
in effect as of the Closing Date.
 
“Certificate of Designation” means the certificate of designation setting forth
the designations, powers and preferences of the Series D Preferred Stock, in the
form attached hereto as Exhibit A.
 
“Certificate of Incorporation” means the certificate of incorporation of the
Company, as the same may have been amended and in effect as of the Closing Date.
 
“Claims” means losses, claims, damages or liabilities, joint or several, Actions
or proceedings (whether commenced or threatened).
 
“Closing” has the meaning assigned to such term in Section 2.3.
 
“Closing Date” has the meaning assigned to such term in Section 2.3.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.
 
“Collective Bargaining Agreement” has the meaning assigned to such term in
Section 3.17(a).
 
“Commission” means the Securities and Exchange Commission or any similar agency
then having jurisdiction to enforce the Securities Act.
 
“Common Stock” means the Common Stock, par value $0.001 per share, of the
Company.
 
“Company” has the meaning assigned to such term in the Preamble.
 
“Company Agreements” has the meaning assigned to such term in Section 3.1.
 
“Company Benefit Plans” means all employee benefit plans providing benefits to
any current or former employee or director of the Company or any of its
Subsidiaries or any beneficiary or dependent thereof that are sponsored or
maintained by the Company or any of its Subsidiaries or ERISA Affiliates or to
which the Company or any of its Subsidiaries or ERISA Affiliates contributes or
is obligated to contribute, including without limitation all employee welfare
benefit plans within the meaning of Section 3(1) of ERISA, all employee pension
benefit plans within the meaning of Section 3(2) of ERISA, and all bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
restricted stock, severance, termination pay and fringe benefit plans.
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“Company Options” has the meaning assigned to such term in Section 3.6.
 
“Confidentiality Agreement” means the confidentiality agreement dated March 22,
2013, between Purchaser and the Company.
 
“Contemplated Transactions” means the transactions contemplated by this
Agreement and the exhibits hereto, including without limitation the issuance,
purchase and sale of the Series D Preferred Stock, and the adoption of the
Certificate of Designation.
 
“Contractual Obligation” means, as to any Person, any agreement, undertaking,
contract, indenture, mortgage, deed of trust, credit agreement, note, evidence
of indebtedness or other instrument, written or otherwise, to which such Person
is a party or by which it or any of its property is bound.
 
“Conversion Shares” has the meaning assigned to such term in Section 4.5(c).
 
“Decrees” has the meaning assigned to such term in Section 3.10(a).
 
“Employment Agreement” means a contract, offer letter or agreement of the
Company or any of its Subsidiaries with or addressed to any individual who is
rendering or has rendered services thereto as an employee or consultant,
pursuant to which the Company or any of its Subsidiaries has any actual or
contingent liability or obligation to provide compensation and/or benefits in
consideration for past, present or future services.
 
“Environmental Claim” means any claim, action, cause of action, investigation of
which the Company or any of its Subsidiaries has knowledge, or written notice by
any Person to the Company or any of its Subsidiaries alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or release into the environment, of any
Material of Environmental Concern at any location, or (b) circumstances forming
the basis of any violation or liability, or alleged violation or liability, of
any Environmental Law.
 
“Environmental Laws” means all Federal, state, local, and foreign statute, Law,
regulation, ordinance, rule, common Law, judgment, order, decree or other
governmental requirement or restriction relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata and natural
resources), including, without limitation, Laws relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; provided that Environmental Laws does not include the
Occupational Safety and Health Act or any other similar Requirement of Law
governing worker safety or workplace conditions.
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“Equitable Principles” means applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar Laws affecting creditors’
rights generally from time to time in effect and to general principles of
equity, regardless of whether in a proceeding at equity or at Law.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder from time to time.
 
“ERISA Affiliate” means each entity which is a member of a “controlled group of
corporations,” under “common control” or an “affiliated service group” with the
Company or its Subsidiaries within the meaning of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with the Company or its Subsidiaries
under Section 414(o) of the Code, or is under “common control” with the Company
or its Subsidiaries, within the meaning of Section 4001(a)(14) of ERISA.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder by the Commission from time to
time.
 
“Exempt Issuances” has the meaning assigned to such term in the Certificate of
Designation.
 
“Existing Plans” has the meaning assigned to such term in Section 3.6.
 
“FINRA” means the Financial Industry Regulatory Authority.
 
“Fully Diluted Basis” has the meaning assigned to such term in Section 2.1.
 
“GAAP” means United States generally accepted accounting principles.
 
“Governmental Authority” means the government of any nation, state, city,
locality or other political subdivision of any thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government or any international regulatory body or
self-regulatory organization having or asserting jurisdiction over a Person, its
business or its properties.
 
“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business, and (c)
the present value of any lease payments in excess of $50,000 due under leases
required to be capitalized in accordance with GAAP.
 
“Intellectual Property” has the meaning assigned to such term in Section 3.20.
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“Investor Rights Agreement” means the Right of First Refusal and Co-Sale
Agreement, dated July 5, 2013, by and between the Company, the Purchaser, Shane
McMahon and Weicheng Liu.
 
“IRS” means the Internal Revenue Service.
 
“knowledge of the Company” means the actual knowledge of the chairman or any
executive officer of the Company or any of its Subsidiaries, after due inquiry
of those persons employed by the Company or its Subsidiaries charged with
administrative or operational responsibility for such matter.
 
“Law” means all Federal, state, local, and foreign statute, law, regulation,
ordinance, rule, common law, judgment, order, decree or other governmental
requirement or restriction of all applicable jurisdictions.
 
“Leases” has the meaning assigned to such term in Section 3.15.
 
“Licenses” has the meaning assigned to such term in Section 3.10(b).
 
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other), voting or other restriction, preemptive
right or other security interest of any kind or nature whatsoever.
 
“Mandatory Effectiveness Period” shall mean the period from the date that a
Registration Statement is declared effective by the Commission until the earlier
to occur of the date when all Registrable Securities covered by a Registration
Statement (a) either have been sold pursuant to a Registration Statement or an
exemption from the registration requirements of the Securities Act; and (b)
pursuant to a written opinion of counsel reasonably acceptable to the Company,
may be sold pursuant to Rule 144(b)(1) without any limitations.
 
“Mandatory Registration Statement” has the meaning assigned to such term in
Section 8.1(a).
 
“Material Adverse Effect” means any material adverse change in or affecting (i)
the business, properties, assets, liabilities, operations, results of operations
(financial or otherwise), condition, or prospects of the Company and its
Subsidiaries taken as a whole or (ii) the ability of the Company or any of the
Company’s Subsidiaries to consummate the Contemplated Transactions or the sale
and issuance of the Series E Preferred Stock; provided, however, that none of
the following shall be deemed in themselves, either alone or in combination, to
constitute, and none of the following shall be taken into account in determining
whether there has been, a Material Adverse Effect: (A) any change in the market
price or trading volume of the capital stock of the Company after the date
hereof, (B) any changes, events or occurrences in the United States securities
markets which are not specific to the Company, (C) any changes, events,
developments or effects resulting from general economic conditions, which are
not specific to the Company or its Subsidiaries and which do not affect the
Company or its Subsidiaries in a materially disproportionate manner and (D) any
changes resulting from the execution or announcement of this Agreement and the
Contemplated Transactions.
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“Material Contracts” has the meaning assigned to such term in Section 3.12(a).
 
“Materials of Environmental Concern” means chemicals, pollutants, contaminants,
industrial, toxic or hazardous wastes, substances or constituents, petroleum and
petroleum products (or any by-product or constituent thereof), asbestos or
asbestos-containing materials, lead or lead-based paints or materials, PCBs, or
radon, or any other materials that are regulated by, or may form the basis of
liability under, any Environmental Law.
 
“NASDAQ” means The Nasdaq Stock Market Inc.’s National Market System.
 
“NGCL” has the meaning assigned such term in Section 3.24(a).
 
“NYSE” means the New York Stock Exchange.
 
“Person” means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, company, limited
liability company, trust, unincorporated association, Governmental Authority, or
any other entity of whatever nature.
 
“Preferred Stock” has the meaning assigned to such term in Section 3.6.
 
“Prospectus” means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to such
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
 
“Purchase Price” has the meaning assigned to such term in Section 2.1.
 
“Purchaser” has the meaning assigned to such term in the Preamble.
 
“Purchaser Indemnitee” has the meaning assigned to such term in Section 9.1.
 
“Qualified Acquisition Proposal” has the meaning assigned to such term in
Section 5.2.
 
“Registrable Securities” means the Common Stock and other securities, if any,
issuable upon conversion of the Series D Preferred Stock or Series E Preferred
Stock, and any securities issued pursuant to Purchaser’s rights under Section
8.3, in each case, until any such security is effectively registered under the
Securities Act and disposed of in accordance with the Registration Statement
covering it, or is distributed to the public by the holder thereof pursuant to
Rule 144.
 
“Registration Statement” means any registration statement of the Company under
the Securities Act that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the related Prospectus, all amendments
and supplements to such registration statement (including post-effective
amendments), all exhibits and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
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“Restricted Period” has the meaning assigned to such term in Section 5.1(a).
 
“Requirement of Law” means, as to any Person, the certificate of incorporation
and bylaws or other organizational or governing documents of such Person, and
any Law (including, without limitation, Laws related to Taxes and Environmental
Laws), treaty, rule, regulation, ordinance, qualification, standard, license or
franchise or determination of an arbitrator or a court or other Governmental
Authority, including the NYSE or NASDAQ or any national securities exchange or
automated quotation system on which the Common Stock is listed or admitted to
trading, 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 or pertaining
to any or all of the transactions contemplated hereby.
 
“Return” has the meaning assigned to such term in Section 5.1(a)(ix).
 
“Rule 144” means Rule 144 promulgated by the Commission under the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission.
 
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
 
“SEC Reports” means each registration statement, report, proxy statement or
information statement (other than preliminary materials) or other documents
filed by the Company or any of its Subsidiaries with the Commission pursuant to
the Securities Act or the Exchange Act or the rules and regulations thereunder
since January 1, 2010, each in the form (including exhibits and any amendments)
filed with the Commission.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder by the Commission from time to time.
 
“Series A Preferred Stock” means the Company’s Series A Convertible Preferred
Stock.
 
“Series C Preferred Stock” means the Company’s Series C Convertible Preferred
Stock.
 
“Series D Preferred Stock” has the meaning assigned to such term in the Recitals
hereto.
 
“Series E Certificate of Designation” means the certificate of designation
setting forth the designations, powers and preferences of the Series E Preferred
Stock, substantially in the form attached hereto as Exhibit D.
 
“Series E Closing” means the closing of the sale of Series E Preferred Stock to
the Purchaser or an Affiliate of the Purchaser designated in the Series E
Purchase Agreement set forth in Exhibit C.
 
“Series E Preferred Stock” means the Company’s Series E Convertible Preferred
Stock.
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“Series E Purchase Agreement” means the Series E Preferred Stock Purchase
Agreement by and between the Company and the Purchaser as set forth in Exhibit
C.
 
“Shares” mean the shares of Common Stock.
 
“Subsidiary” of any specified Person means any other Person more than 50% of the
outstanding voting securities of which is owned or controlled, directly or
indirectly, by such specified Person or by one or more other Subsidiaries of
such specified Person, or by such specified Person and one or more other
Subsidiaries of such specified Person.  For the purposes of this definition,
“voting securities” means securities which ordinarily have voting power for the
election of directors (or other Persons having similar functions), whether at
all times or only so long as no senior class of securities has such voting power
by reason of any contingency, or other ownership interests ordinarily
constituting a majority voting interest.
 
“Tax Claim” has the meaning assigned to such term in Section 5.1(a)(ix).
 
“Tax” or “Taxes” means any taxes, assessment, duties, fees, levies, imposts,
deductions, or withholdings, including income, gross receipts, ad valorem, value
added, excise, real or personal property, asset, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes, estimated taxes,
withholding, employment, social security, workers’ compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes, or other governmental charges of any nature
whatsoever, imposed by any taxing authority of any government or country or
political subdivision of any country, and any liabilities with respect thereto,
including any penalties, additions to tax, fines or interest thereon and
includes any liability for Taxes of another Person by Contract, as a transferee
or successor, under Treasury Regulation 1.1502-6 or analogous state, local or
foreign Requirement of Law provision or otherwise.
 
“Trading Affiliates” has the meaning assigned to such term in Section 4.11.
 
“Voting Securities” means any class or classes of stock of the Company pursuant
to which the holders thereof have the general power under ordinary circumstances
to vote with respect to the election of the Board of Directors, irrespective of
whether or not, at the time, stock of any other class or classes shall have, or
might have, voting power by reason of the happening of any contingency.
 
ARTICLE 2
 
PURCHASE AND SALE OF SERIES D PREFERRED STOCK
 
2.1               Purchase and Sale of Series D Preferred Stock.  Subject to the
terms set forth herein and in reliance upon the representations set forth below,
the Company shall issue and sell to the Purchaser and the Purchaser shall
purchase from the Company 2,285,714 shares of Series D Preferred Stock (subject
to adjustment pursuant to Section 2.5), for an aggregate purchase price of
$4,000,000 ($1.75 per share of Series D Preferred Stock) (the “Purchase Price”).
 Immediately following the Closing, the Purchaser shall own 10.3% of the equity
of the Company on a fully diluted basis (i.e., assuming the exercise of all
Company Options (whether or not vested) and the issuance of all shares of Common
Stock listed on Schedule 3.6, the granting and exercise of all the options or
securities allowed pursuant to Section 5.5(c) and the conversion of the Series D
Preferred Stock into Common Stock, all as of the Closing (“Fully Diluted
Basis”)).
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2.2               Certification of Designation.  The Series D Preferred Stock
shall have the powers, rights and other terms set forth in the form of
Certificate of Designation attached hereto as Exhibit A.
 
2.3               Closing.  The issuance, sale and purchase of the Series D
Preferred Stock shall take place at a closing (the “Closing”) to be held at the
offices of Reed Smith, 599 Lexington Ave., New York, New York (except that the
Closing may be conducted as a “virtual closing”, with the parties providing
signature pages to each other electronically or via facsimile), at 10:00 A.M.,
local time, on the Closing Date.  On the first Business Day after the conditions
set forth in Sections 6.1 and 7.1 (other than those to be satisfied on the
Closing Date, which shall be satisfied or waived on such date) have been
satisfied or waived by the party entitled to waive such conditions or such later
date and time as the parties may agree in writing (the “Closing Date”), (A) the
Purchaser shall (x) deliver to the Company by wire transfer in immediately
available funds to an account or accounts designated in writing by the Company
to the Purchaser on the Closing Date, funds in an amount equal to the Purchase
Price (which funds will be used by the Company in accordance with Section 2.4)
and (y) make or cause to be made the deliveries set forth in Section 8.1 and (B)
the Company shall (x) issue and deliver to the Purchaser all of the shares of
the Series D Preferred Stock registered in the name of the Purchaser, and (y)
make or cause to be made the deliveries set forth in Section 6.1.
 

2.4               Use of Proceeds.  The Purchase Price shall be used by the
Company solely for working capital and general business operating expenses, and
the Company shall not, without the prior written consent of the Purchaser, use
the monies for other purposes.
 

2.5               Additional Issuances; Adjustment.
 

(a)              In the event that at any time after the Closing the
representation and warranty set forth in the penultimate sentence of Section 3.6
is determined not to have been true as of the Closing, the Company shall issue
to the Purchaser, at no cost to the Purchaser, and as an adjustment to the
purchase price paid by the Purchaser per share of Series D Preferred Stock, an
additional amount of Series D Preferred Stock such that, if such issuance of
additional Series D Preferred Stock had been made at the Closing, such
representation and warranty would have been true and accurate in all respects at
the Closing.
 
(b)              If at the time of any required adjustment pursuant to Section
2.5(a), all shares of Series D Preferred Stock have been converted into shares
of Common Stock or other equity security, such as Series E Preferred Stock, the
Company shall promptly issue to the Purchaser, at no cost to the Purchaser and
as an adjustment to the purchase price paid by the Purchaser per share of Series
D Preferred Stock, an additional amount and kind of equity security equal to the
amount and kind of equity security issuable upon the conversion or for which the
Series D Preferred Stock has been converted into (based on the conversion ratio
in effect at the time the last shares of Series D Preferred Stock were converted
into shares of Common Stock or such other equity security such as Series E
Preferred Stock) of the amount of Series D Preferred Stock which would have been
issued with respect to such adjustment pursuant to Section 2.5(a) if such
adjustment had been made immediately prior to the time the last shares of Series
D Preferred Stock were converted into shares of Common Stock.
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(c)              Any additional shares of Series D Preferred Stock and Common
Stock issued to the Purchaser pursuant to this Section 2.5 shall be treated as
if they were issued at the Closing and shall reflect any dividends or other
distributions which would have accrued or have been payable with respect to, and
the application of any anti-dilution, ratable treatment or similar provisions
(as set forth in the Certificate of Incorporation, Certificate of Designation,
applicable Law or otherwise) which would have been applicable to, such shares of
Series D Preferred Stock and Common Stock had they been issued at the Closing.
 
(d)              In connection with any issuances of stock pursuant to this
Section 2.5, the Company (i) shall take all action necessary to cause its
Certificate of Incorporation or Certificate of Designation to be amended to
increase the authorized capital of the Company to permit such issuances and (ii)
shall reserve a sufficient number of shares of Common Stock for issuance to the
Purchaser upon the conversion of any shares of Series D Preferred Stock so
issued.  Any shares of Series D Preferred Stock or Common Stock issued to the
Purchaser pursuant to this Section 2.5 shall, when issued, be validly issued and
fully paid and nonassessable with no personal liability attaching to the
ownership thereof and free and clear of all Liens.
 
ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company hereby represents and warrants to the Purchaser as follows:
 
3.1               Corporate Existence and Power.  The Company (a) is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Nevada; (b) has all requisite corporate power and authority
to own and operate its properties, to lease the properties it operates as lessee
and to carry on its business as currently conducted and currently contemplated
to be conducted; and (c) has (or will have, as applicable) all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement, the Investor Rights Agreement, and the Certificate of
Designation (collectively, the “Company Agreements”).  The Company is duly
qualified to do business as a foreign corporation in, and is in good standing
under the Laws of, each jurisdiction in which the conduct of its business or the
nature of the property owned requires such qualification except where the
failure to be so qualified or in good standing, individually or in the aggregate
would not be materially adverse to the Company.
 

3.2               Subsidiaries.  Except as set forth on Schedule 3.2, the
Company has no Subsidiaries and no interest or investments in any corporation,
partnership, limited liability company, trust or other entity or organization.
 Each Subsidiary listed on Schedule 3.2 has been duly organized, is validly
existing and in good standing under the Laws of the jurisdiction of its
organization, has all requisite corporate (or, in the case of an entity other
than a corporation, other) power and authority to own and operate its
properties, to lease the properties it operates as lessee and to carry on its
business as currently conducted and currently contemplated to be conducted, and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the nature of its
properties requires such qualification except where the failure to be so
qualified or in good standing, individually or in the aggregate, has not had and
would not be materially adverse to the Company.  Except as set forth on Schedule
3.2, all of the issued and outstanding stock (or equivalent interests) of each
Subsidiary set forth on Schedule 3.2 has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company free and
clear of any Liens and there are no rights, options or warrants outstanding or
other agreements to acquire shares of stock (or equivalent interests) of such
Subsidiary.  Schedule 3.2 sets forth the capitalization of each of the
Subsidiaries, including the amount and kind of equity interests held by the
Company in the Subsidiary and the percentage interest represented thereby.
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3.3               Corporate Authorization; No Contravention.  The execution,
delivery and performance by the Company of each Company Agreement and the
consummation of the Contemplated Transactions, (a) have been duly authorized by
all necessary corporate action of the Company; (b) do not contravene the terms
of the Certificate of Incorporation or Bylaws or the organizational documents of
its Subsidiaries; (c) do not entitle any Person to exercise any statutory or
contractual preemptive rights to purchase shares of capital stock or any equity
interest in the Company and (d) subject to receipt or satisfaction of the
approvals, consents, exemptions, authorizations or other actions, notices or
filings set forth on Schedule 3.4, and do not violate or result in any breach or
contravention of, a default under, or an acceleration of any obligation under or
the creation (with or without notice, lapse of time or both) of any Lien under,
result in the termination or loss of any right or the imposition of any penalty
under any Contractual Obligation of the Company or its Subsidiaries or by which
their respective assets or properties are bound or any Requirement of Law
applicable to the Company or its Subsidiaries or by which their respective
assets or properties are bound.  Except as set forth on Schedule 3.3, no event
has occurred and no condition exists which (upon notice or the passage of time
or both) would constitute, or give rise to: (i) any breach, violation, default,
change of control or right to cause the Company to repurchase or redeem under,
(ii) any Lien on the assets of the Company or any of its Subsidiaries under,
(iii) any termination right of any party, or any loss of any right or imposition
of any penalty, under or (iv) any change or acceleration in the rights or
obligations of any party under, any material Contractual Obligation of the
Company or its Subsidiaries (or by which their respective assets or properties
are bound) or the Certificate of Incorporation or Bylaws or the organizational
documents of the Company’s Subsidiaries except for any of the foregoing that,
individually or in the aggregate, would not be material to the Company or its
Subsidiaries.
 
3.4               Governmental Authorization; Third Party Consents.  Except as
set forth on Schedule 3.4, no approval, consent, qualification, order,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority, or any other Person in respect of any Requirement of
Law, Contractual Obligation or otherwise, and no lapse of a waiting period under
a Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the issuance, sale and
delivery of the Series D Preferred Stock) by the Company, or enforcement against
the Company, of the Company Agreements or the consummation of the Contemplated
Transactions except for any of the foregoing that, individually or in the
aggregate, would not be material to the Company or its Subsidiaries.
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3.5               Binding Effect.  Each of the Company Agreements has been (or
will, as of the Closing, be, as applicable) duly authorized, executed and
delivered by the Company and, subject to Equitable Principles, constitutes (or
will, as of the Closing, constitute, as applicable) the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
 
3.6               Capitalization of the Company and its Subsidiaries.  The
authorized stock of the Company consists of 1,500,000,000 shares of Common Stock
and 50,000,000 shares of preferred stock, par value $0.001, of the Company (the
“Preferred Stock”).  As of the date hereof, (a) 7,000,000 shares of Series A
Preferred Stock are issued or outstanding, and 250,000 shares of Series C
Preferred Stock are issued or outstanding and have no voting rights, (b)
15,283,597 shares of Common Stock are issued and outstanding, (c) 4,534,897
shares of Common Stock are reserved for or subject to issuance.  Schedule 3.6
sets forth a true and correct list of all outstanding rights, options or
warrants to purchase shares of any class or series of stock of the Company
(collectively, the “Company Options”) and a true and correct list of each of the
Company’s stock option, incentive, purchase or other plans pursuant to which
options or warrants to purchase stock of the Company may be issued
(collectively, the “Existing Plans”).  Except for (i) shares of Common Stock
issuable pursuant to the exercise of outstanding Company Options, and (ii) for
shares of Common Stock issuable upon conversion of the Series A Preferred Stock
or the Series C Preferred Stock, there are no shares of Common Stock or any
other equity security of the Company issuable upon conversion or exchange of any
security of the Company or any of its Subsidiaries nor any rights, options or
warrants outstanding or other agreements to acquire shares of stock of the
Company or any of its Subsidiaries.  Neither the Company nor any of its
Subsidiaries is contractually obligated to issue any shares of stock or to
purchase, redeem or otherwise acquire any of its outstanding shares of stock.
 Neither the Company nor any of its Subsidiaries has created any “phantom
stock,” stock appreciation rights or other similar rights the value of which is
related to or based upon the price or value of the Common Stock.  Neither the
Company nor any of its Subsidiaries has outstanding debt or debt instruments
providing for voting rights with respect to the Company or such Subsidiary to
the holders thereof.  No stockholder of the Company or any of its Subsidiaries
or other Person is entitled to any preemptive or similar rights to subscribe for
shares of stock of the Company or any of its Subsidiaries.  All of the issued
and outstanding shares of Common Stock and Preferred Stock are duly authorized,
validly issued, fully paid, and nonassessable.  Other than pursuant to Article
8, neither the Company nor any of its Subsidiaries has granted to any Person the
right to demand or request that the Company or such Subsidiary effect a
registration under the Securities Act of any securities held by such Person or
to include any securities of such Person in any such registration by the Company
or such Subsidiary. Immediately following the Closing, the shares of Common
Stock issuable upon conversion of the Series D Preferred Stock that will be
issued to the Purchaser under this Agreement will represent, in the aggregate,
no less than 10% of the outstanding capital stock of the Company on a Fully
Diluted Basis, and the voting power of such issued shares of Series D Preferred
Stock will represent, in the aggregate, no less than 7% of the total number of
votes able to be cast on any matter by Voting Securities of the Company on a
Fully Diluted Basis.  Upon completion of the sale and issuance of the Series E
Preferred Stock, and the exchange of all of the shares of Series D Preferred
Stock for additional shares of Series E Preferred Stock, and the exchange by the
Purchaser with Shane McMahon of 933,333 shares of Series E Preferred Stock for
all of his shares of Series A Preferred Stock, then the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock and Series E Preferred
Stock that will be held by the Purchaser will represent, in the aggregate, no
less than 40% of the outstanding capital stock of the Company on a Fully Diluted
Basis (assuming no changes to the outstanding capital stock of the Company as of
the date hereof other as described in the Series E Purchase Agreement), and the
voting power of such shares of Series A Preferred Stock and Series E Preferred
Stock will represent, in the aggregate, no less than 50% of the total number of
votes able to be cast on any matter by Voting Securities of the Company on a
Fully Diluted Basis (assuming no changes to the outstanding capital stock of the
Company as of the date hereof other as described in the Series E Purchase
Agreement).
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3.7               Commission Documents; Sarbanes-Oxley Compliance.
 
(a)              Since December 31, 2009, the Company has filed with or
furnished to the Commission all forms, reports, statements, schedules,
certificates and other documents that have been required to be filed or
furnished by it under applicable Laws on a timely basis or received a valid
extension of such time of filing and filed any such SEC Reports prior to the
expiration of any such extension.  The Company has made available to Purchaser
true, complete and unredacted copies of (i) SEC Reports filed or furnished prior
to the date of this Agreement, in each case to the extent not publicly filed in
unredacted form and (ii) all correspondence between the Company (or on its
behalf) and the Commission.  As of its filing date (or, if amended or superseded
by a filing prior to the date of this Agreement, on the date of such amended or
superseded filing), (a) each SEC Report complied as to form in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act, as the case may be, each as in effect on the date such Company SEC Report
was filed, and (b) each SEC Report did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. None of the Company’s Subsidiaries is required to file any
forms, reports or other documents under the Exchange Act. No executive officer
of the Company has failed to make the certifications required of him or her
under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any SEC
Report, except as disclosed in certifications filed with the SEC Reports.
Neither the Company nor any of its executive officers has received notice from
any Governmental Authority challenging or questioning the accuracy,
completeness, form or manner of filing of such certifications. The Company and
each of its officers is in compliance in all material respects with (i) the
applicable provisions of the Sarbanes-Oxley Act and the rules and regulations
promulgated thereunder, and (ii) the applicable listing and corporate governance
rules and regulations of NASDAQ.
 
(b)            The management of the Company has (i) designed disclosure
controls and procedures to ensure that material information relating to the
Company, including its consolidated Subsidiaries, is made known to the
management of the Company by others within those entities, and (ii) has
disclosed, based on its most recent evaluation, to the Company’s outside
auditors and the audit committee of the Board of Directors (A) any significant
deficiencies in the design or operation of internal controls which could
adversely affect the Company’s ability to record, process, summarize and report
financial data and have identified for the Company’s outside auditors any
material weaknesses in internal controls and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company’s internal controls.  A summary of any of those disclosures
made by management to the Company’s auditors and audit committee has been
furnished to Purchaser.  The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(c)            Since December 31, 2009, neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any director, officer,
employee, auditor, accountant or representative of the Company or any of its
Subsidiaries has received or otherwise had or obtained knowledge of any
complaint, allegation, assertion or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of
the Company or any of its Subsidiaries or their respective internal accounting
controls, including any complaint, allegation, assertion or claim that the
Company or any of its Subsidiaries has engaged in questionable accounting or
auditing practices.  No attorney representing the Company or any of its
Subsidiaries, whether or not employed by the Company or any of its Subsidiaries,
has reported evidence of a material violation of securities Laws, breach of
fiduciary duty or similar violation by the Company or any of its officers,
directors, employees or agents to the Board of Directors or any committee
thereof or to any director or officer of the Company.
 
(d)            To the knowledge of the Company, no employee of the Company or
any of its Subsidiaries has provided or is providing information to any law
enforcement agency regarding the commission or possible commission of any crime
or the violation or possible violation of any Law, rule, regulation, order,
decree or injunction.  Neither the Company nor any of its Subsidiaries nor, to
the knowledge of the Company, any contractor, subcontractor or agent of the
Company or any such Subsidiary of the Company has discharged, demoted,
suspended, threatened, harassed or in any other manner discriminated against an
employee of the Company or any of its Subsidiaries in the terms and conditions
of employment because of any act of such employee described in 18 U.S.C.
 ss.1514A(a).
 
3.8               Absence of Certain Developments.  Since December 31, 2009,
except as set forth on Schedule 3.8 and except as described in the SEC Reports
filed with the Commission prior to the date hereof (a) each of the Company and
its Subsidiaries has operated in the ordinary course, (b) there has been no
occurrence or event of the type set forth in Section 5.1(a), there has occurred
no fact, event, circumstance or development that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect.
 

3.9               Indebtedness; No Undisclosed Liabilities.  Schedule 3.9 sets
forth the Indebtedness of the Company.  Neither the Company nor any of its
Subsidiaries has any material liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, except (a) liabilities or obligations
disclosed or reserved against in the SEC Reports filed with the Commission prior
to the date hereof, (b) liabilities or obligations which arose after the last
date of any such SEC Report, in the ordinary course of business consistent with
past practice that, individually or in the aggregate, does not exceed
$1,000,000, (c) as set forth on Schedule 3.9, and (d) liabilities incurred in
connection with the Contemplated Transactions that are not in breach of this
Agreement.
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3.10            Compliance with Laws; Licenses.
 
(a)              Except as set forth in the SEC Reports filed with the
Commission prior to the date hereof or as set forth on Schedule 3.10(a), neither
the Company nor any of its Subsidiaries in the conduct of its business, is, or
since December 31, 2009, has been, in violation of any Requirement of Law, or
any judgments, orders, rulings, injunctions or decrees of a Governmental
Authority (collectively, “Decrees”), applicable thereto or to the employees
conducting such business, except for violations that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect.
 
(b)            The Company and its Subsidiaries as applicable, have obtained or
made, as the case may be, all permits, licenses, authorizations, orders and
approvals, and all filings, applications and registrations with, all
Governmental Authorities (“Licenses”), that are required to conduct the
businesses of the Company and its Subsidiaries in the manner and to the full
extent as currently conducted or currently contemplated to be conducted except
where such failure to obtain or make, individually or in the aggregate, would
not be materially adverse to the Company.  None of such Licenses is subject to
any restriction or condition that limits or would reasonably be expected to
limit in any material way the full operation of the Company or its Subsidiaries
as currently conducted or currently contemplated to be conducted.  Each of the
Licenses has been duly obtained, is valid and in full force and effect, and is
not subject to any pending or threatened proceeding to limit, condition,
suspend, cancel, suspend, or declare such License invalid.  Neither the Company
nor any of its Subsidiaries is in default in any material respect with respect
to any of the Licenses, and to the knowledge of the Company no event has
occurred which constitutes, or with due notice or lapse of time or both may
constitute, a default by the Company or any such Subsidiary under any License.
 

3.11            Litigation.  Except as set forth on Schedule 3.11, there is no
legal action, suit, arbitration, proceeding or, to the knowledge of the Company,
other legal, administrative or other governmental investigation or inquiry
pending or claims asserted (or, to the knowledge of the Company, any threat
thereof) against the Company or any of its Subsidiaries or relating to any of
the Company Agreements or the Contemplated Transactions or against any officer,
director or employee of the Company in connection with such Person’s
relationship with or actions taken on behalf of the Company.  The Company is not
subject to any Decree that, individually or in the aggregate, has had or would
reasonably be expected to be material to the Company.
 

3.12            Material Contracts.
 

(a)              Schedule 3.12(a) sets forth a true, correct and complete list
of the following Contractual Obligations (including every written amendment,
modification or supplement to the foregoing or other material amendment,
modification or supplement to the foregoing that is binding on the Company or
any of its Subsidiaries) to which the Company or any of its Subsidiaries is a
party: (i) any Contractual Obligation that is a “material contract” (as such
term is defined in Item 601(b)(10) of Regulation S-K of the Commission), (ii)
Contractual Obligations that collectively represent the top 5 agreements (based
on cost) with content licensors for the Company and its Subsidiaries during the
Company’s last fiscal year, (iii) Contractual Obligations that collectively
represent the top 5 agreements (based on revenue) for distribution services and
cooperation agreements of the Company and its Subsidiaries during the Company’s
last fiscal year, (iv) any Contractual Obligation (other than a Contractual
Obligation described in one of the other provisions of this Section 3.12(a)
without regard to any threshold contained therein) that involves annual
expenditures during the Company’s last fiscal year by the Company or any Company
Subsidiary in excess of $200,000 and is not otherwise cancelable by the Company
or any of its Subsidiaries without any financial or other penalty on 90-days’ or
less notice, (v) any Lease for real property or (vi) any other Contractual
Obligation that is material to the Company or its Subsidiaries (each Contractual
Obligation referenced above in clauses (i) through (vi) individually, a
“Material Contract” and collectively, “Material Contracts”); provided that, with
respect to Company Material Contracts described above, such list shall identify
the date of such contract and any communications (written or, to the knowledge
of the Company, oral) received by the Company or its Subsidiaries from any party
to such contract or on behalf of any such party that such party intends to
cancel, terminate, seek re-bidding of or fail to renew such contract.  Except as
set forth on Schedule 3.12(a), the Company has delivered or made available true,
correct and complete copies of all such Contractual Obligations to counsel to
Purchaser.
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(b)            All of the Material Contracts are valid, binding and in full
force and effect in all material respects and enforceable by the Company in
accordance with their respective terms in all material respects, subject to
Equitable Principles.  The Company is not in material default or breach under
any of its Contractual Obligations or organizational documents and, to the
knowledge of the Company, no other party to any of its Contractual Obligations
is in material default or breach thereunder (and no event has occurred which
with the passage of time or the giving of notice or both would result in a
material default or breach by the Company or, to the knowledge of the Company,
by any other party thereunder).  Except as set forth on Schedule 3.12(b),
neither the Company nor any of its Subsidiaries is a party to any
non-competition agreement or any other agreement or obligation that materially
limits or will materially limit the Company or any of its Subsidiaries from
engaging in any line of business in any territory.
 
3.13            Environmental.  Except as set forth on Schedule 3.13, the
Company and its Subsidiaries are, and have been, in compliance with all
Environmental Laws, except where such non-compliance, individually or in the
aggregate, has not had and would not reasonably be expected to be materially
adverse to the Company.  Neither the Company nor any of its Subsidiaries has
received any written notice that alleges that the Company or its Subsidiaries is
not in compliance with any Environmental Laws, and to the knowledge of the
Company, there are no circumstances that could reasonably be expected to prevent
or interfere with such compliance in the future. There is no Environmental Claim
pending, or to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries with respect to the operations or business of the
Company or its Subsidiaries, or against any Person whose liability for any
Environmental Claim the Company or its Subsidiaries has retained or assumed
either contractually or by operation of Law.  There has been no release at any
time of any Materials of Environmental Concern at, on, about, under or within
any real property currently, or to the knowledge of the Company, formerly owned,
leased, operated or controlled by the Company or any of its Subsidiaries or any
of their predecessors.
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3.14            Taxes.  Except as set forth on Schedule 3.14 hereto, all Returns
required to be filed by the Company and each of its Subsidiaries have been
timely filed (after giving effect to any valid extensions of time in which to
make such filings) and all such Returns are true, complete, and correct in all
material respects.  All Taxes that are due or claimed to be due from the Company
and each of its Subsidiaries have been timely paid, other than those (i)
currently payable without penalty or interest or (ii) being contested in good
faith and by appropriate proceedings and for which, in the case of both clauses
(i) and (ii), adequate reserves have been established on the books and records
of the Company and its Subsidiaries in accordance with GAAP.  There are no
proposed, asserted, ongoing or to the knowledge of the Company, threatened,
assessments, examinations, claims, deficiencies, Liens or other litigation with
regard to any Taxes or Returns of the Company or any of its Subsidiaries.  To
the knowledge of the Company, the accruals and reserves on the books and records
of the Company and its Subsidiaries in respect of any Tax liability for any
taxable period not finally determined are adequate to meet any assessments of
Tax for any such period.  The Company is not a United States real property
holding corporation as defined in Section 897(c)(2) of the Code.  Except as set
forth on Schedule 3.14, the Company and each of its Subsidiaries are not
currently the beneficiary of any extension of time within which to file any Tax
Return.  All material amounts required to be collected or withheld by the
Company or any of its Subsidiaries have been collected or withheld and any such
amounts that are required to be remitted to any taxing authority have been duly
and timely remitted.  Neither the Company nor any of its Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.  No taxing authority in a
jurisdiction where the Company or its Subsidiaries do not file Tax Returns has
made a written claim or assertion that the Company or its Subsidiaries are or
may be subject to taxation by such jurisdiction.  Except as set forth on
Schedule 3.14, the Company and each of its Subsidiaries is not a party to or
bound by any Tax sharing or Tax allocation or similar Contractual Obligation.
 True and complete copies of all income Tax Returns that have been filed by the
Company or any of its Subsidiaries for Tax periods after December 31, 2008 have
been delivered or made available to the Purchaser.  The Company and each of its
Subsidiaries (A) has not been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group of which the Company
was the common parent) or (B) does not have any liability for the Taxes of any
Person (other than the Company) under Treasury Regulation ss. 1.1502-6 (or any
similar provision of state, local, or foreign Requirement of Law), as a
transferee or successor, by contract, or otherwise.  The Company and each of its
Subsidiaries has not agreed, and is not required to include in income any
adjustment pursuant to Section 481(a) of the Code (or analogous provision of
foreign, state, or local Requirement of Law) by reason of a change in accounting
method or otherwise, and the Company and each of its Subsidiaries does not have
knowledge that the Internal Revenue Service (or other taxing authority) has
proposed or is considering any such change in accounting.  The Company and each
of its Subsidiaries will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any: (A) “closing
agreement” as described in Code ss.  7121 (or any corresponding or similar
provision of state, local or foreign income Tax Requirement of Law) executed on
or prior to the Closing Date; (B) installment sale or open transaction
disposition made on or prior to the Closing Date; or (C) prepaid amount received
on or prior to the Closing Date.
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3.15            Title to Property and Assets; Leases.  Except as set forth on
Schedule 3.15, each of the Company and its Subsidiaries has good and marketable
title, free and clear of all Liens to all of its assets, including all real
property and interests in real property owned in fee simple by the Company and
its Subsidiaries and all real property leased, subleased or otherwise occupied
by the Company and its Subsidiaries and any assets and properties which it
purports to own, except (i) Liens for taxes not yet due and payable and (ii)
Liens that do not interfere with the use, utility or value of such assets in any
material respect.  All leases to which the Company or any of its Subsidiaries is
a party (collectively, the “Leases”) are valid and binding and in full force and
effect in accordance with their respective terms on the Company and its
Subsidiaries and, to the knowledge of the Company, with respect to each other
party to any such Leases, except, in each case, subject to Equitable Principles.
 No material default (or event which, with the giving of notice or passage of
time, or both, would constitute a material default) by the Company or any of its
Subsidiaries, or to the knowledge of the Company by any other party thereto, has
occurred and is continuing under the Leases.  The Company and its Subsidiaries
enjoy a peaceful and undisturbed possession under all such Leases to which any
of them is a party as lessee.  With respect to each Lease, to the knowledge of
the Company, either (a) such Lease is not subject or subordinate to any
mortgage, deed of trust or other lien which has priority over such Lease, or (b)
the holder of any such lien has entered into a valid, binding and enforceable
nondisturbance agreement in favor of the lessee pursuant to which the Lease
cannot be extinguished or terminated by reason of any foreclosure or other
acquisition of title by such holder if the lessee thereunder is not in default
under the Lease as of the date of acquisition of title.  As used herein, the
term “Lease” shall also include subleases or other occupancy agreements (and any
amendments thereto) and the term “lessee” shall also include any sublessee or
other occupant.  Neither the Company nor any of its Subsidiaries own any real
property.
 
3.16            Compliance with ERISA.  Except as set forth on Schedule 3.16,
the Company has made available to the Purchaser true and complete copies of each
Employment Agreement and each material Company Benefit Plan, as well as certain
related documents, including, but not limited to, (a) the actuarial report for
such Company Benefit Plan (if applicable) for each of the last two years, (b)
the most recent determination letter from the IRS (if applicable) for such
Company Benefit Plan, (c) the two most recent annual reports (Series 5500 and
related schedules) required under ERISA (if any), (d) the most recent summary
plan descriptions (with all material modifications) and (e) all material
communications to any current or former employees of the Company relating to any
material Company Benefit Plan or Employment Agreement.  Except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect: (A) each of the Company Benefit Plans has been operated and
administered in all material respects in compliance with its terms and all
applicable Laws; (B) each of the Company Benefit Plans intended to be
“qualified” within the meaning of Section 401(a) of the Code is so qualified;
and (C) there are no pending, or to the knowledge of Company, threatened claims
(other than routine claims for benefits) by, on behalf of or against any of the
Company Benefit Plans or any trusts related thereto or pursuant to any
Employment Agreement.  Neither the Company nor any ERISA Affiliate currently
sponsors, maintains or contributes to, and is not required to contribute to, nor
has ever sponsored, maintained or contributed to, and been required to
contribute to, or incurred any liability with respect to any “employee benefit
plan” (within the meaning of Section 3(3) of ERISA) that is subject to Section
302 of the Code or Title IV of ERISA.  No non-exempt “prohibited transaction,”
within the meaning of Section 4975 of the Code or Section 406 of ERISA, has
occurred with respect to any Company Benefit Plan which could, individually or
in the aggregate, reasonably be expected to result in a material liability to
the Company.  No material liability under any Company Benefit Plan has been
funded nor has any such obligation been satisfied with the purchase of a
contract from an insurance company as to which the Company has received notice
that such insurance company is insolvent or is in rehabilitation or any similar
proceeding.  No Company Benefit Plan is under audit or, to the knowledge of the
Company, investigation by, or is the subject of a proceeding with respect to,
the IRS, the Department of Labor or the Pension Benefit Guaranty Corporation,
and, to the knowledge of the Company, no such audit, investigation or proceeding
is threatened.  Except as set forth on Schedule 3.16, with respect to each
Company Benefit Plan which provides medical benefits, short-term disability
benefits or long-term disability benefits (other than any “pension plan” within
the meaning of Section 3(2) of ERISA), all claims incurred by the Company under
such Company Benefit Plan are either insured pursuant to a contract of insurance
whereby the insurance company bears any risk of loss with respect to such claims
or covered under a contract with a health maintenance organization pursuant to
which such health maintenance organization bears the liability for such claims.
 Except as set forth on Schedule 3.16 hereto or disclosed in the SEC Reports
filed with the Commission prior to the date hereof, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (either alone or in conjunction with any other event such as
termination of employment) (i) result in, or cause any increase, acceleration or
vesting of, any payment, benefit or award under any Company Benefit Plan or
Employment Agreement to any director or employee of Company or any of its
Subsidiaries, (ii) give rise to any obligation to fund for any such payments,
awards or benefits, (iii) give rise to any limitation on the ability of the
Company or any of its Subsidiaries to amend or terminate any Company Benefit
Plan, or (iv) result in any payment or benefit that will or may be made by the
Company or any of its Subsidiaries or affiliates that will be characterized as
an “excess parachute payment,” within the meaning of Section 280G of the Code.
 Except as set forth on Schedule 3.16, neither the Company nor any of its
Subsidiaries or ERISA Affiliates has any liability to provide any
post-retirement or post-termination life, health, medical or other welfare
benefits to any current or former employees or beneficiaries or dependents
thereof which, individually or in the aggregate, is material, except for health
continuation coverage as required by Section 4980B of the Code or Part 6 of
Title I of ERISA or applicable state healthcare continuation coverage Laws
which, individually or in the aggregate, is at no material expense to the
Company and its Subsidiaries.  With respect to each Company Benefit Plan, there
are no understandings, agreements or undertakings that would prevent the Company
from amending or terminating such Company Benefit Plan at any time without
incurring material liability thereunder other than in respect of accrued
obligations and medical or welfare claims incurred prior to such amendment or
termination.
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3.17            Labor Relations; Employees.
 
(a)            (i) Neither the Company nor any of its Subsidiaries is a party to
any collective bargaining agreement, labor union contract, or trade union
agreement (each a “Collective Bargaining Agreement”), (ii) to the knowledge of
the Company, there are no activities or proceedings of any labor or trade union
to organize any employees of the Company or any of its Subsidiaries; (iii) no
Collective Bargaining Agreement is being negotiated by the Company or any of its
Subsidiaries, (iv) there is no strike, lockout, slowdown, or work stoppage
against the Company or any of its Subsidiaries pending or, to the knowledge of
the Company, threatened that may interfere with the respective business
activities of the Company or any of its Subsidiary.
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(b)            Except as set forth on Schedule 3.17(b), the Company and its
Subsidiaries have complied in all material respects with applicable Laws with
respect to employment (including but not limited to applicable Laws regarding
wage and hour requirements, correct classification of independent contractors
and of employees as exempt and non-exempt, immigration status, discrimination in
employment, employee health and safety, and collective bargaining).
 
(c)            The Company and each of its Subsidiaries have withheld all
amounts required by applicable Law to be withheld from the wages, salaries, and
other payments to employees, and are not, to the knowledge of the Company,
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing. Neither the Company nor any of its
Subsidiaries is liable for any material payment to any trust or other fund or to
any Governmental Authority, with respect to unemployment compensation benefits,
social security or other benefits for employees (other than routine payments to
be made in the ordinary course of business consistent with past practice).
 
3.18            Certain Payments.  Neither the Company nor any Subsidiary nor,
to the knowledge of the Company, any director, officer, agent, employee, or
other Person associated with or acting on behalf of any of them, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any Subsidiary or any Affiliate of
the Company or any Subsidiary, or (iv) in violation of any Requirement of Law,
or (b) established or maintained any fund or asset that has not been recorded in
the books and records of the Company.
 

3.19            Insurance.  The Company and its Subsidiaries maintain, with
financially sound and reputable insurers, insurance in such amounts, including
deductible arrangements, and of such a character as is, in the judgment of the
Board of Directors, reasonable in light of the risks faced by the Company in the
conduct of its business.  All policies of title, fire, liability, casualty,
business interruption, workers’ compensation and other forms of insurance
including, but not limited to, directors and officers insurance, held by the
Company and its Subsidiaries, are in full force and effect in accordance with
their terms.  Neither the Company nor any of its Subsidiaries is in default in
any material respect under any provisions of any such policy of insurance that
has not been remedied and no such Person has received notice of cancellation of
any such insurance.
 
3.20            Intellectual Property.  The Company and its Subsidiaries own the
entire and unencumbered right, title and interest in and to, or possess adequate
licenses or other rights to use, all intellectual property, including but not
limited to, patents, trademarks, service marks, trade names, trade secrets,
copyrights, domain names, computer software (including but not limited to code,
data, databases and documentation) and know-how used in, or necessary to, the
business as currently conducted or currently contemplated to be conducted by the
Company or any of its Subsidiaries (the “Intellectual Property”) except where
such failure to so own or possess, individually or in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect.  All
Intellectual Property which is a material patent, trademark, service mark, trade
name, copyright or domain name is set forth on Schedule 3.20.  The Company and
each of its Subsidiaries have performed all commercially reasonable acts to
protect and maintain its material Intellectual Property, including but not
limited to paying all required fees and Taxes to maintain all registrations and
applications of such Intellectual Property in full force and effect. Except as
set forth on Schedule 3.20, none of the Company or any of its Subsidiaries has
received any written notice of infringement of or conflict with (or knows of
such infringement of or conflict with) asserted rights of others with respect to
the use of Intellectual Property.  To the knowledge of the Company, the Company
and its Subsidiaries do not in the conduct of their business infringe or
conflict with any right of any third party. Except as set forth on Schedule
3.20, neither the Company nor any of its Subsidiaries have asserted within two
years of the date hereof, any claim against any third party that such party has
violated, infringed, misappropriated or misused, in any material respect, any
Intellectual Property.  The Company and its Subsidiaries have taken commercially
reasonable precautions to preserve and protect the availability,
confidentiality, security and integrity of data held or transmitted by or
through the Company and its Subsidiaries’ computer networks, software, hardware,
and other systems.
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3.21            Affiliate Transactions.
 
(a)              Except for transactions described on Schedule 3.21(a) and
transactions contemplated by the Voting Agreements, (i)(w) no current officer,
director or employee of the Company or any of its Subsidiaries, (x) to the
knowledge of the Company, no former officer, director or employee of the Company
or any of its Subsidiaries, (y) to the knowledge of the Company, no Affiliate or
associate of any current officer, director or employee of the Company or any of
its Subsidiaries and (z) to the knowledge of the Company, no Affiliate or
associate of any former officer, director or employee of the Company or any of
its Subsidiaries has, directly or indirectly, any interest in any contract,
arrangement or property (real or personal, tangible or intangible) used by the
Company or any such Subsidiary or in their respective businesses, or in any
supplier, distributor or customer of the Company or any such Subsidiary (other
than indirectly through such Person’s ownership of the securities of a
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than one percent (1%) of the stock of such
corporation is beneficially owned by such Person) and (ii) neither the Company
nor any of its Subsidiaries shares any assets, rights or services with any
entity that is controlled by any current officer, director or employee of the
Company or any of its Subsidiaries or, to the knowledge of the Company, by any
former officer, director or employee of the Company or any of its Subsidiaries.
 
(b)            Except as set forth on Schedule 3.21(b), each ongoing
intercompany transaction set forth on Schedule 3.21(a) is on terms that are (i)
consistent with the past practice of the Company and (ii) at least as favorable
in the aggregate for such transaction to the Company as would be available with
independent third parties dealing at arms’ length.
 

3.22            Investment Company Act.  Neither the Company nor any of its
Subsidiaries is, and, after giving effect to consummation of the transactions
contemplated hereby and by the other Company Agreements, will be, an “investment
company” or an entity “controlled by” an “investment company” (as such terms are
defined in the Investment Company Act of 1940, as amended).
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3.23            Private Offering.  No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Series D Preferred Stock.  No registration of the
Series D Preferred Stock pursuant to the provisions of the Securities Act will
be required by the offer, sale, or issuance of the Series D Preferred Stock
pursuant to this Agreement and no registration of the Conversion Stock upon
conversion of the Series D Preferred Stock in accordance with the Certificate of
Designation will be required, assuming the accuracy of the Purchaser’s
representations contained in Section 4.5.
 

3.24            Board Approval; Stockholder Approval.
 

(a) The Board of Directors at a meeting duly called and held has unanimously
determined the Contemplated Transactions to be advisable and in the best
interests of the Company and its stockholders and has approved the Contemplated
Transactions.  The Board of Directors has taken all action required in order to
(i) exempt the Purchaser, in respect to its purchase and conversion of the
Series D Preferred Stock and any other securities of the Company acquired
pursuant to the Contemplated Transactions, from “interested stockholder” status
as defined under Section 78.411 et seq of the Nevada General Corporation Law
(the “NGCL”) and (ii) exempt the Contemplated Transactions from the requirements
of, and from triggering any provisions under, any “moratorium,” “control share,”
“fair price,” “interested stockholder,” “affiliate transaction,” “business
combination” or other anti-takeover Laws and regulations of any Governmental
Authority.
 

(b)              No approval by the holders of any shares of stock of the
Company is required in connection with the execution or delivery of the Company
Agreements or the consummation of the sale and issuance of the Series D
Preferred Stock, and there are no rules and regulations prohibiting the Company
Agreements or the Contemplated Transactions, whether pursuant to the NGCL, the
Certificate of Incorporation or Bylaws, the rules and regulations of the FINRA,
NASDAQ or otherwise.
 
3.25            Series D Preferred Stock.
 
(a)              All shares of the Series D Preferred Stock, when issued and
delivered in accordance with the terms of this Agreement, the Certificate of
Designation and the other Company Agreements, will be duly and validly issued
and outstanding, entitled to the benefits contemplated by the Certificate of
Designation, fully paid and nonassessable and free and clear of any Liens (other
than any Liens granted by the Purchaser), not subject to preemptive or other
similar rights, and constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms.
 
  (b)            All shares of the Common Stock issued and delivered upon
conversion of the Series D Preferred Stock, in accordance with the terms of the
Certificate of Designation, will, when so issued and delivered, be duly and
validly issued and outstanding, fully paid and nonassessable and free and clear
of any Liens (other than any Liens granted by the Purchaser) and not subject to
preemptive or other similar rights.
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3.26            No Brokers or Finders.  Except as set forth on Schedule 3.26, no
agent, broker, finder, or investment or commercial banker or other Person (if
any) engaged by or acting on behalf of the Company or any Subsidiary or
Affiliate is or will be entitled to any brokerage or finder’s or similar fee or
other commission as a result of the Company Agreements or the Contemplated
Transactions.
 

3.27            Disclosure.  Neither this Agreement nor any certificate,
instrument or written statement furnished or made to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein in light of the circumstances under which they were made not misleading.
 

3.28            Suitability.  Neither the Company nor any of its directors,
officers, Subsidiaries or, to the knowledge of the Company, other Affiliates (a)
has ever been convicted of or, to the knowledge of the Company since December
31, 2002, indicted for any felony or any crime involving fraud,
misrepresentation or moral turpitude, (b) is subject to any Decree barring,
suspending or otherwise limiting the right of the Company or such Person to
engage in any activity or (c) has ever been denied any License affecting the
Company’s or such Person’s ability to conduct any activity currently conducted
or currently contemplated to be conducted by the Company, nor, to the knowledge
of the Company, is there any basis upon which such License may be denied.
 

3.29            Off Balance Sheet Arrangements.  Except as disclosed in
Management’s Discussion and Analysis of Financial Conditions and Results of
Operations in the Company’s Form 10-K for the fiscal year ending December 31,
2012, neither the Company nor any of its Subsidiaries has or is subject to any
“Off-Balance Sheet Arrangement” (as defined in Item 303(a)(4)(ii) of Regulation
S-K promulgated under the Exchange Act).
 
ARTICLE 4
 
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
 
The Purchaser hereby represents and warrants to the Company as follows:
 
4.1               Existence and Power.  The Purchaser (a) is duly organized and
validly existing under the Laws of the jurisdiction of its formation and (b) has
all requisite power and authority to execute, deliver and perform its
obligations under this Agreement.
 

4.2               Authorization; No Contravention.  The execution, delivery and
performance by the Purchaser of each Company Agreement to which it is a party
and the Contemplated Transactions (a) have been duly authorized by all necessary
corporate or other action, (b) do not contravene the terms of the Purchaser’s
organizational documents, and (c) do not violate, conflict with or result in any
breach or contravention of, or the creation of any Lien under, any Contractual
Obligation of the Purchaser or any Requirement of Law applicable to the
Purchaser, except for such violations, conflicts, breaches or Liens which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on the Purchaser’s ability to
consummate the Contemplated Transactions.
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4.3               Governmental Authorization; Third Party Consents.  Except as
listed in Schedule 4.3 or, individually or in the aggregate, has not had and
would not reasonably be expected to have a material adverse effect on the
Purchaser’s legal power or ability to purchase or own the Series D Preferred
Stock and exercise the rights incident thereto, no approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person in respect of any Requirement of Law,
and no lapse of a waiting period under a Requirement of Law, is necessary or
required in connection with the execution, delivery or performance by the
Purchaser, or enforcement against the Purchaser, of this Agreement or the
consummation of the Contemplated Transactions.
 

4.4               Binding Effect.  This Agreement has been duly executed and
delivered by the Purchaser and, subject to Equitable Principles, constitutes the
legal, valid and binding obligation of the Purchaser, enforceable against it in
accordance with its terms.
 

4.5               Investment Representations.

(a)            Purchase for Own Account.  The shares of Series D Preferred Stock
are being acquired by the Purchaser for its own account and with no current
intention of distributing or reselling such shares of Series D Preferred Stock
or any part thereof in any transaction that would be in violation of the
securities Laws of the United States of America or any state, without prejudice,
however, to the rights of the Purchaser at all times to sell or otherwise
dispose of all or any part of the Series D Preferred Stock under an effective
Registration Statement under the Securities Act or under an exemption from said
registration available under the Securities Act.  The Purchaser understands and
agrees that if the Purchaser should in the future decide to dispose of any
Series D Preferred Stock, it may do so only in compliance with the Securities
Act and applicable state securities Laws, as then in effect.  The Purchaser
agrees to the imprinting, so long as required by Law, of a legend on all
certificates representing shares of Series D Preferred Stock.
 
(b)            Purchaser Status.  The Purchaser is an “Accredited Investor” (as
defined in Rule 501(a)) under the Securities Act.
 
(c)            Restricted Shares.  The Purchaser understands (i) that the shares
of the Series D Preferred Stock have not been, and the shares of Common Stock
issuable upon conversion of the Series D Preferred Stock (the “Conversion
Shares”) will not (subject to such rights set forth in Section 8.1) be
registered under the Securities Act or any state securities Laws, by reason of
their issuance by the Company in a transaction exempt from the registration
requirements thereof and (ii) the shares of the Series D Preferred Stock and the
Conversion Shares may not be sold unless such disposition is registered under
the Securities Act and applicable state securities Laws or is exempt from
registration thereunder.
 
(d)            Investment Experience:  The Purchaser acknowledges that the
purchase of the Series D Preferred Stock is a highly speculative investment and
that it can bear the economic risk and complete loss of its investment and has
such knowledge and experience in financial and/or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
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4.6               Receipt of Information.  The Purchaser represents that it has
had an opportunity to ask questions and receive answers and documents from the
Company regarding the business, properties, prospects and financial condition of
the Company and concerning the terms and conditions of the offering of the
Series D Preferred Stock and to obtain additional information necessary to
verify the accuracy of any information furnished to the Purchaser or to which
the Purchaser had access.
 

4.7               No Brokers or Finders.  Except as contemplated by this
Agreement, no agent, broker, finder, or investment or commercial banker or other
Person (if any) engaged by or acting on behalf of the Purchaser or any of its
Affiliates is or will be entitled to any brokerage or finder’s or similar fee or
other commission as a result of this Agreement or the Contemplated Transactions.
 

4.8               Sufficient Funds.  The Purchaser will have at the Closing
funds sufficient to perform its obligations under this Agreement and to
consummate the Contemplated Transactions.
 

4.9               Litigation.  There is no legal action, suit, arbitration or
other legal, administrative or other governmental investigation, inquiry,
proceeding or other Actions pending or, to the knowledge of the Purchaser,
threatened against or affecting the Purchaser or relating to any of the Company
Agreements or the Contemplated Transactions which, if determined adversely to
the Purchaser, individually or in the aggregate, has had or would reasonably be
expected to have a material adverse effect on the Purchaser’s ability to
consummate the Contemplated Transactions.  The Purchaser is not subject to any
Decree that, individually or in the aggregate, has had or would reasonably be
expected to have a material adverse effect on the Purchaser’s ability to
consummate the Contemplated Transactions.
 

4.10            No General Solicitation.  The Purchaser did not learn of the
investment in the Series D Preferred Stock as a result of any public
advertising, and is not aware of any public advertisement or general
solicitation in respect of the Company or its securities.
 

4.11            Prohibited Transactions.  Other than with respect to the
transactions contemplated herein, since the earlier to occur of: (a) the time
that the Purchaser was first contacted by the Company, or any other Person
regarding an investment in the Company and (b) the thirtieth (30th) day prior to
the date hereof, neither the Purchaser nor any Affiliate of the Purchaser which
(i) had knowledge of the transactions contemplated hereby, (ii) has or shares
discretion relating to the Purchaser’s investments or trading or information
concerning the Purchaser’s investments, or (iii) is subject to the Purchaser’s
review or input concerning such Affiliate’s investments or trading decisions
(collectively, “Trading Affiliates”) has, directly or indirectly, nor has any
Person acting on behalf of, or pursuant to, any understanding with the Purchaser
or Trading Affiliate effected or agreed to effect any transactions in the
securities of the Company or involving the Company’s securities.
 

4.12            Reliance on Exemptions.  The Purchaser understands that the
Series D Preferred Stock is being offered and sold to it in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities Laws and that the Company is relying upon the truth and
accuracy of, and the Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Investor to acquire the Series D Preferred Stock.
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ARTICLE 5
 
COVENANTS
5.1               Conduct of Business.
 

(a) Except as expressly contemplated by this Agreement or consented to in
writing by the Purchaser, from the date hereof through the earlier of (i) the
Series E Closing Date, (ii) October 31, 2013, (iii) the written confirmation
from Purchaser that it will not pursue the Series E financing pursuant to
Section 5.11 and (iv) termination of this Agreement (the “Restricted Period”),
the Company and its Subsidiaries shall conduct their businesses in the ordinary
course, consistent with past practice and generally in a manner such that the
representations and warranties contained in Article 3, to the extent such
matters are within the Company’s or any of its Subsidiary’s control, shall
continue to be true and correct in all material respects on and as of the
Closing Date (except for representations and warranties made as of a specific
date) as if made on and as of the Closing Date.  The Company shall give the
Purchaser prompt notice of any event, condition or circumstance known or that
becomes known to the Company occurring from the date hereof through the
Restricted Period, that would constitute a violation or breach of (x) any
representation or warranty, whether made as of the date hereof or as of the
Closing Date, or (y) any covenant of the Company contained in this Agreement;
provided, however, that no such notification shall relieve or cure any such
breach or violation of any such representation, warranty or covenant or
otherwise affect the accuracy of any such representation or warranty for the
purposes of Section 6.1.  Without limiting the generality of the foregoing,
except as otherwise expressly contemplated by the terms of this Agreement or the
Company Agreements or agreed in writing by the Purchaser, from and after the
date hereof and through the Restricted Period, the Company shall not, and will
cause its Subsidiaries not to:
 
(i)             make a capital expenditure of more than $50,000 except (x)
pursuant to agreements or commitments entered into by the Company or any of its
Subsidiaries prior to the date hereof and included on Schedule 3.12(a), (y)
unless otherwise reserved against in the Company’s most recent financial
statements filed with the Commission prior to the date hereof, or (z) except as
set forth on Schedule 5.1(a)(i);
 
(ii)            enter into any or amend any Contractual Obligation, other than
in the ordinary course of business, or, in any event, involving more than
$50,000 except as set forth on Schedule 5.1(a)(ii);
 
(iii)           except as set forth on Schedule 5.1(a)(iii), enter into, modify,
make, renew, extend or otherwise alter any credit agreement, note or other
similar agreement (including any interest rate or currency swap, hedge, collar
or straddle or similar transaction) or instrument to which the Company or a
Subsidiary is a party or incur or otherwise become liable with respect to any
indebtedness which, in the aggregate, exceeds $50,000, other than trade payables
incurred in the ordinary course of business and consistent with past practice;
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(iv)           enter into any Contractual Obligation with respect to the
acquisition of any material business, assets or property (real, personal or
mixed, tangible or intangible, including stock or other equity interests in, or
evidences of the indebtedness of, any other corporation, partnership or entity);
 
(v)            form any joint venture or partnership;
 
(vi)           sell, lease, license, surrender, relinquish, encumber, pledge,
transfer, amend, convey or otherwise dispose of any business, property or assets
(whether tangible or intangible) having a material market value;
 
(vii)         fail to maintain any material property of the Company or any of
its Subsidiaries in customary repair, order and condition consistent with the
Company’s or such Subsidiary’s current maintenance policies, ordinary wear and
tear excepted;
 
(viii)       discontinue, permit to lapse or otherwise fail to keep in full
force and effect any material policies of insurance or knowingly take any action
that would cause any such policy to terminate or be terminable prior to the
expiration of its stated term;
 

(ix)            except as required by applicable Law, make or change any
material Tax election of the Company or any of its Subsidiaries, change any
annual Tax accounting period of the Company or any of its Subsidiaries, adopt or
change any Tax accounting method of the Company or any of its Subsidiaries, file
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes (including any schedule or attachment thereto, and
including any amendment thereof, a “Return”) relating to the Company or any of
its Subsidiaries in a manner that is materially inconsistent with past practice,
enter into any closing agreement relating to material Taxes of the Company or
any of its Subsidiaries, settle any material claim made by any Governmental
Authority including social security administration, domestic or foreign, having
jurisdiction over the assessment, determination, collection or other imposition
of Tax or assessment relating to the Company or any of its Subsidiaries (a “Tax
Claim”), surrender any right to claim a refund of Taxes relating to the Company
or any of its Subsidiaries, consent to any extensions or waivers of the
limitations period applicable to any Tax Claim or assessment relating to the
Company or any of its Subsidiaries, or enter into a Tax sharing agreement or
similar arrangement with respect to the Company or any of its Subsidiaries;
 
(x)             except pursuant to the Investors’ Rights Agreement, purchase,
redeem or otherwise acquire, split, combine or reclassify, directly or
indirectly, any of the Common Stock or other equity securities or give notice of
any intention to exercise any right to purchase, redeem or otherwise acquire,
split, combine or reclassify, any of the Common Stock or other equity securities
(including any such purchase, redemption, acquisition or notice in accordance
with the terms of the Certificate of Incorporation or Bylaws or any stockholders
agreement);
 
(xi)            except for Exempt Issuances (as defined in the Certificate of
Designation), issue or sell, or issue any rights to purchase or subscribe for,
or subdivide or otherwise change, any shares or the Company’s or any of its
Subsidiaries’ stock or other securities or similar rights;
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(xii)          declare or pay any dividends on or make other distributions
(whether in cash, stock or property or any combination thereof), directly or
indirectly, in respect of the Common Stock;
 
(xiii)         amend the Certificate of Incorporation or Bylaws or the
organizational documents of any Subsidiary, except as contemplated herein;
 
(xiv)        except for a Claim for which the Company will be repaid all amounts
payable thereunder or will not otherwise be responsible for any such payments,
settle any material Claim of, or against, the Company or its Subsidiaries for an
amount in excess of $250,000;
 
(xv)         change any method of accounting or accounting practice used by the
Company or any of its Subsidiaries, except for any change required by GAAP, by
any Governmental Authority or by a change in Law;
 
(xvi)        cause or permit, by any act or failure to act, any material License
to expire or to be revoked, suspended, or modified, or take any action that
could reasonably be expected to cause any Governmental Authority to institute
proceedings for the suspension, revocation, or adverse modification of any
material License;
 
(xvii)       maintain any significant amount of investments in or trade in
equities or other speculative securities;
 
(xviii)     take any corporate or other action in furtherance of any of the
foregoing; or
 
(xix)         agree to do any of the foregoing.
 
(b)               The Company shall timely file with the Commission a Current
Report on Form 8-K pursuant to Item 1 of such Form when such form is required to
be filed.
 
(c)                Except for Exempt Issuances (as defined in the Certificate of
Designation), the Company shall not, from the date hereof until July 15, 2013,
have any discussion with or provide any confidential information or data to any
Person relating to the issuance or sale of any Shares of stock or other
securities or similar rights of the Company or any of its Subsidiaries
(including any right to acquire any such Shares of stock or other securities or
similar rights), or engage in any negotiations concerning ay such issuance or
sale, or knowingly facilitate any effort or attempt to implement any such
issuance or sale.
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5.2               No Solicitation.  Without limiting the Company’s other
obligations under this Agreement, the Company agrees that, from the date hereof
until July 15, 2013, neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and that it shall use
its reasonable best efforts to cause its and its Subsidiaries’ employees, agents
and representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, (a)
initiate, solicit, encourage or knowingly facilitate (including by way of
furnishing information) any inquiries or the making of any proposal or offer
with respect to, or a transaction to effect, a merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving it or any of its Subsidiaries, or
any purchase or sale of 30% or more of the consolidated assets (including
without limitation stock of its Subsidiaries) of it and its Subsidiaries, taken
as a whole, or any purchase or sale of, or tender or exchange offer for, the
equity securities of the Company that, if consummated, would result in any
Person (or the stockholders of such Person) beneficially owning securities
representing 20% or more of the total voting power of the Company (or of the
surviving parent entity in such transaction) or any of its Subsidiaries (any
such proposal, offer or transaction, including any single or multi-step
transaction or series of related transactions (other than a proposal or offer
made by the Purchaser or any of its Affiliates) being hereinafter referred to as
an “Acquisition Proposal”), (b) have any discussion with or provide any
confidential information or data to any Person relating to an Acquisition
Proposal, or engage in any negotiations concerning an Acquisition Proposal, or
knowingly facilitate any effort or attempt to make or implement an Acquisition
Proposal, (c) approve or recommend, or propose publicly to approve or recommend,
any Acquisition Proposal or (d) approve or recommend, or propose to approve or
recommend, or execute or enter into, any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or other
similar agreement or propose publicly or agree to do any of the foregoing
related to any Acquisition Proposal; provided, however, that the foregoing shall
not prohibit the Company, (i) from complying with Rule 14e-2 and Rule 14d-9
under the Exchange Act with regard to a bona fide tender offer or exchange
offer, (ii) from participating in negotiations or discussions with or furnishing
information to any Person in connection with an unsolicited bona fide
Acquisition Proposal which is submitted in writing by such Person to the Board
of Directors of the Company after the date hereof; provided further, however,
that prior to participating in any such discussions or negotiations or
furnishing any information, (A) the Company receives from such Person an
executed confidentiality agreement on terms no less favorable to the Company
than the Confidentiality Agreement, a copy of which shall be provided only for
informational purposes to the Purchaser, and (B) the Board of Directors of the
Company shall have concluded in good faith, after consulting with its outside
financial advisors and counsel, that such Acquisition Proposal is reasonably
likely to be financially superior to the holders of the Common Stock than the
Contemplated Transactions and the sale and issuance of the Series E Preferred
Stock, taking into account all relevant factors (including financing, required
approvals and the timing and likelihood of consummation and the post-closing
prospects for the Company) (an Acquisition Proposal which meets all of the
conditions set forth in this clause (ii), including the Board of Directors of
the Company having reached the conclusion set forth in clause (ii)(B), being
herein referred to as a “Qualified Acquisition Proposal”), (iii) after the Board
of Directors of the Company has received a Qualified Acquisition Proposal, from
engaging in negotiations and discussions with the Company’s stockholders with
respect to such Qualified Acquisition Proposal, or (iv) from taking any actions
in connection with an Acquisition Proposal if the failure to take such action by
the Board of Directors would be inconsistent with their fiduciary duties.  If
the Board of Directors of the Company receives an Acquisition Proposal, the
Company shall promptly inform the Purchaser in writing of the terms and
conditions of such proposal and the identity of the Person making it, and will
keep the Purchaser informed, on a current basis, of the status and terms of any
such proposals or offers by any Person (whether written or oral).  The Company
will, and will cause its Affiliates to, immediately cease and cause to be
terminated any activities, discussions or negotiations existing as of the date
hereof with any Persons (other than the Purchaser and its Affiliates) conducted
heretofore with respect to any Acquisition Proposal, and request the return or
destruction of all non-public information furnished in connection therewith.
 The Company shall not release any third party from, or waive any provisions of,
any confidentiality or standstill agreement to which such party or its
Subsidiaries is a party; provided, however, that the Company may waive any
provisions of a standstill agreement so long as (x) the Company promptly informs
the Purchaser in writing of such waiver and the identity of the Person
requesting such waiver (and the Company hereby agrees that it will keep the
Purchaser informed, on a current basis, of the status and terms of any proposal
made by the Person requesting such waiver), (y) such waiver is limited to
allowing the party subject to the standstill agreement (1) to submit to the
Board of Directors of the Company, on a confidential basis, a written
Acquisition Proposal and (2) if such Acquisition Proposal is a Qualified
Acquisition Proposal, to pursue discussions and negotiations with respect to
such Qualified Acquisition Proposal with the Company, and (z) the Company
otherwise observes the terms of this Section 5.2 with respect to such
Acquisition Proposal.
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5.3               Regulatory Approval; Litigation.
 
(a)              Each of the Purchaser and the Company agrees that, from the
date hereof  until the Closing, it will use its reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, and to assist and
cooperate with the other party in doing all things, which may be required to
obtain all necessary actions or non-actions, waivers, consents and approval from
Governmental Authorities in order to consummate the Contemplated Transactions,
including without limitation, obtaining the consent of the NASDAQ for the
listing of the shares of Common Stock issuable upon conversion of the Series D
Preferred Stock, subject only to official notice of issuance; provided, however,
that, in connection with obtaining any such action, non-action, waiver, consent
or approval, the Purchaser shall not be required to agree, and the Company,
without the consent of the Purchaser shall not agree, to any condition or action
that the Purchaser reasonably believes would, individually or in the aggregate,
adversely affect Purchaser’s ability to obtain the benefits (financial or
otherwise) from the Contemplated Transactions (including benefits set forth in
the Company Agreements).
 
(b)              The Purchaser and the Company agree that if any Action is
brought seeking to restrain or prohibit or otherwise relates to consummation of
the Contemplated Transactions, the parties shall use all commercially reasonable
efforts to defend such Action, whether judicial or administrative, and to seek
to have any stay or temporary restraining order entered by any court or
Governmental Authority reversed or vacated.
 

5.4               Access. During the Restricted Period, upon reasonable notice,
the Company shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financial advisors and other representatives of
the Purchaser reasonable access during normal business hours, to all its books,
records, properties, plants and personnel and, during such period, the Company
shall (and shall cause its Subsidiaries to) furnish promptly to the Purchaser
(i) a copy of each report, schedule, registration statement and other document
filed, published, announced or received by it during such period pursuant to the
requirements of Federal or state Laws, as applicable, and (ii) all other
information concerning it and its business, properties and personnel as the
Purchaser may reasonably request.  The Purchaser will hold any information
obtained pursuant to this Section 5.4 in confidence in accordance with, and will
otherwise be subject to, the provisions of the Confidentiality Agreement.  Any
investigation by the Purchaser shall not affect the representations and
warranties of the Company or the conditions to its obligations to consummate the
transactions contemplated by this Agreement.
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(b)              During the Restricted Period, the Company shall promptly keep
the Purchaser and its representatives informed of any material development in
the business of the Company or its Subsidiaries.
 
(c)              From the date hereof through the end of the survival period set
forth in Section 5(c) of the Voting Agreement with McMahon described in Section
6.1(n)(ii), so long as the Purchaser continues to hold at least 25% of the
shares of Series D Preferred Stock issued and sold hereunder, the Company shall
provide the Purchaser with (i) quarterly updates concerning the general status
of, (ii) prompt notice of expenses incurred by the Company in connection with,
and (iii) notice of any material developments with respect to, the matter set
forth in Schedule 3.17(b).
 

5.5               Employee Benefits Matters.  Without limiting the generality of
the foregoing, except as otherwise expressly agreed in writing by the Purchaser,
the Company shall not, and shall cause its Subsidiaries not to, take any of the
following actions during the Restricted Period:
 
(a)              enter into any new Employment Agreement;
 
(b)              adopt any new Company Benefit Plan or, except as may be
required by applicable Law, amend any existing Company Benefit Plan;
 

(c)              except for grants of up to an aggregate of 400,000 stock
options to Company employees in connection with bonuses earned during fiscal
2012, grant any stock options or other equity-based compensation to any employee
or director of the Company or any of its Subsidiaries;
 
(d)              increase the salaries, wages, or other compensation or benefits
of any employee or director of the Company or any of its Subsidiaries; or
 
(e)              agree to do any of the foregoing.
 
5.6               Payment of Dividends.
 
(a)              The Company agrees that after the Closing, so long as it is not
prohibited from doing so under any Requirement of Law (including any fiduciary
obligation of the Board of Directors), it will pay required dividends on the
Series D Preferred Stock, as promptly as practicable, on a current basis.
 
  (b)              In addition, the Company shall refrain and shall cause its
Subsidiaries to refrain from entering into any agreements which would preclude
the payment of dividends on the Series D Preferred Stock.
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5.7               Consents.  The Company shall (and shall cause its applicable
Subsidiary to), on or prior to the Closing, use its commercially reasonable
efforts to obtain all consents listed or required to be listed on Schedule 3.4
hereto.
 

5.8               Legends.  Any legends placed on the Series D Preferred Stock
or the Common Stock or other securities issuable, if any, pursuant to the
Contemplated Transactions shall be removed by the Company upon delivery of an
opinion of counsel reasonably acceptable to the Company stating that such legend
is no longer necessary.
 

5.9               Redemption.  If the Series E Preferred Stock financing is not
consummated, on or prior to October 31, 2013 then the Series D Preferred Stock
shall be immediately redeemable at the Purchaser’s option and such redemption
payment shall be due as set forth in the Certificate of Designation by the
Company.
 

5.10            Budget. The Company shall adhere to and comply with, in all
material respects, the 12 month budget attached hereto as Exhibit B, except to
the extent otherwise agreed by the parties.
 

5.11            Series E Financing.  It is the intention of the parties to enter
into an agreement for the purchase and sale of between $12 million and $21
million of Series E Preferred Stock, contingent upon the Purchaser or its
permitted assignee obtaining the required funds for the purchase price thereof
and the satisfaction of the closing conditions set forth in the Series E
Preferred Stock Purchase Agreement attached hereto as Exhibit C. To that end,
the Company and the Purchaser hereby agree to act in good faith and with fair
dealing to finalize an agreement for such purchase and sale, which agreement the
parties agree shall contain the material terms set forth in Exhibit C
 (including that the price per share of such Series E Preferred Stock shall be
$1.75 and Shane McMahon’s promissory note with the Company shall be, at his
option, repaid in full at the Series E Closing or convertible for a period of
six months from the Series E Closing into shares of Series E Preferred Stock at
a conversion price of $1.75 per share, during which six month period his note
shall be at any time repaid upon his demand) which are agreed and are not
subject to change.  The parties agree that the terms of the Series E Preferred
Stock shall be substantially as set forth in the Series E Certificate of
Designation attached hereto as Exhibit D, and the Company hereby agrees to use
commercially reasonable efforts to obtain shareholder approval for such
transaction.  Notwithstanding anything to the contrary contained herein, if the
parties have not entered into the Series E Purchase Agreement on or before
October 31, 2013, the rights and obligations of the parties pursuant to this
Section 5.11 shall thereafter expire.
 

5.12            Non-Solicitation.  During the Restricted Period, the Purchaser
and the Company shall not, directly or indirectly, initiate communications with,
solicit, persuade, entice, induce, encourage (or assist in connection with any
of the foregoing) any Person who is then or has been within the preceding
12-month period a customer or account of, or licensor of technology, content or
other information to, the other party or its Subsidiaries or Affiliates, or any
actual customer, account or licensor leads whose identity the party learned from
the other party, to either (i) terminate or to adversely alter its contractual
or other relationship with the Company or the Purchaser, as applicable, or their
respective Subsidiaries or Affiliates, or (ii) obtain any license or other right
from any such Person regarding technology, content or other information related
to mobile pay-per-view and video on demand services, devices or platforms.
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5.13            Shareholder Approval.  Within sixty (60) days of the earlier of
(i) October 31, 2013 and (ii) written confirmation from Purchaser that it will
not pursue the Series E financing pursuant to Section 5.11, the Company hereby
agrees to use commercially reasonable efforts to obtain the approval by
shareholders holding a majority of the outstanding voting securities of the
Company, and have such approval deemed effective in accordance with the rules
and regulations of the Commission, regarding the removal of the issuance
limitations contained in Section 6(d) of the Certificate of Designation.
 
ARTICLE 6
 
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO CLOSE
 
6.1               Conditions to Closing.  The obligation of the Purchaser to
enter into and complete the Closing are subject to the fulfillment on or prior
to the Closing Date of the following conditions, any one or more of which may be
waived by the Purchaser:
 
(a)            Representations and Covenants.  The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects (other than those which are qualified as to
materiality, Material Adverse Effect or other similar term, which shall be true
and correct in all respects) on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date (except that
representations and warranties made as of a specific date shall be true and
correct in all material respects (except as aforesaid) on such date); the
Company shall have in all material respects performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by the Company on or prior to the Closing Date; and the Company shall have
delivered to the Purchaser a certificate, dated the date of the Closing Date and
signed by an executive officer of the Company, to the foregoing effect.
 
(b)              Secretary’s Certificate.  Purchaser shall have received a
certificate of the Secretary or an Assistant Secretary certifying that attached
thereto are true and complete copies of (i) the Certificate of Incorporation and
the Company’s Bylaws, and (ii) all resolutions adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and the Company Agreements and the consummation of the Contemplated
Transactions, and that all such resolutions are in full force and effect and are
all the resolutions adopted in connection with the transactions contemplated
hereby and thereby, and certifying the names and signatures of the officers of
the Company authorized to sign this Agreement, the Company Agreements, and the
other documents to be delivered hereunder and thereunder.
 
(c)              Certificate of Designation. On or prior to the Closing Date,
(i) the Certificate of Designation shall have been filed with the Secretary of
State of the State of Nevada, and (ii) the Purchaser shall have received
confirmation from the Secretary of State of the State of Nevada reasonably
satisfactory to it that such filing has occurred.
 
  (d)              Good Standing.  The Company shall have delivered to Purchaser
a good standing certificate (or its equivalent) for the Company from the
secretary of state of Nevada.
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(e)              Opinion of Counsel to the Company.  The Purchaser shall have
received (i) the legal opinion of Pillsbury, Winthrop, Shaw Pittman LLP, counsel
to the Company, dated the Closing Date, addressed to the Purchaser, and (ii) the
legal opinion of Lewis & Roca LLP, counsel to the Company on matters pertaining
to Nevada Law, dated the Closing Date, addressed to the Purchaser, and the
opinions in (i) and (ii) shall be in the forms attached as Exhibit E hereto.
 
(f)              No Actions.  (i) No Action shall be pending or overtly
threatened by any Governmental Authority or any other party against the Company
or any of its directors or the Purchaser, which Action is reasonably likely to
(A) restrain or prohibit the consummation of any of the Contemplated
Transactions, or (B) except for Claims disclosed on Schedule 3.11, result in
damages that alone or together with the costs and expenses of defending such
Action are material in relation to the Company and its Subsidiaries, taken as a
whole, and (ii) no Law, order, decree, rule or injunction shall have been
enacted, entered, promulgated or enforced by any Governmental Authority that
prohibits or makes illegal the consummation of any of the Contemplated
Transactions.
 
(g)              No Material Adverse Effect.  Since the date hereof, no event or
development shall have occurred (or failed to occur) and there shall be no
circumstance (and the Purchaser shall not have become aware of any previously
existing circumstance) that, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect.
 
(h)              Material Contracts.  No more than one of the Contractual
Obligations listed on Schedule 6.1(h) (i) shall not be in full force and effect
at the Closing or (ii) shall, to the knowledge of the Company, be terminated
during the current term or not be renewed upon the expiration of its current
term.
 
(i)                Consents.  Any and all consents, approvals, orders, Licenses
and other actions (i) necessary to be obtained from Governmental Authorities in
order to consummate the Contemplated Transactions and for the Company to operate
its business as currently conducted and as currently contemplated to be
conducted following the Closing shall have been obtained and delivered to
Purchaser without any limitation, restriction or requirement that would
adversely affect the ability of the Purchaser to obtain the benefits (financial
or otherwise) from the Contemplated Transactions, and any applicable waiting
periods (and any extensions thereof) shall have been terminated or shall have
expired, and (ii) the consents set forth in Schedule 3.4.
 
(j)                 NASDAQ Listing.  The shares of Common Stock issuable upon
conversion of the Series D Preferred Stock shall have been approved for listing
on NASDAQ, subject only to official notice of issuance.
 
(k)                Company Agreements.  The Company shall have entered into the
the Investor Rights Agreement.
 
(l)                Weicheng Liu and Shane McMahon.  Weicheng Liu shall have been
appointed the Chief Executive Officer of the Company and Shane McMahon shall
remain the Chairman of the Company.
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(m)              Board of Directors.  The Board of Directors of the Company
shall have been reconstituted as set forth on Exhibit F, effective as of the
Closing.
 
(n)              Other Agreements. (i) The Purchaser shall have entered into
Voting Agreements with Messrs. Liu and McMahon satisfactory to the Purchaser,
(ii) Mr. McMahon shall have executed a waiver with the Company whereby the
proceeds of the sale of the Series D Preferred Stock shall not be used to pay
his Promissory Note with the Company and (iii) Mr. McMahon shall have entered
into an agreement with the Purchaser whereby he agrees to exchange all of his
Series A stock for 933,333 shares of the Purchaser’s Series E Preferred Stock
upon the Series E Closing and then to convert any preferred stock of the Company
which he owns or receives upon the Series E Closing into Common Stock.
 
(o)         Approvals and Permits.  All of the Company’s regulatory approvals
and permits must be effective, except where the non-effectiveness of such
regulatory approvals or permits would not have or reasonably be expected to
result in a Material Adverse Effect.
 

ARTICLE 7
 
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE
 
7.1              Conditions to Closing.  The obligation of the Company to enter
into and complete the Closing are subject to the fulfillment on or prior to the
Closing Date of the following conditions, any one or more of which may be waived
by the Company:
 
(a)              Representations and Covenants.  The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects (other than those which are qualified as to
materiality, which shall be true and correct in all respects) on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date (except that representations and warranties made as of a specific
date shall be true and correct in all material respects (except as aforesaid) on
such date); the Purchaser shall have in all material respects performed and
complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date; and the
Purchaser shall have delivered to the Company a certificate, dated the date of
the Closing Date and signed by the Purchaser, to the foregoing effect.
 
(b)              No Actions.  (i)  No Action shall be pending or overtly
threatened by any Governmental Authority or any other party against the Company
or any of its directors or the Purchaser, which Action is reasonably likely to
(A) restrain or prohibit the consummation of any of the Contemplated
Transactions, or (B) result in damages that alone or together with the costs and
expenses of defending such Action are material in relation to the Company and
its Subsidiaries, taken as a whole, and (ii) no Law, order, decree, rule or
injunction shall have been enacted, entered, promulgated or enforced by any
Governmental Authority that prohibits or makes illegal or otherwise relates to
the consummation of any of the Contemplated Transactions.
 
(c)              Consents.  Any and all consents, approvals, orders, Licenses
and other actions necessary to be obtained (i) from Governmental Authorities in
order to consummate the Contemplated Transactions and for the Company to operate
its business as currently conducted and as currently contemplated to be
conducted following the Closing and (ii) the consents set forth in Schedule 3.4.
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(d)       Investor Rights Agreement.  The Purchaser shall have duly executed and
delivered the Investor Rights Agreement.

ARTICLE 8
 
REGISTRATION RIGHTS; RIGHT OF FIRST OFFER; OTHER AGREEMENTS OF THE COMPANY
 
8.1              Registration Rights.
 
(a)              By November 1, 2013, the Company shall prepare and file with
the Commission a Registration Statement on Form S-3, or any other eligible form
if the Company is not eligible to use Form S-3, for the purpose of registering
under the Securities Act all of the Registrable Securities for resale by, and
for the account of, the Purchaser as selling stockholder thereunder (the
“Mandatory Registration Statement”). The Mandatory Registration Statement shall
permit the Purchaser to offer and sell, on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, any or all of the Registrable
Securities.
 
(b)              The Company agrees to use its reasonable best efforts to cause
the Mandatory Registration Statement to become effective as soon as practicable.
If (i) a Registration Statement covering the Registrable Securities is not
declared effective by the Commission within one hundred twenty (120) days, if
subject to the Commission’s review, or forty-five (45) days, otherwise, after
November 1, 2013 or (ii) after a Registration Statement has been declared
effective by the Commission, sales cannot be made pursuant to such Registration
Statement (including without limitation by reason of a stop order, or the
Company’s failure to update the Registration Statement), but excluding the
inability of Purchaser to sell the Registrable Securities covered thereby due to
market conditions, then the Company will make pro rata payments to Purchaser, as
liquidated damages and not as a penalty, in an amount equal to 1% of the
aggregate amount invested by Purchaser for each 30-day period or pro rata for
any portion thereof following the date by which such Registration Statement
should have been effective. Purchaser  shall cooperate with the Company as
reasonably requested in connection with the preparation and filing of the
Mandatory Registration Statement hereunder, including without limitation by
furnishing in writing to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and by executing such documents in
connection with such registration as the Company may reasonably request.  The
Company shall promptly notify Purchaser of the effectiveness of the Mandatory
Registration Statement within one (1) Business Days from the Business Day that
the Company telephonically confirms effectiveness with the Commission.
 Notwithstanding anything herein to the contrary, in no event shall the
aggregate amount of liquidated damages payments pursuant to this Section 8.1(b)
exceed ten percent (10%) of the aggregate Purchase Price paid by the Purchaser
for all Registrable Securities.
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(c)              The Company shall be required to keep the Mandatory
Registration Statement effective for the Mandatory Effectiveness Period.
Thereafter, the Company shall be entitled to withdraw the Mandatory Registration
Statement and Purchaser shall have no further right to offer or sell any of the
Registrable Securities pursuant to the Mandatory Registration Statement (or any
prospectus relating thereto).
 
(d)              The offer and sale of the Registrable Securities pursuant to
the Mandatory Registration Statement shall not be underwritten.
 
(e)              Notwithstanding the foregoing, if the Commission prevents the
Company from including any or all of the Registrable Securities on the Mandatory
Registration Statement due to limitations on the use of Rule 415 of the
Securities Act for the resale of the Registrable Securities by the Purchaser or
by General Instruction I.B.6. of Form S-3, the Mandatory Registration Statement
shall register the resale of a number of shares of Common Stock which is equal
to the maximum number of shares as is permitted by the Commission (the
“Registration Cap”), and, subject to this Section 8.1(e), the Company shall
continue to use reasonable best efforts to register all remaining Registrable
Securities as set forth below. The Company shall continue to use reasonable best
efforts to register all remaining Registrable Securities as promptly as
possible, but in no event will the Company file a Registration Statement with
respect to the registration of the resale of the remaining Registrable
Securities by the Purchaser earlier than 180 calendar days following the date
the Mandatory Registration Statement is declared effective by the Commission and
later than 210 calendar days following the date the Mandatory Registration
Statement is declared effective by the Commission (subject to the following
matters and limitations); provided, however, that the Company shall not be
obligated to file more than one (1) additional Registration Statement with
respect to Registrable Securities other than the Mandatory Registration
Statement. Notwithstanding anything herein to the contrary, if the Commission,
by written or oral comment or otherwise, limits the Company’s ability to file,
or prohibits or delays the filing of, the Registration Statement with respect to
any or all the Registrable Securities which were not included in the Mandatory
Registration Statement, it shall not be a breach or default by the Company under
this Agreement and it shall not be deemed a failure by the Company to use
“reasonable best efforts” or “best efforts” as set forth above.
 

8.2              Other Registration Rights.  Until such time as the Company has
satisfied its obligations to register the Registrable Securities pursuant to
Section 8.1, without the prior written consent of the Purchaser, the Company
shall not grant any right of registration under the Securities Act relating to
any of its securities to any Person other than the Purchaser and Shane McMahon
and Xuesong Song pursuant to the terms of their respective Employment Agreements
with the Company.
 

8.3              Rule 144.  The Company shall file all reports required to be
filed by it under the Securities Act and the Exchange Act and shall take such
further action as the Purchaser may reasonably request, all to the extent
required to enable the Purchaser to sell the Series D Preferred Stock or the
Common Stock into which the Series D Preferred Stock may be converted pursuant
to and in accordance with Rule 144.  Such action shall include, but not be
limited to, making available adequate current public information meeting the
requirements of paragraph (c) of Rule 144.
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8.4              Availability of Common Stock.  The Company shall at all times
reserve and keep available out of its authorized but unissued Common Stock, for
the purpose of effecting the conversion of the Series D Preferred Stock, at
least the full number of shares of Common Stock then issuable upon the
conversion of such securities.  The Company will, from time to time, in
accordance with the Laws of the State of Nevada, increase the authorized amount
of Common Stock if at any time the number of shares of Common Stock remaining
unissued and available for issuance shall be insufficient to permit conversion
of the Series D Preferred Stock.
 

8.5              No Rights Plan.  From the date hereof and for as long as the
Purchaser beneficially owns Series D Preferred Stock or Common Stock, without
the prior written consent of the Purchaser, the Company shall not adopt or enter
into any “poison pill” rights plan or any similar plan or agreement or declare
or pay any dividend of any rights to purchase stock of the Company in connection
with such a plan or agreement.
 
ARTICLE 9
 
INDEMNIFICATION
 
9.1              Indemnification.  The Company hereby agrees to indemnify,
defend and hold harmless the Purchaser, its Affiliates and its directors,
managers, officers, agents, advisors, representatives, employees, successors and
assigns (each, a “Purchaser Indemnitee”) from and against all Claims, including
without limitation, interest, penalties and attorneys’ fees and expenses,
asserted against, resulting to, or imposed upon or incurred by such Purchaser
Indemnitee by a third party and arising out of or resulting from any allegation
or Claim in respect of any wrongful action or inaction by the Company in
connection with the authorization, execution, delivery and performance of this
Agreement or the Company Agreements, except to the extent that the Purchaser
Indemnitee has committed a material breach of its representations, warranties or
obligations under this Agreement, which breach is the cause of the Company’s
wrongful action or inaction.
 

9.2              Terms of Indemnification.  The obligations and liabilities of
the Company with respect to Claims by third parties will be subject to the
following terms and conditions: (a) a Purchaser Indemnitee will give the Company
prompt notice of any Claims asserted against, resulting to, imposed upon or
incurred by such Purchaser Indemnitee, directly or indirectly, and the Company
will undertake the defense thereof by representatives of their own choosing
which are reasonably satisfactory to such Purchaser Indemnitee; provided that
the failure of any Purchaser Indemnitee to give notice as provided in Section
11.3 shall not relieve the Company of its obligations under this Article 9; (b)
if within a reasonable time after notice of any Claim, the Company fails to
defend, such Purchaser Indemnitee will have the right to undertake the defense,
compromise or settlement of such Claims on behalf of and for the account and at
the risk of the Company, subject to the right of the Company to assume the
defense of such Claim at any time prior to settlement, compromise or final
determination thereof; (c) if there is a reasonable probability that a Claim may
materially and adversely affect a Purchaser Indemnitee other than as a result of
money damages or other money payments, such Purchaser Indemnitee will have the
right at its own expense to defend, or co-defend, such Claim; (d) neither the
Company nor the Purchaser Indemnitee will, without the prior written consent of
the other, settle or compromise any Claim or consent to entry of any judgment
relating to any such Claim; (e) with respect to any Claims asserted against a
Purchaser Indemnitee, such Purchaser Indemnitee will have the right to employ
one counsel of its choice in each applicable jurisdiction (if more than one
jurisdiction is involved) to represent such Purchaser Indemnitee if, in such
Purchaser Indemnitee’s reasonable judgment, a conflict of interest between such
Purchaser Indemnitee and the Company exists in respect of such Claims, and in
that event the fees and expenses of such separate counsel shall be paid by the
Company; and (f) the Company will provide each Purchaser Indemnitee reasonable
access to all records and documents of the Company relating to any Claim.
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ARTICLE 10
 
TERMINATION
 
10.1           Termination of Agreement.  The Parties may terminate this
Agreement as provided below:
 
(a)              the Purchaser and the Company may terminate this Agreement by
mutual written consent at any time prior to the Closing;
 

(b)              the Purchaser may terminate this Agreement by giving written
notice to the Company at any time prior to the Closing in the event the Company
has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect (or breached in any respect, if such
representation, warranty or covenant is qualified by materiality or Material
Adverse Effect), and the Purchaser has notified the Company of the breach; and
 
(c)              the Company may terminate this Agreement by giving written
notice to the Purchaser at any time prior to the Closing in the event the
Purchaser has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect (or breached in any respect,
if such representation, warranty or covenant is qualified by materiality or
Material Adverse Effect), and the Company has notified the Purchaser of the
breach.
 

10.2              Effect of Termination.  Upon termination of this Agreement
pursuant to Section 10.1 above, all rights and obligations of the Parties
hereunder (except for those covenants which by their terms survive termination)
shall terminate without any liability of either Party to the other Party (except
for any liability of the Party then in breach).
 
ARTICLE 11
 
MISCELLANEOUS
 
11.1           Survival.  All representations and warranties, covenants and
agreements of the Company and the Purchaser contained in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any Purchaser or any controlling Person thereof or by or
on behalf of the Company, any of its officers and directors or any controlling
Person thereof, and such representations and warranties shall survive for a
period of 24 months from the Closing Date.  The covenants and agreements
contained herein shall survive in accordance with their terms.
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11.2           Fees and Expenses.  On the Closing Date, the Company shall pay
its own expenses and the expenses of the Purchaser incurred in connection with
the negotiation, execution, delivery, performance and consummation of this
Agreement and the Contemplated Transactions.
 

11.3           Notices.  All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage prepaid.
 Any such notice shall be deemed given if delivered personally or telecopied, on
the date of such delivery, or if sent by reputable overnight courier, on the
first Business Day following the date of such mailing, as follows:
 

(a) if to the Company:

 
YOU On Demand Holdings, Inc.
27 Union Square West, Suite 502
New York, New York 10003
Attn: Shane McMahon
Telecopy: (212) 206-9112
 
with a copy to:
 
Pillsbury Winthrop Shaw Pittman LLP
2300 N Street
Washington DC  20037
Attention: Louis Bevilacqua
Telecopy: (212) 663-8007
 

(b) if to the Purchaser:

 
C Media Limited
CN11 Legend Town,
No. 1 Balizhuangdongli, Chaoyang District
Beijing, China 100025
Attn: Victor Chen, Vice President
Rainer Li, CFO
Telecopy: 86 10 8586 2775

with a copy to:
 
Reed Smith LLP
599 Lexington Ave.
New York, New York 10022
Attn: William N. Haddad
Telecopy: (212) 521-5400
 
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Any party may by notice given in accordance with this Section 11.3 designate
another address or Person for receipt of notices hereunder.
 
11.4          Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the parties
hereto.  Other than the parties hereto and their successors and permitted
assigns, and except as set forth in Article 9, no Person is intended to be a
beneficiary of this Agreement.  No party hereto may assign its rights under this
Agreement without the prior written consent of the other party hereto; provided,
however, that, without the prior written consent of the Company, (a) prior to
the Closing the Purchaser may assign all or any portion of its rights hereunder
(along with the corresponding obligations) to any Affiliate of the Purchaser and
(b) after the Closing the Purchaser may assign all or any portion of its rights
hereunder (along with the corresponding obligations) to any purchaser or
transferee of shares of the Series D Preferred Stock.  Any assignee of any
Purchaser pursuant to the proviso of the foregoing sentence shall be deemed to
be a “Purchaser” for all purposes of this Agreement.
 

11.5           Amendment and Waiver.
 
(a)          No failure or delay on the part of the Company or the Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
 
(b)         The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the Company or the Purchaser
at Law, in equity or otherwise.
 
(c)              Any amendment, supplement or modification of or to any
provision of this Agreement and any waiver of any provision of this Agreement
shall be effective only if it is made or given in writing and signed by the
Company (in the case of any amendment, supplement, modification or waiver after
the Closing, with the approval of not less than a majority of the directors not
appointed by the Purchaser) and the Purchaser.
 

11.6           Counterparts.  This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, all of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
 

11.7           Headings.  The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
 
11.8           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be governed by and construed in accordance with the
Requirements of Law of the State of New York without giving effect to the
principles of conflict of Laws.  Each of the parties hereto hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of New York and of the United States of America, in each
case located in the County of New York, for any Action arising out of or
relating to this Agreement and the Contemplated Transactions (and agrees not to
commence any Action relating thereto except in such courts), and further agrees
that service of any process, summons, notice or document by U.S. registered mail
to its respective address set forth in this Agreement, or such other address as
may be given by one or more parties to the other parties in accordance with the
notice provisions of Section 11.3, shall be effective service of process for any
action, suit or proceeding brought against it in any such court.  Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
New York or the United States of America, in each case located in the County of
New York, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such Action brought in any such
court has been brought in an inconvenient forum. Each of the parties irrevocably
and unconditionally waives, to the fullest extent permitted by applicable
Requirements of Law, any and all rights to trial by jury in connection with any
action, suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
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11.9           Severability.  If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
 

11.10        Entire Agreement.  This Agreement, together with the schedules and
exhibits hereto, and the Company Agreements referred to herein or delivered
pursuant hereto, are intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein.  There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein or therein.
 This Agreement, together with the schedules and exhibits hereto, and the
Company Agreements referred to herein or delivered pursuant hereto, supersede
all prior agreements and understandings between the parties with respect to such
subject matter.
 

11.11        Further Assurances.  Subject to the terms and conditions of this
Agreement, from time to time after the Closing, the Company and the Purchaser
agree to cooperate with each other, and at the request of the other party, to
execute and deliver any further instruments or documents and take all such
further action as the other party may reasonably request in order to evidence or
effectuate the consummation of the Contemplated Transactions and to otherwise
carry out the intent of the parties hereunder.  In furtherance and not in
limitation of the foregoing, the Company agrees to all actions necessary to give
effect to the voting rights of the Series D Preferred Stock in accordance with
the terms thereof.
 
11.12        Public Announcements.  Except as required by any Requirement of
Law, none of the parties hereto will issue or make any reports, statements or
releases to the public with respect to this Agreement or the Contemplated
Transactions without consulting the other parties, AND without the approval of
the other parties (such approval not to be unreasonably withheld or delayed).
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11.13        Specific Performance.  The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable Law, each party waives any
objection to the imposition of such relief or any requirement for a bond.
 

11.14        Subsidiaries.  Whenever this Agreement provides that a Subsidiary
of the Company is obligated to take or refrain from taking any action, the
Company shall cause such Subsidiary to take or refrain from taking such action.

[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective officers hereunto duly authorized as of the
date first above written.
 
YOU ON DEMAND HOLDINGS, INC.
By:
/s/ Marc Urbach
Name:  Marc Urbach
Title:    President and Chief Financial Officer

[Signature page to Series D Preferred Stock Purchase Agreement]

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PURCHASER:
C MEDIA LIMITED
By:
/s/ Xuesong Song
Name:  Xuesong Song
Title:    Chairman and CEO

[Signature page to Series D Preferred Stock Purchase Agreement]
 
 

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