Exhibit 10.5


 


EXECUTION COPY


 


YDON HOLDINGS LTD.


 


SERIES A PREFERRED SHARE AND NOTE
PURCHASE AGREEMENT


 


APRIL 22, 2008


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Authorization; Purchase and Sale; Closing
  Deliveries; Amount and Terms of the Shares and Note; Definitions

  	
   

  	
  2

  
	
   

  	
   

  	
  1.1.

  	
   

  	
  Authorization of the Shares, Note and Warrants

  	
   

  	
  2

  
	
   

  	
   

  	
  1.2.

  	
   

  	
  Purchase and Sale of the Shares and Note

  	
   

  	
  2

  
	
   

  	
   

  	
  1.3.

  	
   

  	
  Closing

  	
   

  	
  2

  
	
   

  	
   

  	
  1.4.

  	
   

  	
  Deliveries

  	
   

  	
  3

  
	
   

  	
   

  	
  1.5.

  	
   

  	
  No Security for the Note

  	
   

  	
  3

  
	
   

  	
   

  	
  1.6.

  	
   

  	
  Conversion of the Note

  	
   

  	
  3

  
	
   

  	
   

  	
  1.7.

  	
   

  	
  Use of Proceeds

  	
   

  	
  3

  
	
   

  	
   

  	
  1.8.

  	
   

  	
  Incurrence of Indebtedness; Issuance of Equity

  	
   

  	
  3

  
	
   

  	
   

  	
  1.9.

  	
   

  	
  Payments;

  	
   

  	
  3

  
	
   

  	
   

  	
  1.10.

  	
   

  	
  Defined Terms Used in this Agreement

  	
   

  	
  3

  
	
  2.

  	
   

  	
  Representations and Warranties of the Company

  	
   

  	
  6

  
	
   

  	
   

  	
  2.1.

  	
   

  	
  Organization, Good Standing, Corporate Power and
  Qualification

  	
   

  	
  6

  
	
   

  	
   

  	
  2.2.

  	
   

  	
  Capitalization

  	
   

  	
  6

  
	
   

  	
   

  	
  2.3.

  	
   

  	
  Subsidiaries

  	
   

  	
  7

  
	
   

  	
   

  	
  2.4.

  	
   

  	
  Authorization

  	
   

  	
  8

  
	
   

  	
   

  	
  2.5.

  	
   

  	
  Valid Issuance of the Shares and Conversion Shares

  	
   

  	
  8

  
	
   

  	
   

  	
  2.6.

  	
   

  	
  Governmental Consents and Filings

  	
   

  	
  8

  
	
   

  	
   

  	
  2.7.

  	
   

  	
  Litigation

  	
   

  	
  8

  
	
   

  	
   

  	
  2.8.

  	
   

  	
  Intellectual Property

  	
   

  	
  9

  
	
   

  	
   

  	
  2.9.

  	
   

  	
  Compliance with Other Instruments

  	
   

  	
  9

  
	
   

  	
   

  	
  2.10.

  	
   

  	
  Agreements; Actions

  	
   

  	
  10

  
	
   

  	
   

  	
  2.11.

  	
   

  	
  Certain Transactions

  	
   

  	
  10

  
	
   

  	
   

  	
  2.12.

  	
   

  	
  Rights of Registration and Voting Rights

  	
   

  	
  11

  
	
   

  	
   

  	
  2.13.

  	
   

  	
  Absence of Liens

  	
   

  	
  11

  
	
   

  	
   

  	
  2.14.

  	
   

  	
  Financial Statements

  	
   

  	
  11

  
	
   

  	
   

  	
  2.15.

  	
   

  	
  Changes

  	
   

  	
  12

  
	
   

  	
   

  	
  2.16.

  	
   

  	
  Employee Matters

  	
   

  	
  13

  
	
   

  	
   

  	
  2.17.

  	
   

  	
  Tax Returns and Payments

  	
   

  	
  14

  
	
   

  	
   

  	
  2.18.

  	
   

  	
  Insurance

  	
   

  	
  15

  
	
   

  	
   

  	
  2.19.

  	
   

  	
  Inventions Assignment Agreements

  	
   

  	
  15

  
	
   

  	
   

  	
  2.20.

  	
   

  	
  Permits

  	
   

  	
  15

  



 


i

















 


TABLE OF CONTENTS

(continued)


 


	
   

  	
   

  	
  2.21.

  	
   

  	
  Corporate Documents

  	
   

  	
  15

  
	
   

  	
   

  	
  2.22.

  	
   

  	
  Environmental and Safety Laws

  	
   

  	
  15

  
	
   

  	
   

  	
  2.23.

  	
   

  	
  Disclosure

  	
   

  	
  16

  
	
   

  	
   

  	
  2.24.

  	
   

  	
  Capitalization of Existing Subsidiaries

  	
   

  	
  16

  
	
  3.

  	
   

  	
  Representations and Warranties of the Purchaser

  	
   

  	
  16

  
	
   

  	
   

  	
  3.1.

  	
   

  	
  Authorization

  	
   

  	
  16

  
	
   

  	
   

  	
  3.2.

  	
   

  	
  Purchase Entirely for Own Account

  	
   

  	
  16

  
	
   

  	
   

  	
  3.3.

  	
   

  	
  Knowledge

  	
   

  	
  17

  
	
   

  	
   

  	
  3.4.

  	
   

  	
  Restricted Securities

  	
   

  	
  17

  
	
   

  	
   

  	
  3.5.

  	
   

  	
  No Public Market

  	
   

  	
  17

  
	
   

  	
   

  	
  3.6.

  	
   

  	
  Legends

  	
   

  	
  17

  
	
  4.

  	
   

  	
  Conditions to the Purchaser’s Obligations at Closing

  	
   

  	
  17

  
	
   

  	
   

  	
  4.1.

  	
   

  	
  Representations and Warranties

  	
   

  	
  17

  
	
   

  	
   

  	
  4.2.

  	
   

  	
  Performance

  	
   

  	
  17

  
	
   

  	
   

  	
  4.3.

  	
   

  	
  Compliance Certificate

  	
   

  	
  18

  
	
   

  	
   

  	
  4.4.

  	
   

  	
  Qualifications

  	
   

  	
  18

  
	
   

  	
   

  	
  4.5.

  	
   

  	
  Corporate/Capital Structure

  	
   

  	
  18

  
	
   

  	
   

  	
  4.6.

  	
   

  	
  Opinion of Company Counsel

  	
   

  	
  18

  
	
   

  	
   

  	
  4.7.

  	
   

  	
  Board of Directors

  	
   

  	
  18

  
	
   

  	
   

  	
  4.8.

  	
   

  	
  Indemnification Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.9.

  	
   

  	
  Shareholder Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.10.

  	
   

  	
  Employment Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.11.

  	
   

  	
  Inventions Assignment Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.12.

  	
   

  	
  Share Restriction Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.13.

  	
   

  	
  Note

  	
   

  	
  18

  
	
   

  	
   

  	
  4.14.

  	
   

  	
  Warrant

  	
   

  	
  18

  
	
   

  	
   

  	
  4.15.

  	
   

  	
  Memorandum and Articles

  	
   

  	
  19

  
	
   

  	
   

  	
  4.16.

  	
   

  	
  Secretary’s Certificate

  	
   

  	
  19

  
	
   

  	
   

  	
  4.17.

  	
   

  	
  Proceedings and Documents

  	
   

  	
  19

  
	
   

  	
   

  	
  4.18.

  	
   

  	
  Preemptive Rights

  	
   

  	
  19

  
	
   

  	
   

  	
  4.19.

  	
   

  	
  Business Plan

  	
   

  	
  19

  
	
   

  	
   

  	
  4.20.

  	
   

  	
  Diligence Review

  	
   

  	
  19

  
	
  5.

  	
   

  	
  Conditions of the Company’s Obligations at Closing

  	
   

  	
  19

  
	
   

  	
   

  	
  5.1.

  	
   

  	
  Representations and Warranties

  	
   

  	
  19

  
	
   

  	
   

  	
  5.2.

  	
   

  	
  Performance

  	
   

  	
  19

  
	
   

  	
   

  	
  5.3.

  	
   

  	
  Qualifications

  	
   

  	
  19

  



 


ii

















 


TABLE OF CONTENTS

(continued)


 


	
  6.

  	
   

  	
  Covenants

  	
   

  	
  19

  
	
   

  	
   

  	
  6.1.

  	
   

  	
  Payment of Principal, Premium and Interest

  	
   

  	
  20

  
	
   

  	
   

  	
  6.2.

  	
   

  	
  Conduct of Business and Maintenance of Existence

  	
   

  	
  20

  
	
   

  	
   

  	
  6.3.

  	
   

  	
  Maintenance of Properties

  	
   

  	
  20

  
	
   

  	
   

  	
  6.4.

  	
   

  	
  Change of Jurisdiction of Organization, Relocation
  of Business

  	
   

  	
  20

  
	
   

  	
   

  	
  6.5.

  	
   

  	
  Compliance with Law

  	
   

  	
  20

  
	
   

  	
   

  	
  6.6.

  	
   

  	
  Compliance with Transaction Documents

  	
   

  	
  20

  
	
   

  	
   

  	
  6.7.

  	
   

  	
  Payment of Obligations

  	
   

  	
  20

  
	
   

  	
   

  	
  6.8.

  	
   

  	
  Insurance

  	
   

  	
  21

  
	
   

  	
   

  	
  6.9.

  	
   

  	
  Future Subsidiaries and Future Affiliates

  	
   

  	
  21

  
	
   

  	
   

  	
  6.10.

  	
   

  	
  Investments

  	
   

  	
  21

  
	
   

  	
   

  	
  6.11.

  	
   

  	
  Restricted Payments

  	
   

  	
  21

  
	
   

  	
   

  	
  6.12.

  	
   

  	
  Mergers, Consolidations, Asset Dispositions and
  Acquisitions

  	
   

  	
  22

  
	
   

  	
   

  	
  6.13.

  	
   

  	
  Guarantees

  	
   

  	
  22

  
	
   

  	
   

  	
  6.14.

  	
   

  	
  Books, Records and Inspections; Information Rights

  	
   

  	
  22

  
	
   

  	
   

  	
  6.15.

  	
   

  	
  Transactions with Related Parties

  	
   

  	
  22

  
	
   

  	
   

  	
  6.16.

  	
   

  	
  ESOP

  	
   

  	
  22

  
	
   

  	
   

  	
  6.17.

  	
   

  	
  Notice of Developments

  	
   

  	
  22

  
	
   

  	
   

  	
  6.18.

  	
   

  	
  Further Assurances

  	
   

  	
  22

  
	
  7.

  	
   

  	
  Events Of Default; Remedies

  	
   

  	
  23

  
	
   

  	
   

  	
  7.1.

  	
   

  	
  Events of Default

  	
   

  	
  23

  
	
   

  	
   

  	
  7.2.

  	
   

  	
  Remedies

  	
   

  	
  23

  
	
  8.

  	
   

  	
  Miscellaneous

  	
   

  	
  24

  
	
   

  	
   

  	
  8.1.

  	
   

  	
  Survival of Warranties

  	
   

  	
  24

  
	
   

  	
   

  	
  8.2.

  	
   

  	
  Successors and Assigns

  	
   

  	
  24

  
	
   

  	
   

  	
  8.3.

  	
   

  	
  Governing Law

  	
   

  	
  24

  
	
   

  	
   

  	
  8.4.

  	
   

  	
  Counterparts

  	
   

  	
  24

  
	
   

  	
   

  	
  8.5.

  	
   

  	
  Titles and Subtitles

  	
   

  	
  24

  
	
   

  	
   

  	
  8.6.

  	
   

  	
  Notices

  	
   

  	
  24

  
	
   

  	
   

  	
  8.7.

  	
   

  	
  No Finder’s Fees

  	
   

  	
  25

  
	
   

  	
   

  	
  8.8.

  	
   

  	
  Attorneys’ Fees

  	
   

  	
  25

  
	
   

  	
   

  	
  8.9.

  	
   

  	
  Amendments and Waivers

  	
   

  	
  25

  
	
   

  	
   

  	
  8.10.

  	
   

  	
  Severability

  	
   

  	
  25

  
	
   

  	
   

  	
  8.11.

  	
   

  	
  Delays or Omissions

  	
   

  	
  25

  
	
   

  	
   

  	
  8.12.

  	
   

  	
  Entire Agreement

  	
   

  	
  25

  
	
   

  	
   

  	
  8.13.

  	
   

  	
  Dispute Resolution

  	
   

  	
  26

  
	
   

  	
   

  	
  8.14.

  	
   

  	
  No Commitment for Additional Financing

  	
   

  	
  26

  
	
   

  	
   

  	
  8.15.

  	
   

  	
  Confidentiality

  	
   

  	
  26

  



 


iii

















 


TABLE OF CONTENTS

(continued)


 


	
  Exhibit A

  	
  Memorandum of
  Association

  
	
   

  	
   

  
	
  Exhibit B

  	
  Articles of Association

  
	
   

  	
   

  
	
  Exhibit C

  	
  Disclosure Schedule

  
	
   

  	
   

  
	
  Exhibit D

  	
  Form of Note

  
	
   

  	
   

  
	
  Exhibit E

  	
  Form of Warrant

  
	
   

  	
   

  
	
  Exhibit F

  	
  Form of Employment
  Agreement

  
	
   

  	
   

  
	
  Exhibit G

  	
  Form of
  Indemnification Agreement

  
	
   

  	
   

  
	
  Exhibit H

  	
  Form of Inventions
  Assignment Agreement

  
	
   

  	
   

  
	
  Exhibit I

  	
  Form of
  Shareholders Agreement

  
	
   

  	
   

  
	
  Exhibit J

  	
  Form of Share
  Restriction Agreement

  
	
   

  	
   

  
	
  Exhibit K

  	
  Form of Legal
  Opinion of Company’s Counsel

  



 


iv














 


SERIES A PREFERRED SHARE AND NOTE
PURCHASE AGREEMENT


 


THIS SERIES A
PREFERRED SHARE AND NOTE PURCHASE AGREEMENT (this “Agreement”)  is
made as of the 22nd day of April, 2008 by and among Ydon Holdings Ltd., a
British Virgin Islands Business Company having its registered office at Equity
Trust (BVI) Limited, Palm Grove House, P.O. Box 438, Road Town, Tortola,
British Virgin Islands with company number 1038691 (the “Company”),  Velti Plc, a public limited company organized under the laws
of England and Wales (the “Purchaser”),  and the persons listed as “Founders” on
the signature pages to this Agreement (each a “Founder” and together the “Founders”).


 


RECITALS


 


WHEREAS, the
Company has authorized a financing (the “Series A
Financing”)  consisting
of (a) the sale and issuance of up to a total of 7,050 (the “Shares”) of the Company’s Series A
Convertible Redeemable Participating Preferred Shares (the “Series A Preferred Shares”)  to the Purchaser in consideration for such
Purchaser’s equity investment of an aggregate of One Million Seven Hundred Nine
Thousand Nine Hundred Seventy-Seven Dollars ($1,709,977), (b) the sale and
issuance by the Company of (i) a senior convertible promissory note (the “Note”)  in
an aggregate principal amount of One Million Two Hundred Ninety Thousand
Twenty-Three Dollars ($1,290,023) (the “Loan
Amount”)  in
consideration for such Purchaser’s loan to the Company of an aggregate amount
equal to the Loan Amount and (c) the issuance by the Company of warrants
(the “Warrants”)  exercisable to purchase such additional Series A
Preferred Shares as are necessary, assuming the full conversion of the Note and
the exercise of the Warrants, to make Purchaser’s equity ownership of the
Company equal to fifty percent (50%) on a fully-diluted basis, including the
ESOP (as defined below);


 


WHEREAS, the
proceeds of such financing shall be used by the Company for its benefit as well
as that of its wholly-owned subsidiaries, Casee (Beijing) Information
Technology Company Limited and Beijing Ydon Network Information Technology
Company Limited (each an “Existing Subsidiary”
and collectively, the “Existing
Subsidiaries”);


 


WHEREAS, the
Company desires to (a) issue and sell the Shares to the Purchaser and (b) issue
the Note and Warrants in favor of the Purchaser, on the terms and conditions
set forth herein; and


 


WHEREAS, the
Purchaser desires to (a) purchase the Shares and (b) accept the Note
and Warrants, on the terms and conditions set forth herein.


 


AGREEMENT


 


NOW, THEREFORE, in
consideration of the foregoing recitals and the mutual promises,
representations, warranties, and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:


 

















 


1.         Authorization;
Purchase and Sale; Closing Deliveries; Amount and Terms of the Shares and Note;
Definitions.


 


1.1.      Authorization of the
Shares, Note and Warrants.


 


(a)       The Company has authorized (i) the
sale and issuance to the Purchaser of the Shares and (ii) the issuance of
such Ordinary Shares to be issued upon conversion of the Shares (the “Equity Conversion Shares”).


 


(b)       The Company has also
authorized (i) the sale and issuance of the Note, in an aggregate
principal amount equal to the Loan Amount in consideration for such Purchaser’s
willingness to loan the Company the Loan Amount and (ii) the issuance of
the 7,950 Series A Preferred Shares, subject to adjustment, to be issued
upon conversion of the Note (the “Note
Conversion Shares”).


 


(c)       The Company has authorized (i) the
issuance and delivery to the Purchaser of the Warrants and (ii) the
issuance of such Series A Preferred Shares to be issued upon conversion of
the Warrants (the “Warrant Conversion Shares”
and together with the Equity Conversion Shares and Note Conversion
Shares, the “Conversion Shares”).


 


(d)       The Shares and the
Conversion Shares have the rights, preferences, privileges and restrictions set
forth in the Memorandum and Articles (each as defined below).


 


1.2.      Purchase and Sale of the
Shares and Note.


 


(a)       Subject to the terms and
conditions of this Agreement and on the basis of the representations and
warranties set forth herein, the Company agrees to sell to the Purchaser, and
the Purchaser agrees to purchase from the Company for investment, at the
Closing (as defined below), an aggregate of 7,050 Series A Preferred
Shares, at a price per share of Two Hundred Forty-Two Dollars and Fifty-Five
Cents ($242.55), for an aggregate purchase price of One Million Seven Hundred
Nine Thousand Nine Hundred Seventy-Seven Dollars ($1,709,977).


 


(b)       Subject to the terms and
conditions of this Agreement and on the basis of the representations and
warranties set forth herein, the Company agrees to sell to the Purchaser, and the
Purchaser agrees to purchase from the Company for investment, at the Closing,
the Note for an aggregate purchase price equal to the Loan Amount.


 


(c)       Subject to the terms and
conditions of this Agreement and on the basis of the representations and warranties
set forth herein, the Company agrees to issue to the Purchaser, and the
Purchaser agrees to accept from the Company for investment, at the Closing, the
Warrants.


 


1.3.      Closing. The purchase
and sale of the Shares, Note and Warrants pursuant to this Agreement (the “Closing”)
shall take place remotely via the exchange of documents and
signatures on the 30th day of April, 2008 (such date is hereinafter
referred to as the “Closing Date”).


 


2

















 


1.4.      Deliveries. Subject
to the terms and conditions hereof, the Company will deliver (a) to the
Purchaser, at the Closing, a certificate representing the number of Shares to
be purchased by the Purchaser at the Closing, against payment of the purchase
price therefor by certified check or wire transfer made payable to the order of
the Company, cancellation or conversion of indebtedness of the Company or any
combination of the foregoing and (b) to the Purchaser, at the Closing, a
senior convertible promissory note representing the aggregate principal amount
of the Note to be purchased by the Purchaser at the Closing, against payment of
the purchase price therefor by certified check or wire transfer made payable to
the order of the Company. In the event that payment by the Purchaser is made,
in whole or in part, by cancellation or conversion of indebtedness of the
Company, then the Purchaser shall surrender to the Company for cancellation or
conversion at the Closing any evidence of such indebtedness or shall execute an
instrument of cancellation or conversion in form and substance reasonably
acceptable to the Company.


 


1.5.      No Security for the Note.
The Note shall be unsecured.


 


1.6.      Conversion of the Note.
The Note shall be convertible into Note Conversion Shares in accordance with
the terms and conditions therein.


 


1.7.      Use of Proceeds. The
proceeds from the Series A Financing shall be used by the Company solely
for business expansion, working capital, mergers and acquisitions and other
general corporate purposes in accordance with the Business Plan (as defined
below) and approved budget of the Company.


 


1.8.      Incurrence of
Indebtedness; Issuance of Equity. Neither the Company nor any of the
Existing Subsidiaries shall (a) create, assume, incur or in any manner
become liable in respect of or permit to exist any indebtedness or (b) issue,
or obligate itself to issue, to any Person any equity security, or security
convertible into equity, of the Company or any Existing Subsidiary, other than
in connection with this Agreement without the prior written consent of the
Purchaser. The Company and the Existing Subsidiaries acknowledge and agree that
the foregoing consent right of the Purchaser (i) is a substantial
inducement to the Purchaser entering into this Agreement and (ii) is fair
and reasonable in consideration of the Purchaser’s entry into this Agreement.


 


1.9.      Payments. The Company
will make all cash payments due under the Note in immediately available funds
by the date such payment is due in the manner set forth in the Note.


 


1.10.    Defined Terms Used in this
Agreement. As used in this Agreement, the following terms shall be
construed to have the meanings set forth or referenced below (and such meanings
shall be equally applicable to both the singular and plural form of the terms
defined, as the context may require). Unless otherwise specified, all
references to “$”, “cash”, “dollars” or similar references shall mean U.S.
dollars, paid in cash or other immediately available funds.


 


“Affiliate”
means, with respect to any specified Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with such Person, including, without limitation, any general partner,
managing member, officer or director of such


 


3

















 


Person or any venture
capital fund now or hereafter existing that is controlled by one or more
general partners or managing members of, or shares the same management company
with, such Person.


 


“Agreement”
has the meaning set forth in the preamble hereof.


 


“Articles”
means the Amended and Restated Articles of Association of the
Company, attached as Exhibit B hereto, as may be amended.


 


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


 


“Business
Plan” has the meaning set forth in Section 2.23.


 


“Closing”
has the meaning set forth in Section 1.3.


 


“Closing
Date” has the meaning set forth in Section 1.3.


 


“Company
Intellectual Property” means all patents, patent
applications, trademarks, trademark applications, service marks, tradenames,
copyrights, trade secrets, licenses, domain names, mask works, information and
proprietary rights and processes as are necessary to the conduct of the Company’s
business as now conducted and as presently proposed to be conducted.


 


“Conversion
Shares” has the meaning set forth in Section l.l(c).


 


“Employment
Agreement” means the employment agreement between the Company
or an Existing Subsidiary, as applicable, and a Key Employee, respectively, in
the form attached as Exhibit F hereto.


 


“Equity
Conversion Shares” has the meaning set forth in Section 1.1
(a).


 


“ESOP”
means the 2008 Share Option Plan duly adopted by the Board
and, if necessary, approved by the Company shareholders.


 


“Existing
Subsidiaries” has the meaning set forth in the recitals
hereof.


 


“Financial
Statements” has the meaning set forth in Section 2.14.


 


“Founder”
has the meaning set forth in the preamble hereof.


 


“Hazardous
Substance” has the meaning set forth in Section 2.22.


 


“Indemnification
Agreement” means the indemnification agreement between the
Company and any director designated by the Purchaser as a member of the Board
pursuant to the Shareholders Agreement, in the form attached as Exhibit G
hereto.


 


“Inventions
Assignment Agreement” means the proprietary information and
inventions assignment agreement between the Company or an Existing Subsidiary,
as applicable, and a Key Employee, respectively, in the form attached as Exhibit H
hereto.


 


4

















 


“Key
Employee” means any executive-level employee (including
division director and vice president-level positions) as well as any employee
or consultant who either alone or in concert with others develops, invents,
programs or designs any Company Intellectual Property.


 


“Knowledge,”
including the phrase “to
the Company’s knowledge,” shall mean the actual knowledge of the Key
Employee.


 


“Loan
Amount” has the meaning set forth in the recitals hereof.


 


“Material
Adverse Effect” means a material adverse effect on the
business, assets (including intangible assets), liabilities, financial
condition, property, prospects or results of operations of the Company.


 


“Memorandum”
means the Amended and Restated Memorandum of Association of
the Company, attached as Exhibit A hereto, as may be amended.


 


“Note”
has the meaning set forth in the recitals hereof.


 


“Note
Conversion Shares” has the meaning set forth in Section l.l(b).


 


“Obligations”
means, collectively, all of the payment and other obligations
of the Company to the Purchaser under this Agreement and the Note.


 


“Ordinary
Shares” has the meaning set forth in Section 2.2(a).


 


‘Person”
means any individual, corporation, partnership, trust,
limited liability company, association or other entity.


 


“PCB”
has the meaning set forth in Section 2.22.


 


“Preferred
Shares” has the meaning set forth in Section 2.2(b).


 


“Purchaser”
has the meaning set forth in the preamble hereof.


 


“Related
Party” has the meaning set forth in Section 6.15.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.


 


“Series A
Directors” means a member of the Board who is designated by
the Purchaser in accordance with the Shareholders Agreement.


 


“Series A
Financing” has the meaning set forth in the recitals hereof.


 


“Series A
Preferred Shares” has the meaning
set forth in the recitals hereof.


 


5

















 


“Shareholders
Agreement” means that certain shareholders agreement among,
the Company, the Purchaser and the other shareholders of the Company party
thereto, dated as of the date hereof, in the form of Exhibit I attached to
this Agreement.


 


“Share
Restriction Agreement” means the share restriction agreement
between the Company and each Founder respectively, dated as of the date hereof,
in the form of Exhibit J attached to this Agreement.


 


“Shares”
has the meaning set forth in the recital hereof.


 


“Transaction
Agreements” means this Agreement, the Shareholders Agreement,
Indemnification Agreement and each Employment Agreement, Inventions Assignment
Agreement, Non-Competition Agreement and Share Restriction Agreement.


 


“Warrant
Conversion Shares” has the meaning set forth in Section l.l(c).


 


“Warrants”
has the meaning set forth in the recitals hereof.


 


2.         Representations and
Warranties of the Company. The Company hereby represents and warrants to
the Purchaser that, except as set forth on the Disclosure Schedule attached as Exhibit C
to this Agreement, which exceptions shall be deemed to be part of the
representations and warranties made hereunder, the following representations
are true and complete as of the date of the Closing, except as otherwise
indicated. The Disclosure Schedule shall be arranged in sections corresponding
to the numbered and lettered sections and subsections contained in this Section 2,
and the disclosures in any section or subsection of the Disclosure Schedule
shall qualify other sections and subsections in this Section 2 only
to the extent it is readily apparent from a reading of the disclosure that such
disclosure is applicable to such other sections and subsections.


 


For purposes of
these representations and warranties (other than those in Sections 2.2, 2.3,
2.4, 2.5, and 2.6), the term “the Company” shall include the Existing
Subsidiaries, unless otherwise noted herein.


 


2.1.      Organization, Good
Standing, Corporate Power and Qualification. The Company is a British
Virgin Islands Business Company duly incorporated, validly existing and in good
standing under the laws of the British Virgin Islands and has all requisite
corporate power and authority to carry on its business as presently conducted
and as proposed to be conducted. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to
so qualify would have a Material Adverse Effect.


 


2.2.      Capitalization. The
authorized capital of the Company consists, immediately prior to the Closing,
of:


 


(a)       Sixty Thousand (60,000)
ordinary shares of the Company (the “Ordinary
Shares”),  Twenty-Six
Thousand Six Hundred Twenty-Seven (26,627) shares of which are issued and
outstanding immediately prior to the Closing. All of the outstanding Ordinary
Shares have been duly authorized, are fully paid and nonassessable and were
issued in


 


6

















 


compliance with all
applicable securities laws. The Company holds no treasury shares and no shares
of Series A Preferred Shares in its treasury.


 


(b)       Thirty Thousand (30,000)
preferred shares (the “Preferred Shares”), all
of which shares have been designated Series A Preferred Shares, none of
which are issued and outstanding immediately prior to the Closing. The rights,
privileges and preferences of the Series A Preferred Shares are as stated
in the Memorandum and Articles and as provided by the British Virgin Islands
Business Company Act of 2004.


 


(c)       The Company has reserved
Three Thousand Three Hundred Seventy Three (3,373) Ordinary Shares for issuance
to officers, directors, employees and consultants of the Company pursuant to
its ESOP. Of such reserved Ordinary Shares, no shares have been issued pursuant
to restricted share purchase agreements, no options to purchase shares have
been granted and are currently outstanding, and Three Thousand Three Hundred
Seventy Three (3,373) Ordinary Shares remain available for issuance to
officers, directors, employees and consultants pursuant to the ESOP. The
Company has furnished to the Purchaser complete and accurate copies of the ESOP
and forms of agreements used thereunder.


 


(d)       Section 2.2(d) of
the Disclosure Schedule sets forth the capitalization of the Company
immediately following the Closing including the number of shares of the
following: (i) issued and outstanding Ordinary Shares, including, with
respect to restricted Ordinary Shares, vesting schedule and repurchase price; (ii) issued
share options, including vesting schedule and exercise price; (iii) share
options not yet issued but reserved for issuance; (iv) each series of
Preferred Shares; and (v) warrants or share purchase rights, if any.
Except for (A) the conversion privileges of the Shares to be issued under
this Agreement and (B) the securities and rights described in Section 2.2(c) of
this Agreement and Section 2.2(d) of the Disclosure Schedule,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal or similar rights) or agreements,
orally or in writing, to purchase or acquire from the Company any Ordinary
Shares or Series A Preferred Shares, or any securities convertible into or
exchangeable for Ordinary Shares or Series A Preferred Shares. All
outstanding shares of the Company’s Ordinary Shares and all of the Company’s
Ordinary Shares underlying outstanding options are subject to a right of first
refusal in favor of the Company upon any proposed transfer (other than
transfers for estate planning purposes).


 


(e)       Except with respect to the
Share Restriction Agreement, none of the Company’s share purchase agreements or
share option documents contains a provision for acceleration of vesting (or lapse
of a repurchase right) or other changes in the vesting provisions or other
terms of such agreement or understanding upon the occurrence of any event or
combination of events. The Company has never adjusted or amended the exercise
price of any share options previously awarded, whether through amendment,
cancellation, replacement grant, repricing, or any other means. Except as set
forth in the Memorandum and Articles, the Company has no obligation (contingent
or otherwise) to purchase or redeem any of its capital shares.


 


2.3.      Subsidiaries. Except
as set forth on Section 2.3 of the Disclosure Schedule, the Company
does not currently own or control, directly or indirectly, any interest in any
other corporation, partnership, trust, joint venture, limited liability
company, association, or


 


7

















 


other business entity.
The Company is not a participant in any joint venture, partnership or similar
arrangement.


 


2.4.      Authorization. All
corporate action required to be taken by the Board and shareholders of the
Company in order to authorize the Company to enter into the Transaction
Agreements, and to issue the Shares, Note and Warrant at the Closing and the
Ordinary Shares and Series A Preferred Shares, as applicable, issuable
upon conversion of the Shares or the Note or the exercise of the Warrants, as
the case may be, has been taken or will be taken prior to the Closing. All
action on the part of the officers of the Company necessary for the execution
and delivery of the Transaction Agreements, the performance of all obligations
of the Company under the Transaction Agreements to be performed as of the
Closing, and the issuance and delivery of the Shares has been taken or will be
taken prior to the Closing. The Transaction Agreements, when executed and
delivered by the Company, shall constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of creditors’
rights generally, (b) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies, or (c) to
the extent the indemnification provisions contained in the Shareholders
Agreement and the Indemnification Agreement may be limited by applicable
securities laws.


 


2.5.      Valid Issuance of the
Shares and Conversion Shares. The Shares, when issued, sold and delivered
in accordance with the terms and for the consideration set forth in this
Agreement, will be validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under the
Transaction Agreements, applicable securities laws and liens or encumbrances
created by or imposed by the Purchaser. Assuming the accuracy of the
representations of the Purchaser in Section 3 of this Agreement,
the Shares will be issued in compliance with all applicable securities laws.
The Ordinary Shares and Preferred Shares, as applicable, issuable upon the
conversion of the Shares or the Note or the exercise of the Warrants, as the
case may be, have been duly reserved for issuance, and upon issuance in
accordance with the terms of the Memorandum and Articles, will be validly
issued, fully paid and nonassessable and free of restrictions on transfer other
than restrictions on transfer under the Transaction Agreements, applicable
securities laws and liens or encumbrances created by or imposed by the
Purchaser.


 


2.6.      Governmental Consents and
Filings. Assuming the accuracy of the representations of the Purchaser in Section 3
of this Agreement, no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
governmental authority is required on the part of the Company in connection
with the consummation of the transactions contemplated by this Agreement,
except for those which have been made in a timely manner.


 


2.7.      Litigation. There is
no claim, action, suit, proceeding, arbitration, complaint, charge or
investigation pending or to the Company’s knowledge, currently threatened (a) against
the Company or any officer, director or Key Employee of the Company; (b) that
questions the validity of the Transaction Agreements or the right of the
Company to enter into them, or to consummate the transactions contemplated by
the Transaction Agreements; or (c) to


 


8

















 


the Company’s knowledge,
that would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. Neither the Company nor, to the Company’s
knowledge, any of its officers, directors or Key Employees is a party or is
named as subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality (in the case of
officers, directors or Key Employees, such as would affect the Company). There
is no action, suit, proceeding or investigation by the Company pending or which
the Company intends to initiate. The foregoing includes, without limitation,
actions, suits, proceedings or investigations pending or threatened in writing
(or any basis therefor known to the Company) involving the prior employment of
any of the Company’s employees, their services provided in connection with the
Company’s business, or any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers.


 


2.8.      Intellectual Property.
The Company owns or possesses legal rights to all Company Intellectual Property
without any known conflict with, or infringement of, the rights of others. To
the Company’s knowledge, no product or service marketed or sold (or proposed to
be marketed or sold) by the Company violates or will violate any license or
infringes or will infringe any intellectual property rights of any other party.
Other than with respect to commercially available software products under
standard end-user object code license agreements, there are no outstanding
options, licenses, agreements, claims, encumbrances or shared ownership
interests of any kind relating to the Company Intellectual Property, nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other Person. The Company has not received any communications
alleging that the Company has violated or, by conducting its business, would
violate any of the patents, trademarks, service marks, tradenames, copyrights,
trade secrets, mask works or other proprietary rights or processes of any other
Person. The Company has obtained and possesses valid licenses to use all of the
software programs present on the computers and other software-enabled
electronic devices that it owns or leases or that it has otherwise provided to
its employees for their use in connection with the Company’s business. To the
Company’s knowledge, it will not be necessary to use any inventions of any of
its employees or consultants (or Persons it currently intends to hire) made
prior to their employment by the Company. Each employee and consultant has
assigned to the Company all intellectual property rights he or she owns that
are related to the Company’s business as now conducted and as presently
proposed to be conducted. Section 2.8 of the Disclosure Schedule
lists all Company Intellectual Property. The Company has not embedded any open
source, copyleft or community source code in any of its products generally
available or in development, including but not limited to any libraries or code
licensed under any General Public License, Lesser General Public License or
similar license arrangement.


 


2.9.      Compliance with Other
Instruments. The Company is not in violation or default (a) of any
provisions of its Articles or Memorandum, (b) of any instrument, judgment,
order, writ or decree, (c) under any note, indenture or mortgage, or (d) under
any lease, agreement, contract or purchase order to which it is a party or by
which it is bound that is required to be listed on the Disclosure Schedule, or,
of any provision of a statute, rule or regulation applicable to the
Company, the violation of which would have a Material Adverse Effect. The
execution, delivery and performance of the Transaction Agreements and the


 


9

















 


consummation of the
transactions contemplated by the Transaction Agreements will not result in any
such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either (i) a default under any such
provision, instrument, judgment, order, writ, decree, contract or agreement or (ii) an
event which results in the creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, forfeiture, or nonrenewal
of any material permit or license applicable to the Company.


 


2.10.    Agreements; Actions.


 


(a)       Except for the Transaction
Agreements, there are no agreements, understandings, instruments, contracts or
proposed transactions to which the Company is a party or by which it is bound
that involve (i) obligations (contingent or otherwise) of, or payments to,
the Company in excess of $25,000, (ii) the license of any patent,
copyright, trademark, trade secret or other proprietary right to or from the
Company, (iii) the grant of rights to manufacture, produce, assemble,
license, market, or sell its products to any other Person that limit the
Company’s exclusive right to develop, manufacture, assemble, distribute, market
or sell its products, or (iv) indemnification by the Company with respect
to infringements of proprietary rights.


 


(b)       The Company has not (i) declared
or paid any dividends, or authorized or made any distribution upon or with
respect to any class or series of its capital shares, (ii) incurred any
indebtedness for money borrowed or incurred any other liabilities individually
in excess of $25,000 or in excess of $100,000 in the aggregate, (iii) made
any loans or advances to any Person, other than ordinary advances for travel
expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course
of business. For the purposes of subsections (b) and (c) of this Section 2.10,
all indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same Person (including Persons the
Company has reason to believe are affiliated with each other) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsection.


 


(c)       The Company is not a
guarantor or indemnitor of any indebtedness of any other Person.


 


(d)       The Company has not engaged
in the past three (3) months in any discussion with any representative of
any Person regarding (a) a sale or exclusive license of all or substantially
all of the Company’s assets, or (b) any merger, consolidation or other
business combination transaction of the Company with or into another Person.


 


2.11.    Certain Transactions.


 


(a)       Other than (i) standard
employee benefits generally made available to all employees, (ii) standard
director and officer indemnification agreements approved by the Board, and (iii) the
purchase of shares of the Company’s capital shares and the issuance of options
to purchase shares of the Company’s Ordinary Shares, in each instance, approved
in the written minutes of the Board of Directors (previously provided to the
Purchaser or its counsel),


 


10

















 


there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, consultants or Key Employees, or any Affiliate thereof.


 


(b)       The Company is not
indebted, directly or indirectly, to any of its directors, officers or
employees or to their respective spouses or children or to any Affiliate of any
of the foregoing, other than in connection with expenses or advances of
expenses incurred in the ordinary course of business or employee relocation
expenses and for other customary employee benefits made generally available to
all employees. None of the Company’s directors, officers or employees, or any
members of their immediate families, or any Affiliate of the foregoing are,
directly or indirectly, indebted to the Company have any (i) material
commercial, industrial, banking, consulting, legal, accounting, charitable or
familial relationship with any of the Company’s customers, suppliers, service
providers, joint venture partners, licensees and competitors, (ii) direct
or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship, or
any firm or corporation which competes with the Company except that directors,
officers or employees or shareholders of the Company may own shares in (but not
exceeding two percent (2%) of the outstanding capital shares of) publicly
traded companies that may compete with the Company or (iii) financial
interest in any contract with the Company.


 


2.12.    Rights of Registration and
Voting Rights. Except as provided in the Shareholders Agreement, the
Company is not under any obligation to register under the Securities Act (or a
foreign equivalent) any of its currently outstanding securities or any
securities issuable upon exercise or conversion of its currently outstanding
securities. To the Company’s knowledge, except as contemplated in the
Shareholders Agreement, no shareholder of the Company has entered into any
agreements with respect to the voting of capital shares of the Company.


 


2.13.    Absence of Liens. The
property and assets that the Company owns are free and clear of all mortgages,
deeds of trust, liens, loans and encumbrances, except for statutory liens for
the payment of current taxes that are not yet delinquent and encumbrances and
liens that arise in the ordinary course of business and do not materially
impair the Company’s ownership or use of such property or assets. With respect
to the property and assets it leases, the Company is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances other than those of the lessors of such property
or assets.


 


2.14.    Financial Statements.
The Company has delivered to the Purchaser its audited financial statements as
of December 31, 2006 and for the fiscal year ended December 31, 2007
and its unaudited financial statements (including balance sheet, income
statement and statement of cash flows) as of March 31, 2008 and for the
three (3) month period ended March 31, 2008 (collectively, the “Financial Statements”).  The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except that the unaudited
Financial Statements may not contain all footnotes required by generally
accepted accounting principles. The Financial Statements fairly present in all
material respects the financial condition and operating results of the Company
as of the dates, and for the periods, indicated therein, subject in the case of
the unaudited Financial Statements to normal year-end audit adjustments. Except
as set forth in the


 


11

















 


Financial Statements, the
Company has no material liabilities or obligations, contingent or otherwise,
other than (a) liabilities incurred in the ordinary course of business
subsequent to December 31, 2007 (b) obligations under contracts and
commitments incurred in the ordinary course of business and (c) liabilities
and obligations of a type or nature not required under generally accepted
accounting principles to be reflected in the Financial Statements, which, in
all such cases, individually and in the aggregate would not have a Material
Adverse Effect. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with generally
accepted accounting principles.


 


2.15. Changes.
Since December 31, 2007 there has not been:


 


(a)       any change in the assets,
liabilities, financial condition or operating results of the Company from that
reflected in the Financial Statements, except changes in the ordinary course of
business that have not caused, in the aggregate, a Material Adverse Effect;


 


(b)       any damage, destruction or
loss, whether or not covered by insurance, that would have a Material Adverse
Effect;


 


(c)       any waiver or compromise by
the Company of a valuable right or of a material debt owed to it;


 


(d)       any satisfaction or
discharge of any lien, claim, or encumbrance or payment of any obligation by
the Company, except in the ordinary course of business and the satisfaction or
discharge of which would not have a Material Adverse Effect;


 


(e)       any material change to a
material contract or agreement by which the Company or any of its assets is
bound or subject;


 


(f)        any material change in any
compensation arrangement or agreement with any employee, officer, director or
shareholder;


 


(g)       any resignation or
termination of employment of any officer or Key Employee of the Company;


 


(h)       any mortgage, pledge,
transfer of a security interest in, or lien, created by the Company, with
respect to any of its material properties or assets, except liens for taxes not
yet due or payable and liens that arise in the ordinary course of business and
do not materially impair the Company’s ownership or use of such property or
assets;


 


(i)        any loans or guarantees
made by the Company to or for the benefit of its employees, officers or
directors, or any members of their immediate families, other than travel
advances and other advances made in the ordinary course of its business;


 


(j)        any declaration, setting
aside or payment or other distribution in respect of any of the Company’s
capital shares, or any direct or indirect redemption, purchase, or other
acquisition of any of such shares by the Company;


 


12














 


(k)                      any sale,
assignment or transfer of any Company Intellectual Property that could
reasonably be expected to result in a Material Adverse Effect;


 


(1)                      receipt of
notice that there has been a loss of, or material order cancellation by, any
major customer of the Company;


 


(m)                   to the Company’s
knowledge, any other event or condition of any character, other than events
affecting the economy or the Company’s industry generally, that could
reasonably be expected to result in a Material Adverse Effect; or


 


(n)                     any
arrangement or commitment by the Company to do any of the things described in
this Section 2.15.


 


2.16.            Employee Matters.


 


(a)                      As of the
date hereof, the Company employs twenty-six (26) full-time employees and three (3) part-time
employees and engages no consultants or independent contractors. Section 2.16
of the Disclosure Schedule sets forth a detailed description of all
compensation, including salary, bonus, severance obligations and deferred
compensation paid or payable for each officer, employee, consultant and
independent contractor of the Company who received compensation in excess of
fifty thousand dollars ($50,000) for the fiscal year ended December 31,
2007 or is anticipated to receive compensation in excess of fifty thousand
dollars ($50,000) for the fiscal year ending March 31, 2009.


 


(b)                     To the
Company’s knowledge, none of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would materially interfere with such employee’s
ability to promote the interest of the Company or that would conflict with the
Company’s business. Neither the execution or delivery of the Transaction
Agreements, nor the carrying on of the Company’s business by the employees of
the Company, nor the conduct of the Company’s business as now conducted and as
presently proposed to be conducted, will, to the Company’s knowledge, conflict
with or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, any contract, covenant or instrument under which
any such employee is now obligated.


 


(c)                      The Company
is not delinquent in payments to any of its employees, consultants, or
independent contractors for any wages, salaries, commissions, bonuses, or other
direct compensation for any service performed for it to the date hereof or
amounts required to be reimbursed to such employees, consultants, or
independent contractors. The Company has complied in all material respects with
all applicable equal employment opportunity laws and with other laws related to
employment, including those related to wages, hours, worker classification, and
collective bargaining. The Company has withheld and paid to the appropriate
governmental entity or is holding for payment not yet due to such governmental
entity all amounts required to be withheld from employees of the Company and is
not liable for any arrears of wages, taxes, penalties, or other sums for
failure to comply with any of the foregoing.


 


13

















 


(d)                     To the
Company’s knowledge, no Key Employee intends to terminate employment with the
Company or is otherwise likely to become unavailable to continue as a Key Employee,
nor does the Company have a present intention to terminate the employment of
any of the foregoing. The employment of each employee of the Company is
terminable at the will of the Company. Except as set forth in Section 2.16
of the Disclosure Schedule or as required by law, upon termination of the
employment of any such employees, no severance or other payments will become
due. Except as set forth in Section 2.16 of the Disclosure
Schedule, the Company has no policy, practice, plan, or program of paying
severance pay or any form of severance compensation in connection with the
termination of employment services.


 


(e)                      The Company
has not made any representations regarding equity incentives to any officer,
employees, director or consultant that are inconsistent with the share amounts
and terms set forth in the minutes of meetings of the Board.


 


(f)                        Each
former Key Employee whose employment was terminated by the Company has entered
into an agreement with the Company providing for the full release of any claims
against the Company or any related party arising out of such employment.


 


(g)                     The Company
is not bound by or subject to (and none of its assets or properties is bound by
or subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the Company’s knowledge,
threatened, which could have a Material Adverse Effect, nor is the Company
aware of any labor organization activity involving its employees.


 


(h)                     To the
Company’s knowledge, none of the Key Employees or directors of the Company has
been (i) subject to voluntary or involuntary petition under any bankruptcy
law or any insolvency law or the appointment of a receiver, fiscal agent or
similar officer by a court for his business or property; (ii) convicted in
a criminal proceeding or named as a subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses); (iii) subject to
any order, judgment, or decree (not subsequently reversed, suspended, or
vacated) of any court of competent jurisdiction permanently or temporarily
enjoining him from engaging, or otherwise imposing limits or conditions on his
engagement in any securities, investment advisory, banking, insurance, or other
type of business or acting as an officer or director of a public company; or (iv) found
by a court of competent jurisdiction in a civil action or by the Securities and
Exchange Commission or the Commodity Futures Trading Commission (or their
foreign equivalents) to have violated any securities, commodities, or unfair
trade practices law, which such judgment or finding has not been subsequently
reversed, suspended, or vacated.


 


2.17.            Tax Returns and
Payments. There are no taxes dues and payable by the Company which have not
been timely paid. There are no accrued and unpaid taxes of the Company which
are due, whether or not assessed or disputed. There have been no examinations
or audits of any tax returns or reports by any applicable federal, state, local
or foreign governmental agency. The Company has duly and timely filed all tax
returns required to have


 


14

















 


been filed by it and
there are in effect no waivers of applicable statutes of limitations with
respect to taxes for any year.


 


2.18.            Insurance. Section 2.18
of the Disclosure Schedule contains an accurate and complete description of all
policies of insurance covering the Company or all or any portion of its
property and assets. All such policies are in full force and effect, all
premiums covering all periods up to the date hereof have been paid and no
notice of cancellation or termination has been received with respect any such
policy.


 


2.19.            Inventions
Assignment Agreements. Each current and former employee, consultant and
officer of the Company has executed an agreement with the Company regarding
proprietary information and inventions substantially in the form of the
Inventions Assignment Agreement attached hereto. No current or former Key
Employee has excluded works or inventions from his or her assignment of
inventions pursuant to such Key Employee’s Inventions Assignment Agreement. The
Company is not aware that any of its Key Employees is in violation thereof.


 


2.20.            Permits. The
Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business, the lack of which could reasonably
be expected to have a Material Adverse Effect. The Company is not in default in
any material respect under any of such franchises, permits, licenses or other
similar authority.


 


2.21.            Corporate Documents.
The Memorandum and Articles are in the form provided to the Purchaser. The copy
of the minute books of the Company provided to the Purchaser contains minutes
of all meetings of directors and shareholders and all actions by written
consent without a meeting by the directors and shareholders since the date of
incorporation and accurately reflects in all material respects all actions by
the directors (and any committee of directors) and shareholders with respect to
all transactions referred to in such minutes.


 


2.22.            Environmental and
Safety Laws. Except as could not reasonably be expected to have a Material
Adverse Effect, (a) the Company is and has been in compliance with all
Environmental Laws (as defined below); (b) there has been no release or
threatened release of any pollutant, contaminant or toxic or hazardous
material, substance or waste, or petroleum or any fraction thereof, (each a “Hazardous Substance”)  on, upon, into or from any site currently
or heretofore owned, leased or otherwise used by the Company; (c) there
have been no Hazardous Substances generated by the Company that have been
disposed of or come to rest at any site that has been included in any published
list of hazardous or toxic waste sites published by any governmental authority;
and (d) there are no underground storage tanks located on, no
polychlorinated biphenyls (“PCBs”)  or PCB-containing equipment used or stored
on, and no hazardous waste stored on, any site owned or operated by the
Company, except for the storage of hazardous waste in compliance with
Environmental Laws. The Company has made available to the Purchaser true and
complete copies of all material environmental records, reports, notifications,
certificates of need, permits, pending permit applications, correspondence,
engineering studies, and environmental studies or assessments.


 


15

















 


For purposes of
this Section 2.22, “Environmental Laws” means any law, regulation,
or other applicable requirement relating to (i) the release or a
threatened release of a Hazardous Substance; (ii) pollution or protection
of employee health or safety, public health or the environment; or (iii) the
manufacture, handling, transport, use, treatment, storage, or disposal of a
Hazardous Substance.


 


2.23.            Disclosure. The
Company has made available to the Purchaser all the information reasonably
available to the Company that the Purchaser has requested for deciding whether
to acquire the Shares, including certain of the Company’s projections and its
proposed business plan (the “Business Plan”),
a copy of which is contained in Section 2.23 of the Disclosure
Schedule. No representation or warranty of the Company contained in this
Agreement, as qualified by the Disclosure Schedule, and no certificate furnished
or to be furnished to the Purchaser at the Closing contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.


 


2.24.            Capitalization of
Existing Subsidiaries. The authorized capitalization and issued and
outstanding capital shares of each Existing Subsidiary is set forth as Schedule
2.24 of the Disclosure Schedule. All outstanding capital shares of each
Existing Subsidiary is held beneficially and of record by the Company free and
clear of all liens, encumbrances, charges and other adverse claims. All issued
and outstanding shares of each Existing Subsidiary’s capital shares (a) have
been duly authorized and validly issued and are fully paid and nonassessable,
and (b) were issued in compliance with all applicable laws concerning the
issuance of securities.


 


3.                          Representations
and Warranties of the Purchaser. The Purchaser hereby represents and
warrants to the Company that:


 


3.1.                  Authorization.
The Purchaser has full power and authority to enter into the Transaction
Agreements. The Transaction Agreements to which the Purchaser is a party, when
executed and delivered by the Purchaser, will constitute valid and legally
binding obligations of the Purchaser, enforceable in accordance with their
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of
general application affecting enforcement of creditors’ rights generally, and
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, or (b) to the extent the
indemnification provisions contained in the Shareholders Agreement may be
limited by applicable securities laws.


 


3.2.                  Purchase
Entirely for Own Account. The Shares, Note and Warrants to be acquired by
the Purchaser will be acquired for investment for the Purchaser’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 the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, the Purchaser further represents that the Purchaser does not
presently 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 any of the Shares, Note or Warrants. The Purchaser has
not been formed for the specific purpose of acquiring the Shares.


 


16

















 


3.3.                  Knowledge.
The Purchaser is aware of the Company’s business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares, Note and Warrants.


 


3.4.                  Restricted
Securities. The Purchaser understands that the Shares, Note and Warrants
have not been, and will not be, registered under the Securities Act (or its
foreign equivalent), by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Purchaser’s
representations as expressed herein. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Shares, Note, Warrants,
Conversion Shares or the Ordinary Shares or Series A Preferred Shares into
which they may be converted, for resale except as set forth in the Shareholders
Agreement.


 


3.5.                  No Public
Market. The Purchaser understands that no public market now exists for the
Shares, Note and Warrants and that the Company has made no assurances that a
public market will ever exist for the Shares, Note or Warrants.


 


3.6.                  Legends.
The Purchaser understands that the any securities issued hereunder, may bear
one or all of the following legends:


 


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


 


(b)                     Any legend
set forth in, or required by, the other Transaction Agreements.


 


(c)                      Any legend
required by the securities laws of any jurisdiction to the extent such laws are
applicable to the Shares represented by the certificate so legended.


 


4.                          Conditions
to the Purchaser’s Obligations at Closing. The obligations of the Purchaser
to purchase the Shares, Note and Warrants at the Closing are subject to the
fulfillment, on or before such Closing, of each of the following conditions,
unless otherwise waived:


 


4.1.                  Representations
and Warranties. The representations and warranties of the Company contained
in Section 2 shall be true and correct in all respects as of such
Closing.


 


4.2.                  Performance.
The Company shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by the Company on or before such Closing.


 


17

















 


4.3.                  Compliance
Certificate. The President of the Company shall deliver to the Purchaser at
such Closing a certificate certifying that the conditions specified in Sections
4.1 and 4.2 have been fulfilled.


 


4.4.                  Qualifications.
All authorizations, approvals or permits, if any, of any governmental authority
or regulatory body of any jurisdiction that are required, in the sole
discretion of Purchaser, in connection with the transactions contemplated
hereby shall be obtained and effective as of such Closing.


 


4.5.                  Corporate/Capital
Structure. The Purchaser shall be satisfied with the ownership, corporate
and legal structure, capitalization and capital structure of the Company and
the Existing Subsidiaries, including, without limitation, the terms and amounts
of other debt, if any, the terms and conditions of any capital shares, options,
warrants or other securities issued by the Company or the Existing Subsidiaries
and any agreements related thereto, and the management of the Company and the
Existing Subsidiaries shall be acceptable to the Purchaser.


 


4.6.                  Opinion of
Company Counsel. The Purchaser shall have received from DeBound Law
Offices, counsel for the Company, an opinion, dated as of the date of such
Closing, in substantially the form of Exhibit K attached to this
Agreement.


 


4.7.                  Board of
Directors. As of the Closing, the authorized size of the Board shall be
four (4) directors, and the Board shall be comprised of Mr. Eric Xu, Mr. Xin
Ye, Mr. Paul Cheng and Mr. Alexandras Moukas.


 


4.8.                  Indemnification
Agreement. The Company and each director designated by the Purchaser shall
have executed and delivered the Indemnification Agreement.


 


4.9.                  Shareholder
Agreement. The Company, the Purchaser and the other shareholders of the
Company named as parties thereto shall have executed and delivered the
Shareholder Agreement.


 


4.10.            Employment
Agreement. The Company and each Key Employee, respectively, shall have
executed and delivered an Employment Agreement.


 


4.11.            Inventions
Assignment Agreement. The Company, each Existing Subsidiary and each Key
Employee, respectively, shall have executed and delivered an Inventions
Assignment Agreement.


 


4.12.            Share Restriction
Agreement. The Company and each Founder, respectively, shall have executed
and delivered a Share Restriction Agreement.


 


4.13.            Note. At or
prior to the Closing Date, the Note, in the form of Exhibit D, shall have
been issued and delivered by the Company to the Purchaser.


 


4.14.            Warrant. At or
prior to the Closing Date, the Warrants, in the form of Exhibit E, shall
have been issued and delivered by the Company to the Purchaser.


 


18

















 


4.15.            Memorandum and
Articles. The Company shall have filed both the Memorandum and Articles
with the appropriate authorities on or prior to the Closing, each of which
shall continue to be in full force and effect as of the Closing.


 


4.16.            Secretary’s
Certificate. The Secretary of the Company shall have delivered to the
Purchaser at the Closing a certificate certifying (a) the Memorandum and
Articles and (b) resolutions of the Board approving the Transaction
Agreements and the transactions contemplated under the Transaction Agreements.


 


4.17.            Proceedings and
Documents. All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Purchaser, and
the Purchaser (or its counsel) shall have received all such counterpart
original and certified or other copies of such documents as reasonably
requested. Such documents may include good standing certificates.


 


4.18.            Preemptive Rights.
The Company shall have fully satisfied (including with respect to rights of
timely notification) or obtained enforceable waivers in respect of any
preemptive or similar rights directly or indirectly affecting any of its
securities.


 


4.19.            Business Plan.
The Purchaser has approved the Company’s Business Plan and budget for the
twelve (12) months following the Closing Date.


 


4.20.            Diligence Review.
The Purchaser shall have, in its sole discretion, satisfactorily completed its
business, technical, legal and financial review of the Company and the Existing
Subsidiaries.


 


5.                          Conditions
of the Company’s Obligations at Closing. The obligations of the Company to
sell the Shares, Note and Warrants to the Purchaser at the Closing are subject
to the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:


 


5.1.                  Representations
and Warranties. The representations and warranties of the Purchaser
contained in Section 3 shall be true and correct in all respects as
of such Closing.


 


5.2.                  Performance.
The Purchaser shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before such Closing.


 


5.3.                  Qualifications.
All authorizations, approvals or permits, if any, of any governmental authority
or regulatory body of any jurisdiction that are required in connection with the
lawful issuance and sale of the Share pursuant to this Agreement shall be
obtained and effective as of the Closing.


 


6.                          Covenants.
The Company and the Existing Subsidiaries, as applicable, covenant and agree,
for the benefit of the Purchaser, that until the Obligations have been
performed and paid in full:


 


19

















 


6.1.                  Payment of
Principal, Premium and Interest. The Company will duly and punctually pay
the principal, the interest, the premium (if any) and any other amounts owing
under this Agreement and the Note, in each case when due under the terms of
this Agreement and the Note, and the Company will observe and comply with all
other requirements applicable to it pursuant to this Agreement and the other
Transaction Documents, subject in each case to applicable notice and grace
periods.


 


6.2.                  Conduct of
Business and Maintenance of Existence. Subject to this Agreement, the
Company and each of the Existing Subsidiaries shall continue to engage in its
business in substantially the same manner as it is now conducted and proposed
to be conducted in the Business Plan, and preserve, renew and keep in full force
and effect and in good standing its existence and take all reasonable action to
maintain all material rights, privileges, franchises, permits, licenses and
approvals, copyrights, patents, trademarks, licenses and trade names necessary
or desirable in the normal conduct of its business except for rights,
privileges, franchises, permits, licenses and approvals, copyrights, patents,
trademarks and tradenames the loss of which would not in the aggregate
reasonably be expected to have a Material Adverse Effect, and except as
otherwise permitted by this Agreement.


 


6.3.                  Maintenance
of Properties. The Company and each of the Existing Subsidiaries shall keep
its properties in such reasonable repair, working order and condition, normal
wear and tear excepted, and shall from time to time make such reasonable
repairs, replacements, additions and improvements thereto, as are necessary for
the efficient operation of its business and shall comply at all times in all
material respects with all material franchises, licenses and leases to which it
is party so as to prevent any loss or forfeiture thereof or thereunder, except
where (a) compliance is at the time being contested in good faith by
appropriate proceedings and (b) failure to comply with the provisions
being contested has not resulted, and does not create a material risk of
resulting, in the aggregate, in any Material Adverse Effect.


 


6.4.                  Change of
Jurisdiction of Organization, Relocation of Business. Neither the Company
nor any Existing Subsidiary shall change its jurisdiction of organization,
relocate its chief executive office, principal place of business or its records
without thirty (30) days prior written notice to the Purchaser.


 


6.5.                  Compliance
with Law. The Company and each of the Existing Subsidiaries shall comply in
all material respects with all laws, rules, regulations and orders of any
court, arbitrator or governmental entity, jurisdiction or authority applicable
to the operation of its business; provided, however, that it may contest any
such law, rule, regulation or order in any reasonable manner which shall not,
in the reasonable opinion of the Purchaser, adversely affect the Purchaser’s
rights.


 


6.6.                  Compliance
with Transaction Documents. The Company and each of the Existing
Subsidiaries shall comply in all material respects with all Transaction
Documents to which it is a party.


 


6.7.                  Payment of
Obligations. Each of the Company and the Existing Subsidiaries shall pay
promptly when due all taxes, assessments and governmental charges or


 


20

















 


levies imposed upon its
income or profits, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies), except that no such
charge need be paid if (a) the validity thereof is being contested in good
faith by appropriate proceedings and (b) such charge is adequately
reserved against on the books of the Company and the Existing Subsidiaries, as
applicable, in accordance with generally accepted accounting principles.


 


6.8.                  Insurance.
The Company and each of the Existing Subsidiaries shall maintain insurance
policies in such amounts and forms and with such companies as are customarily
maintained by businesses similar to the Company and the Existing Subsidiaries,
respectively. Within thirty (30) days of the Closing Date, the Company shall
obtain and maintain in full force and effect director and officer liability
insurance in an amount of at least Two Million Dollars ($2,000,000) and on
terms satisfactory to the Board, including the affirmative vote of at least one
of the Series A Directors, provided that such director and officer
liability insurance shall in any event include as an additional insured any
entity that (a) has the right to appoint one (1) or more members of
the Board and (b) is a holder of Series A Preferred Shares. In
addition, within thirty (30) days of the Closing Date, the Company will obtain
and maintain in full force and effect term life insurance in an amount not less
than Five Million Dollars ($5,000,000) and on terms satisfactory to the Board,
including the affirmative vote of at least one of the Series A Directors,
on the life of each Founder, naming the Company as beneficiary, provided that
the Company shall, in the sole discretion of the Purchaser, use such proceeds
to, first, pay in full in cash the Obligations, second, to redeem the Series A
Preferred Shares in accordance with its terms and provisions and third, for the
general corporate purposes of the Company.


 


6.9.                  Future
Subsidiaries and Future Affiliates. The Company shall promptly notify the
Purchaser of the creation or acquisition by any of the Company or the Existing
Subsidiaries of any subsidiary or Affiliate after the Closing Date.
Furthermore, the Company shall cause each such subsidiary and affiliate to
comply with the terms and conditions of this Agreement and the Transaction
Documents applicable to the Company and the Existing Subsidiaries.


 


6.10.            Investments.
Neither the Company nor the Existing Subsidiaries shall have outstanding,
acquire or hold any investment (or become contractually committed to do so),
except the following:


 


(a)                      Investments
in bank instruments maturing within three months after their acquisition issued
by banks that are rated at least AAA by S&P.


 


(b)                     Repurchase
agreements, having terms of less than ninety (90) days, for government
obligations with a commercial bank or trust company which is rated at least AAA
by S&P.


 


6.11.            Restricted Payments.
Unless approved by the Board, including each Series A Director, neither
the Company nor any of the Existing Subsidiaries shall directly or indirectly,
declare, order or pay any dividends or make any distributions of any kind on
its outstanding capital shares or membership interests, as applicable, or any
other payments of any kind to any of the holders of its capital shares or
membership interests in respect of such capital


 


21














 


shares or membership
interests (including any redemption, purchase or acquisition of the same) or
make or set apart any sum, payment, dividend, distribution or property for such
purpose (or become contractually committed to do so), except that the Existing
Subsidiaries may pay dividends or make distributions to the Company.


 


6.12.            Mergers,
Consolidations, Asset Dispositions and Acquisitions. Neither the Company
nor any of the Existing Subsidiaries shall merge or consolidate with any other
Person, or sell all or substantially all of their assets, or acquire a company
with a business or line of business different than the business of the Company.


 


6.13.            Guarantees.
Neither the Company nor any Existing Subsidiary shall become or be liable in
respect of any guarantee, except guarantees of the Note.


 


6.14.            Books, Records and
Inspections; Information Rights. The Company and each of the Existing
Subsidiaries shall grant the Purchaser standard inspection rights, including,
but not limited to the right, on a quarterly basis, or as they may otherwise
agree, to visit and inspect any of the properties of the Company or any of the
Existing Subsidiaries, to examine their books of account and records, to make
copies and extracts therefrom, to observe the taking of any physical
inventories of their properties by them or their accountants, to discuss their
affairs, finances and accounts with, and to be advised as to the same by, their
officers and employees, and their independent public accountants, all upon
reasonable prior written notice to the Company or any of the Existing
Subsidiaries and at such reasonable times (during normal business hours) and
intervals as such authorized partner, designee or officer desires.


 


6.15.            Transactions with
Related Parties. Except for the Transaction Documents and the transactions
contemplated therein, neither the Company nor any of the Existing Subsidiaries
shall enter into any transaction with any officer, director, manager,
shareholder, member or family member of an officer, director, manager,
shareholder or member of the Issuer or any of the Existing Subsidiaries (each a
“Related Party”), except upon fair
and reasonable terms not less favorable to the Company or such Existing
Subsidiary than it would obtain in a comparable arm’s-length transaction with a
Person that is not a Related Party, and all such transactions shall require the
prior approval of a majority of the disinterested members of the Company’s
Board of Directors.


 


6.16.            ESOP. Within
thirty (30) days of the Closing, the Company shall have in place the ESOP and
delivered a copy of all the documentation related thereto to the Purchaser.


 


6.17.            Notice of
Developments. Each of the Company and the Existing Subsidiaries shall
provide the Purchaser with prompt written notice in the event its own
representations and warranties are discovered to be untrue as of the date of
any Closing. No disclosure by the Company or any of the Existing Subsidiaries
shall be deemed to amend or supplement the Schedule of Exceptions hereto or to
cure any misrepresentation or breach of warranty; provided, however, that the
delivery of or failure to deliver any notice pursuant to this Section 4
shall not limit or otherwise affect the remedies available hereunder to the
Purchaser.


 


6.18.            Further Assurances.
The Company and the Existing Subsidiaries shall take all actions, and make,
execute, acknowledge and deliver all documents, as may be


 


22

















 


reasonably required by
the Purchaser to protect its rights and interests under this Agreement and the
Note.


 


7.                          Events
Of Default; Remedies.


 


7.1.                  Events of
Default. The occurrence of any one or more of the following shall
constitute an Event of Default:


 


(a)                      The Company
fails to timely pay any of the principal amount, interest or other amounts due
under the Note on the date the same become due and payable;


 


(b)                     The Company
or any of the Existing Subsidiaries shall fail to perform any of their other
Obligations or shall be in breach of any of their representations, warranties
or covenants hereunder or under the Note, as applicable;


 


(c)                      The Company
or any of the Existing Subsidiaries shall be in breach of any of their
representations, warranties or covenants under this Agreement or any of the
Transaction Agreements, as applicable;


 


(d)                     If the
employment of any Founder by the Company or an Existing Subsidiary is
terminated for any reason, including death or disability;


 


(e)                      The breach
by any Founder of their (i) non-competition obligations under their
Employment Agreement or (ii) Confidentiality Agreement;


 


(f)                        The
Company or any of the Existing Subsidiaries files any petition or action for
relief under any bankruptcy, reorganization, insolvency or moratorium law or
any other law for the relief of, or relating to, debtors, now or hereafter in
effect, or makes any assignment for the benefit of creditors or takes any
corporate action in furtherance of any of the foregoing; or


 


(g)                     An
involuntary petition is filed against the Company or any of the Existing
Subsidiaries (unless such petition is dismissed or discharged within sixty (60)
days under any bankruptcy statute now or hereafter in effect), or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of any property
of the Company or any of the Existing Subsidiaries.


 


7.2.                  Remedies.
If an Event of Default shall have:


 


(a)                      occurred
with respect to any Event of Default described in Section 7.1(f) or
Section 7.1 (g), the unpaid principal amount of the Note, together
with accrued interest thereon, shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by the Company; and


 


(b)                     occurred and
be continuing with respect to any Event of Default other than one described in Section
7.1 (f) or Section 7.1 (g), the Purchaser may in its discretion,
upon written notice to the Company, declare the Note to be due and payable,
whereupon the


 


23

















 


principal amount of the
Note, together with accrued interest thereon, shall automatically become
immediately due and payable, such without any other notice of any kind, and
without presentment, demand, protest or other requirements of any kind, all of
which are hereby expressly waived by the Company.


 


8.                          Miscellaneous.


 


8.1.                  Survival of
Warranties. Unless otherwise set forth in this Agreement, the
representations and warranties of the Company, the Founders and the Purchaser
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing and shall in no way be affected by
any investigation or knowledge of the subject matter thereof made by or on
behalf of the Purchaser or the Company.


 


8.2.                  Successors
and Assigns. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.


 


8.3.                  Governing Law.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Delaware, regardless of the laws that might otherwise govern
under applicable principles of conflicts of law, and the parties hereby
irrevocably submit to the non-exclusive jurisdiction of the courts of the State
of Delaware.


 


8.4.                  Counterparts.
This Agreement may be executed and delivered by facsimile or other electronic
transmission and in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.


 


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


 


8.6.                  Notices.
All notices and other communications given or made pursuant to this Agreement
shall be in writing and shall be deemed effectively given upon the earlier of
actual receipt or: (a) personal delivery to the party to be notified, (b) when
sent, if sent by electronic mail or facsimile during normal business hours of
the recipient, and if not sent during normal business hours, then on the
recipient’s next business day, (c) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) business day after deposit with a nationally
recognized overnight courier, freight prepaid, specifying next business day
delivery, with written verification of receipt. All communications shall be
sent to the respective parties at their address as set forth on the signature page or
to such e-mail address, facsimile number or address as subsequently modified by
written notice given in accordance with this Section 8.6. If notice
is given to the Purchaser, a copy (which shall not by itself constitute notice)
shall also be given to Kirkpatrick & Lockhart Preston Gates Ellis LLP,
599 Lexington Avenue, New York, NY 10022, Attention: Robert S. Matlin, Esq.


 


24

















 


8.7.                  No Finder’s
Fees. Each party represents that it neither is nor will be obligated for
any finder’s fee or commission in connection with this transaction. The
Purchaser agrees to indemnify and to hold harmless the Company from any
liability for any commission or compensation in the nature of a finder’s or
broker’s fee arising out of this transaction (and the costs and expenses of
defending against such liability or asserted liability) for which the Purchaser
or any of its officers, employees, or representatives is responsible. The
Company agrees to indemnify and hold harmless the Purchaser from any liability
for any commission or compensation in the nature of a finder’s or broker’s fee
arising out of this transaction (and the costs and expenses of defending
against such liability or asserted liability) for which the Company or any of
its officers, employees or representatives is responsible.


 


8.8.                  Attorneys’
Fees. If any action at law or in equity (including arbitration) is
necessary to enforce or interpret the terms of any of the Transaction
Agreements, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled.


 


8.9.                  Amendments
and Waivers. Except as otherwise expressly provided, this Agreement may be
amended or modified, and the obligations of the parties hereto may be waived,
only upon the written consent of the parties hereto.


 


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


 


8.11.            Delays or Omissions.
No delay or omission to exercise any right, power or remedy accruing to any
party under this Agreement, upon any breach or default of any other party under
this Agreement, shall impair any such right, power or remedy of such non-breaching
or non-defaulting party nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.


 


8.12.            Entire Agreement.
This Agreement (including the Exhibits hereto), the Memorandum, Articles and
the other Transaction Agreements constitute the full and entire understanding
and agreement between the parties with respect to the subject matter hereof,
and any other written or oral agreement relating to the subject matter hereof
existing between the parties are expressly canceled.


 


25

















 


8.13.            Dispute Resolution.
All disputes arising out of or in connection with the present contract shall be
finally settled under the Rules of Arbitration of the International
Chamber of Commerce by one arbitrator appointed in accordance with the said
Rules. The seat, or legal place, of the arbitration shall be England and the
arbitration shall take place in London, England. The language of the
arbitration proceedings shall be English.


 


8.14.            No Commitment for
Additional Financing. The Company acknowledges and agrees that the
Purchaser has not made any representation, undertaking, commitment or agreement
to provide or assist the Company in obtaining any financing, investment or
other assistance, other than the purchase of the Shares, Note and Warrants as
set forth herein and subject to the conditions set forth herein. In addition,
the Company acknowledges and agrees that (a) no statements, whether
written or oral, made by the Purchaser or its representatives on or after the
date of this Agreement shall create an obligation, commitment or agreement to
provide or assist the Company in obtaining any financing or investment, (b) the
Company shall not rely on any such statement by the Purchaser or its
representatives and (c) an obligation, commitment or agreement to provide
or assist the Company in obtaining any financing or investment may only be
created by a written agreement, signed by the Purchaser and the Company,
setting forth the terms and conditions of such financing or investment and
stating that the parties intend for such writing to be a binding obligation or
agreement. The Purchaser shall have the right, in it sole and absolute
discretion, to refuse or decline to participate in any other financing of or
investment in the Company, and shall have no obligation to assist or cooperate
with the Company in obtaining any financing, investment or other assistance.


 


8.15.            Confidentiality.
The terms and conditions of this Agreement, the other Transaction Agreements
and the transactions contemplated hereby and thereby are confidential and shall
not be disclosed by any party except as permitted herein. Neither the Company
nor any Founder shall make any public announcement regarding the Series A
Financing, including, without limitation, by a press conference, in any
professional or trade publication, in any marketing materials or otherwise to
the general public, without the prior written consent of the Purchaser.
Notwithstanding the foregoing, the Company will be entitled, after the Closing,
to disclose the closing of the Series A Financing, solely to the Company’s
investors, investment bankers, lenders, accountants, legal counsel, business
partners, and bona fide prospective investors, employees, lenders and business
partners, in each case, only where such persons or entities are under
appropriate nondisclosure obligations. Notwithstanding anything to the contrary
herein, the Purchaser shall be entitled to disclose its investment in the
Company to third parties or to the public at any time. In the event of a
disclosure required by law, the disclosing party shall, at a reasonable time
before making any such disclosure or filing, consult with the other parties
regarding such disclosure or filing and, to the extent possible, seek
confidential treatment for such portions of the disclosure or filing as may be
requested by the other parties.


 


SIGNATURE PAGE FOLLOWS


 


26

















 


IN
WITNESS WHEREOF, the parties have executed this Series A
Preferred Share and Note Purchase Agreement as of the date first written above.


 


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  YDON HOLDINGS LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Xin Ye

  
	
   

  	
  Name:

  	
  Xin Ye

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Ying Du Plaza A-9B

  
	
   

  	
   

  	
  48 Zhi Chun Rd.

  
	
   

  	
   

  	
  Haidian Dist, Beijing

  
	
   

  	
   

  	
  China 100086

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  VELTI PLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alexandros Moukias

  
	
   

  	
  Name:

  	
  Alexandros Moukias

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
					



 


 


SERIES A PREFERRED SHARE AND NOTE PURCHASE AGREEMENT


SIGNATURE PAGE


 

















 


	
   

  	
  FOUNDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Xin Ye

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: Xin Ye

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Ying Du Plaza A-9B,

  
	
   

  	
   

  	
  48 Zhi Chun Rd.

  
	
   

  	
   

  	
  Haidian Dist, Beijing.

  
	
   

  	
   

  	
  China

  
	
   

  	
   

  
	
   

  	
  c/o

  
	
   

  	
   

  
	
   

  	
  /s/ Kaiyang Liu

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: Kaiyang Liu

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Ying Du Plaza A-9B,

  
	
   

  	
   

  	
  48 Zhi Chun Rd.

  
	
   

  	
   

  	
  Haidian Dist, Beijing
  100098

  
	
   

  	
   

  	
  China.

  



 


SERIES A PREFERRED SHARE AND NOTE PURCHASE
AGREEMENT


SIGNATURE PAGE


 

















 


Warrant No. W-1, Date of
Issuance April 30, 2008


 


AMENDMENT 1


TO


SERIES A PREFERRED SHARE PURCHASE
WARRANT


BETWEEN


YDON HOLDINGS LTD.


AND


VELTI PLC.


 


This Amendment 1
to the Series A Preferred Share Purchase Warrant (“Amendment 1”) is made
as of March 2, 2010 (“Amendment 1 Effective Date”), by and between Ydon
Holdings Ltd. A British Virgin Islands Business Company (“Company”) and Velti
Plc. a company duly incorporated and validly existing under the laws of England
having its principal office at First
Floor, 28-32 Pembroke Street Upper Dublin 2, Republic of Ireland (“Registered
Holder”), and amends the Series A Preferred Share Purchase Warrant between
Company and Registered Holder dated April 30, 2008 (the “ Warrant
Agreement”). Certain capitalized terms used but not otherwise defined in this
Amendment 1 shall have the same meanings given such terms in the Agreement,
and, unless otherwise specified, references to Sections refer to Sections of
the Agreement. This Amendment 1 modifies the Warrant Agreement only to the
extent expressly described herein and does not modify the Warrant Agreement or
the exhibits thereto in any other manner and all other provisions of the
Warrant Agreement remain in full force and effect in accordance with their
terms.


 


WHEREAS, the
parties desire to amend the Warrant Agreement in accordance with the terms set
forth below;


 


NOW, THEREFORE,
Company and Registered Holder hereby agree as follows:


 


1.                         Section 1.                Exercise. Section 1(a) is
hereby deleted and replaced in its entirety with the following:


 


“(a)                This Warrant shall
be exercisable, in whole or in part, at any time or from time to time, during
the period commencing on the Date of Issuance and ending on the earlier of (A) July 31,
2010, or (B) the consummation of a Qualified IPO (as defined in the Articles)
(the “Exercise Period”)”


 


2.                         Effect of
Amendment. Except as specifically modified or waived herein, all terms and
conditions of the Agreement shall continue in full force and effect. In the
event of any conflict, ambiguity, or inconsistency between the terms of this
Amendment 1 and the terms of the Agreement, the terms of this Amendment 2 shall
control.


 

















 


3.                         Execution
of Amendment. This Amendment 1 may be executed in any number of
counterparts, all of which taken together will constitute a single instrument.
Execution and delivery of this Amendment 1 may be evidenced by facsimile
transmission.


 


IN WITNESS
WHEREOF, the undersigned have executed this Amendment 1 as of the Amendment 1
Effective Date.


 


	
  Velti
  Plc.

  	
   

  	
  Ydon Holdings Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  David J. Powers

  	
   

  	
  By:

  	
  /s/ Xin Ye

  
	
  Name:

  	
  David
  J. Powers

  	
   

  	
  Name:

  	
  Xin
  Ye

  
	
  Title:

  	
  General
  Counsel

  	
   

  	
  Title:

  	
  CEO