Exhibit 10.2

EXECUTION VERSION

THIS CONVERTIBLE SUBORDINATED PROMISSORY NOTE IS SUBJECT TO THE TERMS AND
PROVISIONS OF (A) THE SUBORDINATION AGREEMENT DATED AS OF SEPTEMBER 15, 2012 BY
AND BETWEEN OXFORD FINANCE LLC AND LENDER (AS DEFINED HEREIN) AND (B) THE
SUBORDINATION AGREEMENT DATED AS OF SEPTEMBER 15, 2012 BY AND BETWEEN ATEL
VENTURES, INC., AS AGENT, AND LENDER (AS DEFINED HEREIN) (THE “SUBORDINATION
AGREEMENTS”). IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF EITHER
SUBORDINATION AGREEMENT AND THIS AGREEMENT, THE TERMS OF THE SUBORDINATION
AGREEMENTS SHALL GOVERN AND CONTROL.

COMPLETE GENOMICS, INC.

Convertible Subordinated Promissory Note

 

September 15, 2012

   U.S. $30,000,000

COMPLETE GENOMICS, INC., a Delaware corporation (“Borrower”), hereby promises to
pay to BGI-HONGKONG CO., LIMITED, a limited company incorporated in Hong Kong
(the “Lender”), at such place as the Lender may from time to time designate in
writing, the principal sum of Thirty Million U.S. Dollars ($30,000,000) (the
“Loan”) or if less, the aggregate unpaid and outstanding principal amount
advanced by the Lender to Borrower pursuant to the terms hereof, together with
interest accruing thereon, and all other amounts owed by Borrower to the Lender
hereunder, all in accordance with the terms hereof. Lender agrees to the terms
hereof as provided herein.

Section 1. Definitions.

“ATEL” means the lender or lenders under the ATEL Loan Agreement.

“ATEL Loan Agreement” means the Loan and Security Agreement No. COMPX, dated as
of December 17, 2010, as amended, among ATEL Ventures, Inc., as agent for its
affiliated funds under an Intercompany Agency and Power of Attorney Agreement
dated as of April 30, 2010, the lenders party thereto from time to time, and
Borrower.

“ATEL Senior Loan” means the loan extended by ATEL to Borrower pursuant to the
ATEL Loan Agreement.

“Borrower” has the meaning set forth in the preamble.

“Borrower’s Liabilities” means the then-outstanding principal amount hereof,
accrued and unpaid interest hereunder, and any other amounts owed by Borrower
hereunder.

“Business Day” means a business day in California and Hong Kong.

“Change of Control” means any transaction or series of related transactions
pursuant to which one or more Persons or group of Persons, other than Lender and
its affiliates, acquires (i)

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equity securities (or other securities convertible into equity securities) of
Borrower possessing the voting power sufficient to elect a majority of the
members of the board of directors of Borrower (whether such transaction is
effected by merger, consolidation, recapitalization, sale or transfer of
Borrower’s equity or otherwise) or (ii) a majority of the assets of Borrower and
its Subsidiaries, taken as a whole.

“Common Stock” means the common stock, par value $0.001 per share, of Borrower.

“Conversion Shares” means the Common Stock issued to Lender upon conversion
pursuant to Section 4.

“Event of Default” has the meaning set forth in Section 7(a).

“Interest Rate” has the meaning set forth in Section 2.

“Lender” has the meaning set forth in the preamble.

“Loan” has the meaning set forth in the preamble.

“Maturity Date” has the meaning set forth in Section 3(g).

“Merger Agreement” means that certain Agreement and Plan of Merger, dated as of
September 15, 2012, by and among BGI-Shenzhen, Beta Acquisition Corporation, and
Borrower.

“Note” means this Convertible Subordinated Promissory Note.

“Offer Price” has the meaning set forth in Section 4(a).

“Oxford” means the lender or lenders under the Loan and Security Agreement (as
it may be amended from time to time), dated as of March 25, 2011, among Oxford
Finance LLC in its capacity as collateral agent for the lenders thereunder and
as a lender, the lenders from time to time a party thereto, and Borrower.

“Oxford Loan Agreement” means the Loan and Security Agreement (as it may be
amended from time to time), dated as of March 25, 2011, among Oxford in its
capacity as collateral agent for the lenders thereunder and as a lender, the
lenders from time to time a party thereto, and Borrower.

“Oxford Senior Loan” means the loan extended by Oxford to Borrower pursuant to
the Oxford Loan Agreement.

“Payment/Advance Request Form” has the meaning set forth in Section 3(a).

“Person” means any natural person, corporation, limited liability company,
partnership, firm, association, governmental authority or any other entity
whether acting in an individual, fiduciary or other capacity.

“Senior Creditors” means Oxford and ATEL.

 

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“Subsidiary” of any Person means any corporation, partnership, joint venture or
other legal entity of which such Person owns directly or indirectly a majority
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the members of the board of directors or
other governing body of such corporation, partnership, joint venture or other
legal entity.

“U.S.$” or “$” refers to the lawful currency of the United States of America.

Section 2. Interest. The outstanding principal hereof shall bear interest at a
rate equal to 6% per annum (the “Interest Rate”) from the date hereof through
and including the date all amounts of principal of and interest on this Note are
paid in full in cash. On the last day of each calendar quarter and on the
Maturity Date, accrued interest calculated at a rate equal to the Interest Rate
shall be added to the principal hereof and thereby capitalized. All computations
of interest hereunder shall be computed on the basis of a 360-day year
comprising twelve (12) months consisting of thirty (30) days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

Section 3. Multiple Draws; Prepayment and Repayment; Maturity Date;
Incorporation of Covenants; Etc.

(a) Multiple Draws. Proceeds of the Loan shall be available through multiple
draws up to an aggregate principal amount of $30,000,000. Each draw shall be
requested by Borrower to the Lender in writing (in form reasonably satisfactory
to Lender) (“Payment/Advance Request Form”) at least three Business Days prior
to the requested funding date, which shall be a Business Day. The first draw
shall be in the amount of $6,000,000 and shall be funded by Lender on October 1,
2012, without further request by Borrower. Thereafter, there shall be no more
than one funding per calendar month, beginning in November 2012. Fundings shall
be the least of (i) the number of months, beginning September, 2012 and ending
the month immediately prior to the month of funding, multiplied by $6,000,000,
(ii) the amount of cash expended by Borrower in the calendar month beginning
September, 2012 and ending the month immediately prior to the month of funding,
and (iii) a different amount requested by Borrower, in each case minus the
aggregate fundings hereunder prior to the currently contemplated funding.
Proceeds will be wire transferred to Borrower. It shall be a condition to
Lender’s obligation to fund on a proposed date of funding that (x) no Event of
Default (other than an Event of Default under Section 7(a)(vii)) exists,
(y) Borrower has delivered a Payment/Advance Request Form as required in this
Section 3(a), and (z) the Merger Agreement has not been terminated and remains a
valid and binding obligation of the parties thereto.

(b) Voluntary Prepayment. Upon two Business Day’s prior written notice by
Borrower to Lender, all or any part of the interest and/or principal obligation
evidenced by this Note may be repaid by Borrower without premium or penalty.

(c) Mandatory Prepayment. Net proceeds of any debt or equity financing by
Borrower after the date hereof (except for advances made under this Note) shall
be applied first to the repayment of the Senior Creditors to the extent required
by the Senior Creditors’ credit documents with Borrower, and after the Senior
Debt (as defined in the Subordination

 

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Agreements) has been repaid in full, 50% of such net proceeds shall be applied
to repay the Borrower Liabilities in the order set forth in Section 3(f).

(d) Re-Borrowings. Borrower may not reborrow the principal amount of the Loan
which is repaid.

(e) Use of Proceeds. The proceeds of the Loan shall be used solely for working
capital and capital expenditure requirements in the ordinary course of business.

(f) Payments. All payments due under this Note shall be made in cash in lawful
money of the United States and immediately available funds, unless otherwise
specified herein. All payments shall be applied first to accrued but unpaid
interest, next to costs and expenses of Lender payable hereunder, and then to
any outstanding principal.

(g) Maturity Date. The outstanding principal of and accrued and unpaid interest
on this Note shall be due and payable on the earlier of (i) September 30, 2014
(or if such day is not a Business Day, then on the next succeeding Business
Day), (ii) the date upon which a Change of Control occurs, and (iii) the
occurrence of an Event of Default (the “Maturity Date”).

(h) Incorporation of Oxford Loan Agreement Negative Covenants. Article 7
(Negative Covenants) of the Oxford Loan Agreement as it exists on the date
hereof and notwithstanding any amendment or modification after the date hereof
is incorporated herein mutatis mutandis (including all applicable definitions)
as if Borrower is “Borrower” (as defined in this Note) and Lender is “Lender”
(as defined in this Note); provided that under Section 7.4 of the Oxford Loan
Agreement, Borrower’s ability to incur Subordinated Debt (as defined in the
Oxford Loan Agreement) shall not require Lender’s consent or entry into a
subordination agreement as long as such indebtedness is subordinated to the
indebtedness under this Note to the same extent that the indebtedness under this
Note is subordinated pursuant to the Subordination Agreements.

Section 4. Conversion; Registration Rights.

(a) Conversion. The principal amount hereof and all accrued and unpaid interest
hereon shall be convertible by Lender at any time following the termination of
the Merger Agreement into Common Stock at the Offer Price (as defined in the
Merger Agreement). Conversion of a portion of this Note shall not affect
Lender’s obligation to continue funding pursuant to Section 3(a). If a Change of
Control is to occur, Lender may elect that such conversion occur upon the Change
of Control, with the effect that Lender will receive the consideration
thereunder due to holders of the Common Stock in lieu of being repaid the
principal of and interest on the Loan. Upon conversion of this Note pursuant
hereto, Lender shall surrender this Note for reduction of the stated principal
amount hereof. At its expense, Borrower will issue and deliver to Lender a
certificate for the number of shares of Common Stock to which Lender is entitled
upon such conversion.

(b) Fractional Shares. No fractional shares of the Common Stock will be issued
upon conversion and no payment shall be made for any fractional share, which is
hereby waived by Lender.

 

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(c) Registration Rights. Borrower and Lender shall be bound by the registration
rights provisions set forth in Exhibit A attached hereto during any period for
which Lender holds Conversion Shares.

Section 5. Representations and Warranties of Borrower. Borrower represents and
warrants to Lender as follows:

(a) Organization, Good Standing and Qualification. Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and corporate authority
to own and operate its properties and assets and to carry on its business as
presently conducted. Borrower is duly qualified to transact business and is in
good standing in each jurisdiction in which the failure so to qualify would have
a material adverse effect on its business or properties.

(b) Authorization. All corporate action on the part of Borrower, its officers,
directors and stockholders necessary for execution and delivery of this Note and
the performance of all obligations of Borrower hereunder required to be taken
has been taken. This Note constitutes a valid and legally binding obligations of
Borrower, enforceable against Borrower in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other laws of general application affecting
enforcement of creditors’ rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.

(c) Reserved Common Stock. Borrower has reserved sufficient Common Stock to
allow conversion hereof to Common Stock pursuant to Section 4.

(d) Governmental Consent. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of Borrower is
required in connection with the valid execution, delivery and performance by
Borrower of this Note and the transactions contemplated thereby, except for
filings pursuant to Section 25102(f) of the California Corporate Securities Law
of 1968, as amended, and the rules thereunder, other applicable state securities
laws and Regulation D of the Securities Act of 1933, as amended (the “Securities
Act”).

(e) No Conflict. The execution, delivery and performance of this Note will not
result in (i) any violation of any provisions of Borrower’s Amended and Restated
Certificate of Incorporation or Bylaws or of any federal or state statute, rule
or regulation, applicable to Borrower or (ii) conflict with or constitute, with
or without the passage of time and giving of notice either (A) a default under
any such provision or under any instrument, judgment, order, writ, decree,
contract, lease, purchase order or agreement to which Borrower is a party or by
which it is bound or (B) an event which results in the creation of any lien,
charge or encumbrance upon any material assets of Borrower.

Section 6. Representations and Warranties of Lender. Lender hereby represents
and warrants to Borrower that:

(a) Requisite Power and Authority. Lender has all necessary power and authority
under all applicable provisions of law to execute and deliver this Note and to
carry out

 

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its provisions. All action on Lender’s part required for the lawful execution
and delivery of this Note has been taken. This Note constitutes a valid and
legally binding obligation of Lender, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other laws of general application
affecting enforcement of creditors’ rights generally, and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or
other equitable remedies.

(b) Accredited Investor. Lender is an “accredited investor” within the meaning
of Rule 501(a) of the Securities Act.

(c) Residence. Lender’s principal residence or office location is set forth in
Section 8(c).

(d) Purchase Entirely for Own Account. This Note and any Common Stock issued to
Lender upon conversion hereof are and are to be acquired for investment for
Lender’s own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Lender has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Lender further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to this Note
or the Conversion Shares.

(e) Restricted Securities. Lender understands that this Note and any Conversion
Shares are characterized as “restricted securities” under the federal securities
laws inasmuch as they are being acquired from Borrower in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. In this connection, Lender represents that it
is familiar with Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act. Lender must bear the
economic risk of this investment indefinitely unless such securities are
registered pursuant to the Securities Act, or an exemption from registration is
available. Lender also understands that there is no assurance that any exemption
from registration under the Securities Act will be available and that, even if
available, such exemption may not allow Lender to transfer all or any portion of
such securities under the circumstances, in the amounts or at the times Lender
might propose.

(f) Legends. Lender understands that the Conversion Shares may bear one or all
of the following legends:

(a) “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT OR QUALIFICATION RELATED THERETO OR AN OPINION
OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS.”

 

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(b) Any legend required by the blue sky laws of any state to the extent such
laws are applicable to the securities represented by the certificate or other
document so legended.

Section 7. Events of Default; Acceleration; Remedies.

(a) The occurrence of any of the following events shall constitute a default by
Borrower (“Event of Default”) under this Note: (i) Borrower fails to pay any of
Borrower’s Liabilities when due and payable or declared due and payable
hereunder; (ii) Borrower fails to perform, keep or observe in any material
respect any material obligation under this Note; (iii) a petition under any
section or chapter of Title 11 of the United States Code, as amended, or any
similar law or regulation is filed by or against Borrower, if Borrower shall
make an assignment for the benefit of creditors, or if any similar case or
proceeding is filed by Borrower or against it by its creditors, provided that
such actions not taken voluntarily by Borrower will not constitute an Event of
Default if dismissed or stayed within 60 days thereof; (iv) any material
representation and warranty of Borrower is untrue in any material respect and
Borrower does not effect a cure by causing such representation and warranty to
become true prior to such time as Lender is materially harmed thereby,
(v) (1) the Borrower fails to make any payment when due (after any applicable
grace period) with respect to the Oxford Senior Loan, the ATEL Senior Loan or
any other present or future indebtedness (whether actual or contingent) of the
Borrower for or in respect of moneys borrowed in an aggregate principal amount
of at least $1,000,000 or (2) any lenders, creditors or similar parties in
respect of the agreements referred to in clause (v)(1) of this Section 7(a)
declares any such indebtedness to be due and payable prior to its stated
maturity date; (vi) the Senior Creditors take possession of, or commence action
with a view to the seizure, compulsory acquisition, or possession of the assets
of the Borrower; or (vii) an Event of Default (as defined in the Oxford Loan
Agreement, including all applicable definitions, as it exists on the date hereof
and notwithstanding any amendment or modification after the date hereof) occurs
and is continuing.

(b) Subject to the Subordination Agreements, if an Event of Default (other than
an Event of Default under Section 7(a)(iii)) has occurred and is continuing,
upon written notice by Lender to Borrower, all of Borrower’s Liabilities
hereunder shall be due and payable forthwith and Lender may, without notice or
demand, exercise all rights and remedies available to Lender under this Note or
at law or equity. If an Event of Default occurs under Section 7(a)(iii), then
automatically all of Borrower’s Liabilities hereunder shall immediately become
due and payable. The acceptance by Lender of partial payment made hereunder
after the time any Borrower’s Liabilities become due and payable hereunder will
not establish a custom, or waiver any rights of Lender to enforce the prompt
payment hereof. Borrower and every endorser hereof waive presentment, demand and
protest and notice of presentment, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of this Note.

(c) If at any time or times after the date of this Note, Lender: (i) employs
counsel for advice or other representation to enforce any rights of Lender
against Borrower; and/or (ii) attempts to or enforces any of Lender’s rights or
remedies under this Note, the reasonable costs and expenses incurred by Lender
with respect to the foregoing shall be part of Borrower’s Liabilities hereunder,
payable by Borrower to Lender on demand.

 

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Section 8. Miscellaneous.

(a) Severance. If any provision of this Note or the application thereof to any
party or circumstance is held invalid or unenforceable, the remainder of this
Note and the application of such provision to other parties or circumstances
will not be affected thereby and the provisions of this Note shall be severable
in any such instance.

(b) Assignment. This Note may be assigned by the Lender to any affiliate of
Lender but shall not otherwise be assignable without Borrower’s consent, except
that Borrower’s consent shall no longer be required after the entire principal
amount committed hereunder by the Lender shall have been drawn.

(c) Notices. Any notices under this Note shall be given by personal delivery or
by nationally recognized overnight courier service at the addresses specified
below or any address specified by in writing from time to time by Borrower and
Lender. Notices shall be effective upon receipt or upon affirmative refusal to
accept delivery.

 

If to Lender:

  

BGI-HONGKONG CO., LIMITED

  

16 Dai Fu Street, Tai Po Industrial Estate

  

Tai Po, Hong Kong

  

Attn: CHU Sze Nam

  

Fax: +852 2636 5406

  

email: ericchu@genomics.cn

with a copy to:

  

O’Melveny & Myers

  

1 Connaught Road Central

  

Hong Kong

  

Attn: David Johnson

  

Fax: +852 2522 1760

  

email: djohnson@omm.com

If to Borrower:

  

Complete Genomics, Inc.

  

2071 Stierlin Court

  

Mountain View, California 94043

  

Attn: Ajay Bansal, Chief Financial Officer

  

Fax: (650) 964-2108

  

Email: abansal@completegenomics.com

(d) THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

(e) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS

 

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REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS NOTE
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

(f) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN THE BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF,
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH PARTY HERETO IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH PARTY
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS NOTE AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION WHERE SUCH PROPERTY IS LOCATED.

(g) NO PROVISION OF THIS NOTE SHALL ALTER OR IMPAIR THE OBLIGATION OF BORROWER,
WHICH IS ABSOLUTE AND UNCONDITIONAL, TO PAY THE PRINCIPAL OF AND INTEREST ON
THIS NOTE AT THE TIMES, PLACE AND RATE, AND IN THE COIN OR CURRENCY, HEREIN
PRESCRIBED, AS PROVIDED HEREIN.

(h) Termination. This Note and the Borrower’s obligations hereunder shall
terminate and be of no further force or effect upon the payment in full in cash
of the Borrower’s Liabilities (other than inchoate obligations).

 

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IN WITNESS WHEREOF, Borrower and Lender have caused this Convertible
Subordinated Promissory Note to be duly executed on the date first stated above.

 

BORROWER:

 

COMPLETE GENOMICS, INC.

 

By:

 

/s/ Clifford A. Reid

 

Name: Clifford A. Reid

 

Title: Chief Executive Officer

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LENDER:

 

BGI-HONGKONG CO., LIMITED

 

By:

 

/s/ Yin Ye

 

Name: Yin Ye

 

Title: COO

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Exhibit A

Registration Rights Provisions

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

“Affiliate” shall mean with respect to any Person, any other Person who directly
or indirectly controls, is controlled by or is under common control with such
Person (and “control” means possession, directly or indirectly, of power to
direct or cause the direction of management or policies, whether through
ownership of voting securities or otherwise).

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

“Convertible Securities” shall mean (i) any debt or equity securities of
Borrower, including preferred stock, that are convertible into or exchangeable
for Common Stock, and (ii) any rights, warrants or options to subscribe for or
purchase Common Stock or any securities described in clause (i).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

“Prospectus” shall mean the prospectus included in any Registration Statement,
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 by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.

“Public Offering” shall mean an underwritten public offering of equity
securities of Borrower pursuant to an effective registration statement filed by
Borrower under the Securities Act (other than on a Form S-8 or successors to
such form).

“Register,” “Registered” and “Registration” refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities
Act, and the declaration or ordering of the effectiveness of such registration
statement.

“Registrable Securities” shall mean the Conversion Shares then held by Lender.
Any Registrable Securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to the sale of such Registrable Securities
has been declared effective under the Securities Act after the date hereof and
such Registrable Securities have been disposed of in accordance with the plan of
distribution set forth in such Registration Statement, (ii) such Registrable
Securities are disposed of pursuant to Rule 144 (or any similar provision then
in force) under the Securities Act or (iii) such Registrable Securities are
disposed of by Lender in a transaction in which Lender’s rights under this
Agreement are not assigned. Any securities that have ceased to be Registrable
Securities cannot thereafter become Registrable Securities, and any security
that is issued or distributed in respect of securities that have ceased to be
Registrable Securities is not a Registrable Security.

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“Registration Expenses” shall mean all expenses incurred in complying with
Section 2 of this Exhibit (excluding Selling Expenses), including, without
limitation, all federal and state registration, qualification, listing and
filing fees, printing expenses, fees and disbursements of counsel for Borrower,
Blue Sky fees and expenses, the expense of any special audits incident to or
required by any such registration, and all other accounting fees incurred by
Borrower and fees and disbursements of one counsel for Lender in an amount not
to exceed $35,000.

“Registration Statement” shall mean any registration statement of Borrower which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.

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

“Selling Expenses” shall mean all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities pursuant to this Agreement.

“Underwritten Offering” shall mean a sale of securities of Borrower to an
underwriter for reoffering to the public.

2. Piggyback Registration.

2.1 Notice of Piggyback Registration and Inclusion of Registrable Securities.
Subject to the terms of this Agreement, each time Borrower decides to Register
any of its Common Stock (other than a Form S-4, a Form S-8, a universal shelf or
a transaction pursuant to Rule 145 under the Securities Act (or any successor
forms or rules)), on a form that would be suitable for a Registration involving
solely Registrable Securities (a “Piggyback Registration”), Borrower shall
(a) promptly give Lender written notice thereof and (b) include in such
Registration and in any underwriting involved therein, all of the Registrable
Securities specified in a written request delivered to Borrower by Lender within
10 Business Days after delivery of such written notice from Borrower.

2.2 Underwriting in Piggyback Registration.

(a) Notice of Underwriting in Piggyback Registration. If a Piggyback
Registration is an Underwritten Offering, the right of Lender to Registration
pursuant to this Section 2 shall be conditioned upon the inclusion of Lender’s
Registrable Securities in such underwriting to the extent provided in
Section 2.2.2. If Lender proposes to distribute its securities through such
underwriting, Lender shall (together with Borrower and any other stockholders
distributing their securities through such underwriting) enter into a customary
underwriting agreement with the underwriter(s) selected by Borrower for such
offering.

(b) Priority on Registration. In the event the underwriter(s) advise Borrower in
writing that market factors (including, without limitation, the aggregate number
of shares of Registrable Securities requested to be Registered, the general
condition of the market, and the status of the Persons proposing to sell
securities pursuant to the Registration) require a limitation of the type of
securities to be sold or the number of securities to be

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underwritten, then the number of shares that may be included in the underwriting
shall be allocated in such offering in the following order of priority: (A) if
the registration is initiated by a Person other than Borrower, (i) first, the
number of shares requested to be registered by such Person and Lender based upon
their relative proportionate total holdings of shares requested to be included
in such Registration, which, in the opinion of such managing underwriter or
underwriters, can be sold in the offering without a significant adverse effect
on the price, timing or distribution of the securities offered; (ii) second, the
number of shares that Borrower has requested to be included in such Registration
Statement, which, in the opinion of such managing underwriter or underwriters,
can be sold in the offering without a significant adverse effect on the price,
timing or distribution of the securities offered; and (iii) third, the number of
shares requested by other Persons to be included in such Registration, which, in
the opinion of the managing underwriter or underwriters, can be sold without
such adverse effect referred to above; and (B) in the case of a Registration
initiated by Borrower, (i) first, 100% of the securities that Borrower proposes
to sell, and (ii) second, the number of shares of securities which all other
Persons, including Lender, have requested to be included in such Registration
which, in the opinion of the managing underwriter or underwriters, can be sold
without such adverse effect referred to above, such amount to be allocated pro
rata among such Persons based upon their relative proportionate total holdings
of securities of Borrower.

(c) Right of Withdrawal in Piggyback Registration. If Lender disapproves of the
terms of the underwriting, Lender may elect to withdraw therefrom by notice to
Borrower and the underwriter(s) prior to the execution of the underwriting
agreement. The securities so withdrawn shall also be withdrawn from the
Registration.

2.3 Blue Sky in Piggyback Registration. In the event of any Piggyback
Registration, Borrower shall exercise commercially reasonable efforts to
Register and qualify the securities covered by the Registration Statement under
such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate for the distribution of such securities; provided,
however, that (a) Borrower shall not be required to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, and (b) notwithstanding anything in this Agreement to the
contrary, in the event any jurisdiction in which the securities shall be
qualified imposes a non-waivable requirement that expenses incurred in
connection with the qualification of the securities be borne by selling
stockholders, such expenses shall be payable pro rata by the selling
stockholders.

2.4 S-3 Registration. Promptly (but in any event, no later than 30 days
following the date upon which Lender converts all outstanding principal and
accrued interest under the Note into Conversion Shares pursuant to Section 4 of
the Note), Borrower shall prepare and file with the Commission a Registration
Statement on Form S-3 (including, without limitation, in accordance with General
Instruction I.D. of such Form) covering the resale of the Registrable
Securities, and may, at the election of Lender, include a shelf registration
statement (as defined below). Borrower shall use commercially reasonable efforts
to cause such Registration Statement to be declared effective as soon as
practicable after it has been filed.

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3. Expenses of Registration. All Registration Expenses incurred in connection
with any Registration pursuant to this Agreement shall be borne by Borrower.
Unless otherwise stated, all other Selling Expenses relating to securities
registered on behalf of Lender incurred in connection with any Registration
pursuant to this Agreement shall be borne by the stockholders holding the
Registrable Securities included in such Registration pro rata on the basis of
the number of shares so Registered.

4. Obligations of Borrower. Whenever required under Section 2 (so long as
Borrower or other initiator of such Registration, in its sole discretion, does
not abandon the Registration) to use its reasonable efforts to effect the
Registration of any Registrable Securities, Borrower shall, as expeditiously as
reasonably possible:

4.1 File Registration Statement. Prepare and file with the Commission a
Registration Statement with respect to such Registrable Securities and use
commercially reasonable efforts to cause such Registration Statement to become
and remain effective until the distribution described in the Registration
Statement has been completed; provided, however, that in connection with any
proposed Registration intended to permit an offering of any securities from time
to time (i.e., a so-called “shelf registration”), Borrower shall in no event be
obligated to cause any such Registration to remain effective for more than 450
days, said period to be increased by one day for each day that the effectiveness
of the shelf-registration is suspended and for each day that the Prospectus
cannot be used due to a notification under Section 5.5 or other legal
requirement to amend the Prospectus, or in accordance with Section 8 hereof.

4.2 File Amendments and Supplements. Prepare and file with the Commission such
amendments and supplements to such Registration Statement and Prospectus as may
be necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by such Registration
Statement.

4.3 Furnish Prospectus. Furnish to Lender such numbers of copies of a
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it.

4.4 Deregistration. Promptly deregister, if requested by Lender, any Registrable
Securities which are not sold pursuant to a Registration after the Registration
Statement relating thereto is no longer effective.

4.5 Notification to Lender. Promptly notify Lender (i) and (if requested)
confirm such notice in writing, as soon as practicable after notice thereof is
received by Borrower (a) when the Registration Statement and any amendments
thereto have been filed and become effective and the Prospectus, offering
circular or other offering document or any amendment or supplement to the
Prospectus has been filed or (b) of any request by the Commission for amendments
or supplements to the Registration Statement, the Prospectus or for additional
information, and (ii) at any time when a Prospectus relating thereto is required
to be delivered under the Securities Act, of (a) the happening of any event of
which Borrower is aware as a result of which the Prospectus contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein, in light of the circumstances under which made, not misleading and, at
the request of Lender, Borrower shall as promptly as practicable prepare a
supplement or amendment to such Prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such Prospectus will not contain
an untrue statement of a material

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fact or omit to state any fact necessary to make the statements therein in light
of the circumstances under which made, not misleading or (b) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary Prospectus, or of the suspension of the qualification of the
Registration Statement for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any of such purposes,
whereupon, in either case each Investor shall immediately cease to use such
Registration Statement or Prospectus for any purpose and, as promptly as
practicable thereafter, Borrower shall prepare and file with the Commission, and
shall furnish without charge to the appropriate Investors and managing
underwriters, if any, a supplement or amendment to such Registration Statement
or Prospectus which will correct such statement or omission or effect such
compliance and such copies thereof as the Investors and any underwriters may
reasonably request.

5. Information Furnished by Lender. It shall be a condition precedent of
Borrower’s obligations under this Agreement that Lender furnish to Borrower such
information regarding Lender and the distribution proposed by it as Borrower may
reasonably request in the event Registrable Securities are included in any
Registration.

6. Indemnification.

6.1 Borrower’s Indemnification of Lender. Borrower shall indemnify Lender and
each of its directors, officers, employees and agents with respect to which
Registration, qualification or compliance of Registrable Securities has been
effected pursuant to this Agreement, against all claims, losses, damages and
liabilities and expenses (or actions in respect thereof) to the extent such
claims, losses, damages or liabilities and expenses arise out of or are based
upon any untrue statement (or alleged untrue statement) of a material fact
contained in any Prospectus, preliminary Prospectus or Registration Statement
incident to any such Registration, qualification or compliance, are based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or are
based on any violation (or alleged violation) by Borrower of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, Exchange Act or any state securities law in connection
with the offering covered by the Registration; and Borrower shall reimburse
Lender and each of its directors, officers, employees and agents for any
reasonable legal and other expenses as and when incurred in connection with
investigating or defending any such claim, loss, damage, liability or expense;
provided, however, that the indemnity contained in this Section 7.1 shall not
apply to amounts paid in settlement of any such claim, loss, damage, liability
or expense if such settlement is effected without the consent of Borrower,
provided that the request for such consent has been provided to Lender no less
than 30 days prior to such date of settlement, and such settlement does not
provide for any admission of guilt or liability on the part of Lender, which
consent (consistent with the foregoing) shall not be unreasonably withheld,
conditioned or delayed; and provided, further, that Borrower will not be liable
to Lender or any of its directors, officers, employees or agents in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based upon any untrue statement or omission contained in
written information furnished to Borrower by Lender or any of its directors,
officers, employees or agents and stated to be for use in connection with the
offering of securities of Borrower, unless Lender has provided in writing to the
Company, within a reasonable period of time prior to the filing of any such
Prospectus, preliminary Prospectus or Registration Statement incident to the

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Registration, qualification or compliance or any amendment or supplement
thereto, information which corrected any such untrue statement or omission
previously furnished to Borrower, and Borrower failed to include such
information therein. The indemnification provided herein shall survive any
transfer of securities covered hereby.

6.2 Lender’s Indemnification of Borrower. Lender shall, (i) indemnify Borrower
and each of its directors, officers, employees, agents and each other Person who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Person selling securities under such Registration or any of such
other Person’s shareholders, partners, members, managers, trustees, directors,
officers, employees, agents or any Person who controls such Person within the
meaning of the Securities Act or Exchange Act, against all claims, losses,
damages, liabilities and expenses (or actions in respect thereof) arising out of
or are based upon any untrue statement (or alleged untrue statement) of a
material fact contained in any Prospectus, preliminary Prospectus or
Registration Statement incident to any such Registration, qualification or
compliance, based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or are based on any violation (or alleged violation) by
Lender of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, Exchange Act or any
state securities law in connection with the offering covered by the
Registration; and (ii) reimburse Borrower and each of its directors, officers,
employees, agents and such control Persons, underwriter or other Person, or
stockholder, partner, member, manager, director, officer, employee, agent or
controlling Person of such Person, for any reasonable legal and other expenses
as and when incurred in connection with investigating or defending any such
claim, loss, damage, liability or expense; provided, however, that, Lender shall
indemnify or reimburse, as applicable, to the extent, but only to the extent,
that any such claim, loss, damage, liability or expense arises out of or is
based upon any untrue statement (or alleged untrue statement) or omission (or
alleged omission) made in such Prospectus or Registration Statement in reliance
upon and in conformity with written information concerning Lender which is
furnished to Borrower by Lender and stated to be specifically for use in
connection with such Registration; provided, however, that the indemnity
agreement contained in this Section 7.2 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or expense if such
settlement is effected, consistent with Section 7.1, without the consent of
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed. In no event shall any indemnity under this Section 7.2 exceed the
proceeds from the offering received by Lender.

6.3 Indemnification Procedure. Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof and generally summarize such action. The
indemnifying party shall have the right to participate in and to assume the
defense of such claim with counsel mutually satisfactory to the parties;
provided, however, that if any party reasonably determines that there may be a
conflict between the position of Borrower or Lender in conducting the defense of
such action, suit or proceeding by reason of recognized claims for indemnity
under this Section 7, then counsel for such party shall be entitled to conduct
the defense to the extent reasonably determined by such counsel to be necessary
to protect the interests of such party. The failure to notify an indemnifying
party promptly of the commencement of any such action, if prejudicial to the
ability of the indemnifying party to defend such action, shall relieve such
indemnifying party, to the extent so prejudiced, of any

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liability to the indemnified party under this Section 7, but the omission so to
notify the indemnifying party will not relieve such party of any liability that
such party may have to any indemnified party otherwise other than under this
Section 7.

6.4 Contribution. If the indemnification provided for in Sections 7.1 or 7.2 is
held by a court of competent jurisdiction to be unavailable (other than
expressly provided therein) to an indemnified party with respect to any claim,
loss, damage, liability or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such claim, loss, damage, liability or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other in connection with the actions that
resulted in such claims, loss, damage, liability or action, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact related to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Borrower and Lender agree that it would not be just and
equitable if contribution pursuant to this Section 7.3 were based solely upon
the number of entities from whom contribution was requested or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this paragraph.

7. Market Stand-off. If so requested by the underwriters or any managing
underwriter in respect of an Underwritten Offering of Borrower’s securities,
Lender shall not sell, make any short sale of, loan, grant any option for the
purchase of, hypothecate, hedge or otherwise dispose of any securities of
Borrower (other than those included in the Registration Statement with respect
to such offering) (a) during the up to 90-day period specified by the
underwriters or the managing underwriter(s) following the commencement of any
subsequent Underwritten Offering of equity securities of Borrower. In order to
enforce the foregoing covenants, Borrower may impose stop-transfer instructions
with respect to the securities of Lender. Lender shall enter into a separate
agreement providing for the foregoing, as may be requested by the underwriters
or any managing underwriter of any such public offering.

8. Assignment. Lender may assign its rights hereunder to any permitted assignee
of the Convertible Securities or Registrable Securities, provided that such
assignment is of all of Lender’s Convertible Securities or Registrable
Securities, as applicable.