Document:

EXHIBIT 10.23

AMENDED SETTLEMENT AND LICENSE AGREEMENT

This AMENDED SETTLEMENT AND LICENSE AGREEMENT (together with all Exhibits attached hereto, the “Agreement”), is made and entered into as of the date last executed by a Party (“Amendment Effective Date”) and amends and restates that certain Settlement and License Agreement dated May 14, 2010, by and among Microsoft Corporation, a Washington corporation (Microsoft Corporation together with its Affiliates, “Microsoft” as defined below), on the one hand, and VirnetX, Inc., a Delaware corporation (VirnetX, Inc. together with its Affiliates, “VirnetX” (as defined below), on the other hand.  As used herein, “Party” refers to any of VirnetX or Microsoft individually, and “Parties” refers to VirnetX and Microsoft, collectively.

RECITALS

		A.	SAIC and VirnetX, Inc. have accused Microsoft of infringing U.S. Patent Nos. 6,502,135 B1; 7,188,180 B2; 7,490,151 B2; 7,987,274 B2; 7,418,504 B2; and 7,921,211 B2 (the “Patents-In-Suit”) in actions filed in the U.S. District Court for the Eastern District of Texas (“the Court”), designated Civ. Action No. 6:07CV80 (LED), Civ. Action No. 6:10CV94 (LED) and Civ. Action No. 6:13CV351 (the “Actions”).

		B.	Microsoft Corporation has denied any such infringement of the Patents-in-Suit and challenged the validity thereof.  Microsoft has also challenged the enforceability of the Patents-in-Suit and raised other defenses.

		C.	Microsoft admits no liability with respect to any of the claims asserted in the Actions.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

AGREEMENT

		1.	Compromise Only. This Agreement is entered into for purposes of settlement and compromise only. Nothing contained in this Agreement, or done or omitted in connection with this Agreement, is intended as or shall be construed as an admission of or by any Party, or on behalf of any Microsoft Released Party (as defined below), of any fault, liability or wrongdoing whatsoever, or an admission of or by any Microsoft Released Party that any Licensed Patents (as defined below) are infringed, valid, or enforceable.

		2.	Definitions.

“Licensed Patents” shall mean (a) all patents and patent applications worldwide, now or in the future, that are owned (in whole or in part) or controlled by, or assigned to, VirnetX, Inc. or any entity that, as of the Amendment Effective Date, Controls,  is Controlled by, or is under common Control with VirnetX, Inc. (including, without limitation, the Patents-In-Suit and the patents and applications set forth on Exhibit A); and (b) all patents and applications related to such patents and applications (including, without limitation, originals, divisionals, provisionals, re-exams, re-exam certificates, extensions, reissues, counterparts, parents, continuations, and continuations-in-part) in all countries of the world.

“Microsoft” shall mean Microsoft Corporation and its Affiliates.

“VirnetX” shall mean VirnetX, Inc. and its Affiliates.

“Effective Date” shall mean May 14, 2010.

“Affiliate” means any entity that Controls, is Controlled by, or is under common Control with a Party.  For the avoidance of doubt, this definition applies to entities that became or become Affiliates at any time, whether in the past, currently, or in the future.  For the avoidance of doubt, all Skype entities Controlled by Microsoft at any time are deemed to be Affiliates of Microsoft for purposes of this definition.

 

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“Control” of an entity means the possession, directly or indirectly, through the ownership of voting securities, other voting interests, or otherwise, of the right to direct or cause the direction of management and policies of that entity.  Control also includes the following: (a) direct or indirect ownership of 50% or more of the voting power, securities, or capital of that entity; or (b) direct or indirect ownership of interests representing 50% or more of the voting power to elect the board of directors or other governing body for that entity; or (c) in relation to a partnership, limited liability company, or other unincorporated association, the direct or indirect right to a share of 50% or more of its net assets or net income.

“Licensees” means Microsoft’s direct and indirect distributors, licensees  and customers, but only to the extent such third parties utilize Microsoft Products.

“Microsoft Products” means any past, present, or future Microsoft products or services, including without limitation, Microsoft software, Microsoft hardware, or Microsoft protocols.  For the avoidance of doubt, Microsoft Products include, without limitation, any past, present, or future products or services (including without limitation, Microsoft software, Microsoft hardware, or Microsoft protocols) designed, branded, made, sold (or leased), offered for sale (or offered for lease), purchased, obtained, made available, exported, imported, supplied, licensed, distributed, hosted, used, streamed, exploited, encoded, decoded, or otherwise provided to, by or for Microsoft.  For the avoidance of doubt, Microsoft products or services (including without limitation, Microsoft software, Microsoft hardware, or Microsoft protocols) remain “Microsoft Products” even if combined with any past, present, or future products or services, but only as to those portions of the combination consisting of Microsoft Products. For clarity, a patent, by itself, is an intellectual property right and not a product.

“Pending IPR’s” means the inter partes review proceedings brought by Microsoft Corporation challenging the patents asserted in the Actions, and consists of: IPR2014-00614 (which has been consolidated with IPR2014-00613); IPR2014-00610; IPR2014-00615 (which has been consolidated with IPR2014-00618); IPR2014-00403; IPR2014-00404; IPR2014-01418; and IPR2014-01421.

“SAIC” means Science Applications International Corporation (SAIC Inc.) and Leidos, Inc., and their respective Affiliates.

“Third Party” means any entity that is neither a Party nor an Affiliate of a Party.

“Third Party Products” means products, and services, including protocols, of a Third Party designed or developed by such Third Party, but specifically excluding Microsoft Products.

		3.	Releases

		3.1	Effective upon receipt of the payment set forth in Section 5.2, VirnetX, on behalf of itself and its predecessors, successors, assigns, attorneys, directors, shareholders, employees, and officers (collectively, the “VirnetX Releasing Parties”), hereby voluntarily, irrevocably and unconditionally fully and forever releases, discharges, acquits, covenants not to sue, and holds harmless Microsoft and predecessors to Microsoft’s businesses (including without limitation the previous owners of Microsoft’s businesses acquired from such persons or entities) and their predecessors, successors, assigns, attorneys, insurers, agents, servants, subcontractors, officers, directors, shareholders, representatives, employees, and Licensees (collectively, the “Microsoft Released Parties”) from and for any and all rights, claims, debts, liabilities, demands, suits, obligations, promises, damages, causes of action and claims for relief of any kind, manner, nature and description, known or unknown (collectively, “Claims”), which any of the VirnetX Releasing Parties have, may have had, might have asserted, may now have or assert, or may hereafter have or assert against the Microsoft Released Parties, or any of them, arising, accruing or occurring, in whole or in part, at any time prior to the Amendment Effective Date, including, without in any way limiting the generality of the foregoing, any claims or causes of action arising out of or related to any of the facts, transactions, matters or occurrences giving rise to or alleged, or that could have been alleged in or discovered in, the Actions or under any of the Licensed Patents. (For the avoidance of doubt, this release and covenant applies to Microsoft Affiliates both before and after the time they become an Affiliate of Microsoft).  Notwithstanding the foregoing or anything to the contrary, this release does not apply to any Third Party (other than a Licensee) with respect to Third Party Products, except to the extent such Third Party is utilizing Microsoft Products.

 

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		3.2	Microsoft, on behalf of itself and its predecessors, successors and assigns (collectively, the “Microsoft Releasing Parties”), hereby voluntarily, irrevocably and unconditionally fully and forever releases, discharges, covenants not to sue, and holds harmless VirnetX and its predecessors, successors, assigns, attorneys, insurers, agents, servants, subcontractors, officers, directors, representatives, and employees (collectively, the “VirnetX Released Parties”) from and for any and all Claims which any of the Microsoft Releasing Parties have, may have had, might have asserted, or may now have or assert against the VirnetX Released Parties, or any of them, arising, accruing or occurring, in whole or in part, at any time prior to the Amendment Effective Date arising out of or related to any of the facts, transactions, matters or occurrences giving rise to or alleged, or that could have been alleged in or discovered in, the Actions as to VirnetX’s assertion of the Patents-in-Suit, except that the Microsoft Releasing Parties do not release or discharge (or grant a covenant or hold harmless as to) their Claims that the Licensed Patents are invalid, unenforceable, and/or not infringed by any Microsoft Releasing Parties.  For the avoidance of doubt, the Microsoft Releasing Parties may raise any defense of invalidity, unenforceability or non-infringement in any later proceeding in any court or administrative agency (including without limitation any review in the U.S. Patent & Trademark Office) regardless of whether such defense was previously alleged or adjudicated in any forum.

		3.3	With respect to all claims released herein, the VirnetX Releasing Parties and Microsoft Releasing Parties expressly waive any and all statutes, legal doctrines and other similar limitations upon the effect of general releases. By way of example, and without limitation, the foregoing parties waive the benefit of California Civil Code Section 1542, which states as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

Each Party hereto acknowledges that the inclusion of such unknown claims in the releases above was separately bargained for and was a key element of this Agreement.  Each Party hereto acknowledges that they may hereafter discover facts which are different from or in addition to those that they may now know or believe to be true with respect to any and all claims herein released and agree that all such unknown claims are nonetheless released and that the releases above shall be and remain effective in all respects even if such different or additional facts are subsequently discovered.

		4.	Grant of Licenses and Covenants

		4.1	  VirnetX hereby grants to Microsoft a worldwide, irrevocable, nonexclusive, non-sublicensable, royalty-free, fully paid-up (subject to payment under Section 5.2) license and covenant not to sue under the Licensed Patents.  The license and covenant granted hereunder shall apply, without limitation, to all Microsoft Products and past, present and future activities of Microsoft.   The license granted hereunder fully exhausts all of the Licensed Patents as to Microsoft Products.

		4.2	VirnetX hereby grants to Licensees a worldwide, irrevocable, nonexclusive, non-sublicensable, royalty-free, fully paid-up (subject to payment under Section 5.2) license and covenant not to sue under the Licensed Patents solely as to Microsoft Products, including past, present and future activities of Licensees with respect to Microsoft Products.

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		4.3	Without limiting the scope of the forgoing Sections 4.1 and 4.2, VirnetX, Inc., and any entity that, as of the Amendment Effective Date, Controls, is Controlled by, or is under common Control with VirnetX, Inc., hereby covenants that it, directly or indirectly, will not assert a claim of infringement of any patent (including without limitation the Licensed Patents) or other intellectual property or proprietary rights claim, based in any way, in whole or any part, on any Microsoft Products.  For the avoidance of doubt, VirnetX hereby covenants and agrees that no Microsoft Products shall be used or relied on (in whole or in part, and whether in litigation, mediation, arbitration, demand, cease and desist communication, licensing negotiation, PTO proceeding or otherwise) by VirnetX to satisfy (in whole or in part) any claim or any element, step, means, or limitation of any claim (including without limitation any in the preamble) of any of the Licensed Patents against any entity.

		4.4	The license and covenants by VirnetX in this Section 4 shall extend to each Affiliate or business of Microsoft.  If Microsoft divests an Affiliate or business, the licenses and covenants granted in this Amended Settlement Agreement will continue as to the Affiliate or business for those products and services existing at the time of divestiture, and direct derivatives thereof.

		4.5	The releases, licenses and covenants not to sue are expressly set forth in Sections 3 and 4 above and no other releases, licenses or covenants not to sue are granted or conveyed under this Agreement, whether expressly or by implication, estoppel, reliance or otherwise, all of which are expressly disclaimed.

		5.	Consideration.

		5.1.	Dismissals.To the extent not already dismissed pursuant to that certain Settlement and License Agreement, dated on or about May 14, 2010, by and between Microsoft Corporation and VirnetX, Inc, VirnetX shall dismiss with prejudice (and cause SAIC to join in such dismissal) all claims against Microsoft in the Actions, and Microsoft Corporation shall dismiss with prejudice all counterclaims in the Actions (except that Microsoft Corporation’s affirmative defenses and counterclaims of (i) non-infringement and invalidity shall be dismissed without prejudice and (ii) unenforceability shall be dismissed without prejudice by filing (and VirnetX causing SAIC to file) on or before December 19, 2014, Stipulations of Dismissal and Proposed Order substantially in the form attached as Exhibit E that provide that each of VirnetX, Inc., Microsoft Corporation and SAIC will bear its own costs, expenses and attorney’s fees in connection with the Actions.  No Party shall take any action to oppose the Court’s entry of such dismissal, nor subsequently take any action to vacate, modify, or appeal such dismissal of the Actions.  In addition, VirnetX, Inc. and Microsoft Corporation agree to execute such additional papers and motions as may be necessary to cause the Court to effect a disposal of all issues before it with respect to the Parties and a dismissal of the Actions for these Parties.  For the avoidance of doubt only, the dismissal of the Actions (i.e., the prior lawsuits and the current lawsuit) are based solely on the consent of the parties, not the merits of any past ruling or present motions.  Notwithstanding the foregoing or anything to the contrary in this Section 5.1, VirnetX shall not be obligated to dismiss any separate pending proceedings against any Third Party, but henceforth shall not include Microsoft Products as a basis in whole or in part for its allegations against any Third Party.

		5.2.	Payment. In full and complete settlement of all claims asserted against Microsoft in the Actions, and in full and complete consideration of the licenses, releases, waivers, and other covenants and rights in this Agreement, to the extent not already paid, Microsoft Corporation shall pay a total lump sum amount of two-hundred, twenty-three million U.S. Dollars (USD $223,000,000) (“Payment”), as set forth in this Section 5.2.  Of that Payment, two-hundred million U.S. Dollars (USD $200,000,000.00) was already paid on or about June 7, 2010 by Microsoft Corporation to VirnetX, Inc.  The balance of the Payment (twenty-three million U.S. Dollars (USD $23,000,000)) shall be paid by Microsoft Corporation to VirnetX, Inc. by wire transfer into the following account within twenty(20) business days after the later of  (i) the Amendment Effective Date, or (ii) the provision to Microsoft by VirnetX, Inc. and its counsel of an IRS Form W-9 and a letter on its letterhead with payment instructions consistent with this paragraph:

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Account Name:

Texas IOLTA Trust Account – Caldwell Cassady & Curry

Account No.: 8094381388

ABA Number: 111014325

Bank Name and Address: Bank of Texas

6215 Hillcrest Avenue Dallas, TX 75205

Beneficiary Name: VirnetX, Inc.

VirnetX, Inc. shall be solely responsible for any taxes incurred as a consequence of the Payment or this Agreement.  Microsoft shall not be responsible for any payment to SAIC.

		6.	Term. This Agreement shall remain in full force and effect until after the period ends in which any rights associated with the Licensed Patents might be exercised (for example, currently, as to U.S. patents: after six years after the expiration of the last patent to expire that is part of the Licensed Patents).  Sections 3.1 (provided that the payment in Section 5.2 has been made), 3.2, 3.3, 4 (provided that the payment in Section 5.2 has been made) and 7.1 shall survive termination of the Agreement.

		7.	Miscellaneous.

		7.1.	Confidentiality. The mere existence of this Agreement (including, without limitation, the identification of the Parties and any Licensed Patents) is not confidential.  Within five (5) days after the Amendment Effective Date, Microsoft agrees that VirnetX may issue the press release in the form attached as Exhibit B.  Microsoft may also issue the press release in the form attached as Exhibit B.  Subject to the foregoing, no Party may issue a press release or otherwise affirmatively attempt to publicize the terms or existence of this Agreement, except as set forth below. The Parties further agree that the terms and conditions of this Agreement are confidential and shall not be disclosed by any Party to any other person except (a) as may be required by law (including, without limitation, SEC reporting requirements, or any other United States or foreign regulatory requirements) or stock exchange rule (after prior written notice to the other Party with opportunity to comment on the disclosure), (b) during the course of litigation so long as the disclosure of such terms and conditions are restricted in the same manner as is the confidential information of the litigating Party, which includes designating the Agreement under the highest available level of protection under a protective order; (c) in confidence to the professional legal, advisory, and financial counsel representing or auditing such Party; (d) in confidence, in connection with the enforcement of this Agreement or rights under this Agreement; (e) in confidence, in connection with a merger, or acquisition, divestiture, or proposed merger, acquisition, or divestiture of a Party, or the like; (f) in confidence by Microsoft to Licensees and any third parties covered by the terms of this Agreement; (g) in confidence to potential acquirers of all or substantially all of VirnetX; (h) in confidence to the insurers and third party claim administrators of Microsoft; (i) in confidence to any person covered by the releases, licenses, waivers or other covenants and rights granted herein; or (j) as otherwise agreed in writing by the Parties executing this Agreement.  Prior to any disclosure by VirnetX pursuant to the foregoing subsection (a), VirnetX will provide Microsoft with a draft copy of the proposed disclosure or filing (including, without limitation, any filing with the SEC) at least three business days before such disclosure or filing is made, and the Parties will consult in good faith with respect to the content of the proposed disclosure and the potential for VirnetX to request confidential treatment with respect to portions of the Agreement that VirnetX reasonably believes must be disclosed or filed.

		7.2.	Representations and Warranties.  VirnetX represents, warrants, and covenants to Microsoft that:

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		(a)	VirnetX, Inc. represents and warrants that it is the sole, exclusive, and lawful owner of all right, title, and interest in and to the Licensed Patents (including, without limitation, the Patents-in-Suit).  VirnetX, Inc. represents and warrants that it has all rights necessary to enforce and license the Licensed Patents and, together with any corporate or other authority required to bind VirnetX, thus the right to enter into this Agreement and grant all of the releases, licenses, waivers, and other covenants and rights under this Agreement.  VirnetX, Inc. represents and warrants that from time to time in the Actions and in the Settlement and License Agreement between Microsoft Corporation and VirnetX, Inc. made and entered into on May 14, 2010, VirnetX, Inc. was referenced as “VirnetX Inc.” but that was a typographical error and at all times “VirnetX Inc.” should be considered to refer to VirnetX, Inc. VirnetX represents and warrants that the list of properties set forth on Exhibit A is a complete listing of all patents and applications owned or controlled by (in whole or in part), or assigned to VirnetX.

		(b)	VirnetX further represents and warrants that, as of June 30, 2010, SAIC no longer has any right of reversion to the Licensed Patents.  VirnetX further represents and warrants that SAIC has no right, title or interest in or to the Licensed Patents, and further represents and warrants that SAIC no longer holds the power to assert any claim or claims of the Licensed Patents against Microsoft Released Parties or Licensees.  VirnetX further represents and warrants that SAIC holds no right to review this Agreement prior to its execution and that SAIC holds no right or ability to control the actions or decisions of VirnetX.

		(c)	VirnetX represents and warrants that all releases, licenses, covenants, and other executory obligations made in this Agreement bind both SAIC and VirnetX, and fully encompass any and all rights and interests in the Licensed Patents.  VirnetX further represents and warrants that the review, consent and approval of SAIC is not needed for this Agreement to be binding and enforceable.

		(d)	In the event of any act (including without limitation, the assertion or threatened assertion of any of the Licensed Patents) by SAIC inconsistent with, or contrary to, any of the representations and warranties made by VirnetX in this Agreement, VirnetX agrees to defend, indemnify and hold harmless affected Microsoft Released Parties against SAIC’s actions, including any liability and attorneys’ fees incurred by Microsoft Released Parties.

		(e)	No Claim released herein, and no portion of any such Claim, has been assigned or otherwise transferred by VirnetX to any other person or entity, either directly, indirectly, or by subrogation or operation of law. VirnetX has not filed, commenced, served, or otherwise instituted (in each case, either on its own, or in conjunction with any third party) any complaints, claims, causes of action, or demands against Microsoft or Licensees other than those asserted in connection with the Actions.

		(f)	During the term of this Agreement any consideration required to be paid to any other person, corporation, or entity, if any, on account of any or all of the releases, licenses, waivers, or other covenants or rights granted under this Agreement to any Microsoft Released Parties shall be paid by VirnetX, and no additional consideration shall be required of any of the Microsoft Released Parties. VirnetX has not granted and will not grant any licenses, covenants, and/or other rights under the Licensed Patents and/or otherwise, that would conflict with, impair, and/or prevent any or all of the releases, licenses, waivers, or other covenants or rights granted under this Agreement. VirnetX, Inc. will cause its Affiliates to comply with the terms and conditions of this Agreement where applicable.

		(g)	VirnetX has been represented by competent and independent counsel of their own choice throughout all negotiations preceding the execution of the Agreement, and have executed this Agreement upon the advice of said competent and independent counsel regarding the meaning and legal effect of this Agreement, and regarding the advisability of making the agreements provided for herein, and fully understand the same.

		7.3.	Representations and Warranties.  Microsoft represents, warrants, and covenants to VirnetX that:

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		(a)	No Claim released herein, and no portion of any such Claim, has been assigned or otherwise transferred by Microsoft to any other person or entity, either directly, indirectly, or by subrogation or operation of law. On or prior to the date of the execution of this Agreement, Microsoft has not filed, commenced, served, or otherwise instituted (in each case, either on its own, or in conjunction with any third party) any complaints, claims, causes of action, or demands against VirnetX other than those asserted in connection with the Actions and prior Patent Office proceedings, including the Pending IPRs, of the Licensed Patents.

		(b)	Microsoft has been represented by competent and independent counsel of its own choice throughout all negotiations preceding the execution of the Agreement, and has executed this Agreement upon the advice of said competent and independent counsel regarding the meaning and legal effect of this Agreement, and regarding the advisability of making the agreements provided for herein, and fully understands the same.

		7.4	Mutual Representations and Warranties. Each Party and each person signing this Agreement on behalf of a Party represents and warrants to the other that:

		(a)	Such Party has not entered this Agreement in reliance upon any promise, inducement, agreement, statement, or representation other than those contained in this Agreement.

		(b)	Such Party is duly organized, validly existing and in good standing under the laws of the state, province or country of its organization or incorporation, and has the full right and power to enter into this Agreement, and the person executing this Agreement has the full right and authority to enter into this Agreement on behalf of such Party and the full right and authority to bind such Party to the terms and obligations of this Agreement.

		7.5	Notices. All notices and requests which are required or permitted to be given in connection with this Agreement shall be in writing and shall be deemed given as of the day they are received either by messenger, delivery service, or in the United States of America mails, postage prepaid, certified or registered, return receipt requested, and addressed as follows, or to such other address as the Party to receive the notice or request so designates by written notice to the other:

If to VirnetX, Inc.:

By Regular Mail to:

 Attn:  Kendall Larsen, Chief Executive Officer VirnetX, Inc.

P.O. Box # 439

Zephyr Cove, NV 89448

Facsimile:  (831) 438-3078

By Any Other  Service (Fedex, UPS, etc.) to:

Attn:  Kendall Larsen, Chief Executive Officer VirnetX, Inc.

308 Dorla Ct.

Zephyr Cove, NV 89448

Facsimile:  (831) 438-3078

with a copy to:

Caldwell Cassady & Curry

2101 Cedar Springs Road, Suite 1000, Dallas, TX 75201

Telephone: 214.888.4848

  Facsimile:  214.888.4849

 

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If to Microsoft:

Attn:  Director of Licensing, LCA Patent Group Microsoft Corporation

One Microsoft Way Redmond, WA 98052

Fax: (425) 936-7329

with a copy to:

Attn: Law & Corporate Affairs Microsoft Corporation

One Microsoft Way Redmond, Washington 98052

Facsimile: (425) 936-7329

		7.6.	Governing Law; Venue. This Agreement shall be construed and controlled by the internal laws of the State of Texas (excluding conflict of laws principles) and applicable federal laws. The sole and exclusive venue for any lawsuit arising out of or relating to this Agreement shall be the United States District Court for the Eastern District of Texas.

		7.7.	Costs. Each Party shall bear its own costs, expenses and attorneys’ fees incurred in connection with the Actions, the making of this Agreement, and its performance under this Agreement. Each Party expressly waives any claim of costs and attorneys’ fees from or against the other Party.

		7.8.	Successors and Assigns. The terms, covenants, conditions, provisions and benefits of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.  For the avoidance of doubt only, the releases, licenses and covenants in Section 3.1 and Section 4 run with each of the Licensed Patents covered by this Agreement and are binding on any entity claiming a right, title or interest therein at any time, and VirnetX will inform any such transferee in writing of this restriction prior to transfer.

		7.9.	No Construction Against Drafter. This Agreement results from negotiations between the Parties and their respective legal counsel, and each Party acknowledges that it has had the opportunity to negotiate modifications to the language of this Agreement. Accordingly, each Party agrees that in any dispute regarding the interpretation or construction of this Agreement, no statutory, common law or other presumption shall operate in favor of or against any Party by virtue of his, her or its role in drafting or not drafting the terms and conditions set forth herein.

		7.10.	Captions. Captions or headings used in this Agreement are for the convenience of the Parties only, and shall not be considered part of this Agreement or used to construe the terms of this Agreement.

		7.11.	Construction. If any provision of this Agreement shall be held by a court of competent jurisdiction to be illegal, invalid or unenforceable or otherwise in conflict with law, the remaining provisions shall remain in full force and effect. If any provisions of this Agreement are deemed not enforceable, they shall be deemed modified to the extent necessary to make them enforceable. The Parties undertake to replace the invalid provision or parts thereof by a new provision which will approximate as closely as possible the intent of the Parties.  Provisions shall apply, as applicable, to past, current and successive events, parties, and transactions.

		7.12.	Counterparts. This Agreement may be executed in any number of counterparts and by the different Parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. Execution of this Agreement may be accomplished by signing this Agreement and transmitting the signature page to opposing counsel by facsimile or email. The Parties so executing and delivering shall promptly thereafter deliver signed originals of at least the signature page(s), but failure to do so shall not affect the validity or enforceability of this Agreement.

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		7.13.	Waiver. No waiver of any provision of this Agreement shall be deemed or shall constitute a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver unless expressly stated in writing by the Party making the waiver.  No waiver of any provision shall be binding in any event unless executed in writing by the Party making the waiver.

		7.14.	Entire Agreement.This Agreement (including, without limitation, all Exhibits attached hereto) constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous written or oral agreements (including, without limitation, the Settlement and License Agreement between Microsoft Corporation and VirnetX, Inc. made and entered into on May 14, 2010), memorandums of understanding (including, without limitation, the Memorandum of Understanding between Microsoft Corporation and VirnetX, Inc. dated May 12, 2010), or communications as to such subject matter, all of which are superseded, merged and fully integrated into this Agreement. It shall not be modified except by a written agreement dated subsequent to the date of this Agreement and signed on behalf of the Parties by their respective duly authorized representatives.

	 	
7.15.

	
Inter Partes Review. Microsoft and VirnetX shall cooperate (and if necessary, VirnetX will cause SAIC to cooperate) to file in each of the Pending IPRs, a joint motion to terminate with respect to Microsoft Corporation pursuant to 35 U.S.C. §317(a) in the form set forth in Exhibit C, and a joint request to keep this agreement confidential pursuant to 35 U.S.C. 317(b) and 37 C.F.R. § 42.74(c) in the form set forth in Exhibit D. Microsoft and VirnetX will contact (and if necessary, VirnetX will cause SAIC to contact) the Patent Trial and Appeal Board (“PTAB”) to request permission to file in each of the Pending IPRs the motion and the request within five (5) business days of the filing of the dismissals under Section 5.1, and upon receiving permission, file in each of the Pending IPRs the motion and the request within two (2) business days of the PTAB granting such permission. The parties will work together to modify the motion and request to address any issues raised by the PTAB. If the PTAB denies the motions to terminate, the Parties will take such other permitted steps to have Microsoft withdraw from the Pending IPRs. For example, Microsoft will not actively seek to participate in the Pending IPRs, and will not be bound by the results of the Pending IPRs. This covenant shall not be construed as preventing Microsoft from complying with any court or Patent Office order or applicable law.

	 	
7.16.

	
[***]

 

	
[***]

	
Certain information on this page has been omitted and filed separately with the Securities Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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IN WITNESS WHEREOF, VirnetX, Inc. and Microsoft Corporation, being fully authorized and empowered to bind themselves to this Agreement, have caused this Agreement to be made and executed by duly authorized officers as of the Amendment Effective Date.

	
VIRNETX, INC.

	
 

	
MICROSOFT CORPORATION

	 		
	
/s/ Sameer Mathur

		
 

	
 

	
/s/ David Howard

 

	
Name:

	
Sameer Mathur

		
Name:

	
David Howard

	
Title:

	
VP of Corporate Development & Product Marketing

		
Title:

	
Corporate VP

	
Date:

	
12/17/14

		
Date:

	
12/17/14

 

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EXHIBIT A

 

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Country

	
App. No.

	
Filing date

	
Patent No.

	
Issue Date

	
WO

	
PCT/US99/25325

	
10/29/1999

	 	 
	
AU

	
00/14553

	
10/29/1999

	
761,388

	
09/18/2003

	
CA

	
2,349,519

	
10/29/1999

	 	
08/09/2011

	
CA

	
2,723,504

	
10/29/1999

	 	
04/29/2014

	
EP

	
99971606.1

	
10/29/1999

	
1125419

	
08/26/2009

	
EP-GB

	
99971606.1

	
10/29/1999

	
1125419

	
08/26/2009

	
EP-DE

	
99971606.1

	
10/29/1999

	
1125419

	
08/26/2009

	
EP-FR

	
99971606.1

	
10/29/1999

	
1125419

	
08/26/2009

	
EP-IT

	
46406/BE/2009

	
10/29/1999

	
1125419

	
08/26/2009

	
JP

	
2000-580350

	
10/29/1999

	
4,451,556

	
02/05/2010

	
JP

	
2009-246033

	
10/29/1999

	
4,824,108

	
09/16/2011

	
US

	
09/429,643

	
10/29/1999

	
7,010,604

	
03/07/2006

	
US

	
10/401,551

	
03/31/2003

	
7,133,930

	
11/07/2006

	
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11/301,022

	
12/13/2005

	
7,996,539

	
08/09/2011

	
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11/839,937

	
08/16/2007

	
8,874,771

	
10/28/2014

	
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13/475,637

	
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13/620,550

	
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09/429,643

	
02/15/2000

	
6,502,135

	
12/31/2002

	
WO

	
PCT/US01/04340

	
02/12/2001

	 	 
	
EP

	
14172837.8

	
06/17/2014

	 	 
	
HK

	
14111309.7

	
11/07/2014

	 	 
	
EP

	
01910528.7

	
02/12/2001

	 	 
	
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2001-560062

	
02/12/2001

	 	 
	
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10/082,164

	
02/26/2002

	
6,618,761

	
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6,907,473

	
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13/093,785

	
05/11/2011

	
8,516,117

	
08/20/2013

	
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13/890,206

	
05/08/2013

	 	 
	
WO

	
PCT/US99/25323

	
10/29/1999

	 	 
	
AU

	
00/16003

	
10/29/1999

	
765914

	
01/15/2004

	
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2,349,520

	
10/29/1999

	 	 
	
EP

	
99958693.6

	
10/29/1999

	 	 
	
EP-DE

	
99958693.6

	
10/29/1999

	
1125414

	
12/22/2010

	
EP-FR

	
99958693.6

	
10/29/1999

	
1125414

	
12/22/2010

	
EP-GB

	
99958693.6

	
10/29/1999

	
1125414

	
12/22/2010

	
EP

	
10011949.4

	
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JP

	
2011-081416

	
04/01/2011

	
5198617

	
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12

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2014-000051

	
04/01/2011

	 	
05/15/2014

	
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PCT/US01/13261

	
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EP

	
01932629.7

	
04/25/2001

	
1302047

	
08/01/2012

	
EP

	
06014499.5

	
04/25/2001

	 	 
	
EP

	
06014500.0

	
04/25/2001

	 	 
	
EP-CH

	
01932629.7

	
04/25/2001

	
1302047

	
08/01/2012

	
EP-DE

	
01932629.7

	
04/25/2001

	
1302047

	
08/01/2012

	
EP-NL

	
01932629.7

	
04/25/2001

	
1302047

	
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EP-GB

	
01932629.7

	
04/25/2001

	
1302047

	
08/01/2012

	
EP

	
10012357

	
09/30/2010

	 	
	
EP

	
10012236

	
09/30/2010

	 	 
	
EP

	
11005789.0

	
07/15/2011

	 	 
	
EP

	
11005792.4

	
07/15/2011

		
	
EP

	
11005793.2

	
07/15/2011

	 	 
	
EP

	
10012356

	
09/30/2010

	 	 
	
EP

	
12004353.4

	
06/08/2012

	 	 
	
HK

	
07109112.7

	
08/21/2007

	 	 
	
HK

	
07109113.6

	
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JP

	
2001-583006

	
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4765811

	
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5377455

	
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PCT/US01/13260

	
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01932628.9

	
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1284079

	
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EP-CH

	
01932628.9

	
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60116754.6

	
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1284079

	
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EP-GB

	
01932628.9

	
04/25/2001

	
1284079

	
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EP-IT

	
01932628.9

	
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1284079

	
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EP-NL

	
01932628.9

	
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1284079

	
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05102086.5

	
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1542429

	
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EP-CH

	
05102086.5

	
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1542429

	
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13

	
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05102086.5

	
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05102086.5

	
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10184542.8

	
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10184502.2

	
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2002-501144

	
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JP

	
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5180274

	
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2011-083414

	
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2011-083415

	
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13/617,446

	
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13/950,897

	
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13/950,919

	
07/25/2013

	
8,843,643

	
09/23/2014

	
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14/482,956

	
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WO

	
PCT/US02/01070

	
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EP

	
02 0718836.6

	
01/17/2002

	
1360803

	
11/30/2011

	
EP-CH

	
02 0718836.6

	
01/17/2002

	
1360803

	
11/30/2011

	
EP-DE

	
02 0718836.6

	
01/17/2002

	
1360803

	
11/30/2011

	
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02 0718836.6

	
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1360803

	
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14

	
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Issue Date

	
EP-GB

	
02 0718836.6

	
01/17/2002

	
1360803

	
11/30/2011

	
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02 0718836.6

	
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1360803

	
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EP-NL

	
02 0718836.6

	
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1360803

	
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10012248.0

	
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2264952

	
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10012248.0

	
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10012248.0

	
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2264952

	
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10012248.0

	
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2264952

	
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10012248.0

	
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2264952

	
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10012248.0

	
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2264952

	
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10012248.0

	
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2264952

	
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10012245.6

	
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2264951

	
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10012245.6

	
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10012245.6

	
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2264951

	
07/31/2013

	
EP-GB

	
10012245.6

	
12/22/2010

	
2264951

	
07/31/2013

	
EP-IT

	
10012245.6

	
12/22/2010

	
2264951

	
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EP-NL

	
10012245.6

	
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2264951

	
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PCT/US12/45921

	
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12743274.8

	
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14110584.5

	
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2014-519097

	
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2012282841

	
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WO2008US74886A

	
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16

EXHIBIT B

VirnetX and Microsoft Settle Pending Patent Disputes and

Agree to Jointly Petition to Terminate IPR Proceedings as to Microsoft

ZEPHYR COVE, Nevada and REDMOND, WA – December XX, 2014 – VirnetX Holding Corporation (NYSE MKT: VHC) and Microsoft Corporation announced today that on December XX, 2014, VirnetX, Inc. and Microsoft Corporation have signed an Amended Settlement and License Agreement. This agreement amends and restates certain terms of the original Settlement and License Agreement, dated May 14, 2010, between VirnetX, Inc. and Microsoft Corporation. As a result of the agreement, the parties have settled their pending patent disputes.

Under the terms of the amended agreement, Microsoft has agreed to pay $23 million to VirnetX to settle the patent dispute and expand Microsoft’s license. The parties have also agreed to dismiss the patent infringement case brought by VirnetX, Inc. before the U.S. District Court for the Eastern District of Texas and jointly move to terminate the pending inter partes review proceedings between Microsoft and VirnetX, Inc. as to Microsoft.  All other aspects of the agreement were not disclosed.

“We are pleased to have come to an agreement with Microsoft Corporation and put all our legal disputes behind us,” said Kendall Larsen, Chief Executive Officer and Chairman of VirnetX, Inc.  “This agreement allows us to focus our resources towards the release of our Gabriel Secure Communication PlatformTM and Gabriel Collaboration SuiteTM products in the first-half of 2015 and our ongoing licensing and strategic partnership efforts.”

“Microsoft Corporation is pleased to have come to an agreement with VirnetX and that the settlement includes an expanded license to VirnetX’s entire patent portfolio,” said a Microsoft spokesperson.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services, devices and solutions that help people and businesses realize their full potential.

About VirnetX

VirnetX Holding Corporation is an Internet security software and technology company with patented technology for secure communications including 4G LTE security.  The Company’s software and technology solutions, including its secure domain name registry and GABRIEL Connection TechnologyTM, are designed to facilitate secure communications and to create a secure environment for real-time communication applications such as instant messaging, VoIP, smartphones, eReaders and video conferencing.  The Company’s patent portfolio includes over 107 U.S. and international patents with over 100 pending applications.  For more information, please visit www.virnetx.com.

17

Forward Looking Statements

Statements in this press release that are not statements of historical or current fact, including statements regarding the  strength of Virnetx’s intellectual property, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are based on expectations, estimates and projections about the markets in which the Company operates, management’s beliefs, and certain assumptions made by management and involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements, including but not limited to (1) the outcome of any legal proceedings that have been or may be initiated by the Company or that may be initiated against the Company;, including pending and future inter partes review proceedings in the Patent and Trademark Office (2) the ability to capitalize on the Company’s patent portfolio and generate licensing fees and revenues; (3) the ability of the Company to be successful in entering into licensing relationships with its targeted customers on commercially acceptable terms; (4) potential challenges to the validity of the Company’s patents underlying its licensing opportunities; (5) the ability of the Company to achieve widespread customer adoption of the Company’s GABRIEL Communication TechnologyTM and its secure domain name registry; (6) the level of adoption of the 3GPP Series 33 security specifications; (7) whether or not the Company’s patents or patent applications may be determined to be or become essential to any standards or specifications in the 3GPP LTE, SAE project or otherwise; (8) the extent to which specifications relating to any of the Company’s patents or patent applications may be adopted as a final standard, if at all; and (9) the possibility that Company may be adversely affected by other economic, business, and/or competitive factors.  In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes,” “belief,” “expects,” “intends,” “anticipates,” or “plans” to be uncertain and forward-looking.  The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’s reports and registration statements filed with the Securities and Exchange Commission, including those under the heading “Risk Factors” in Company’s Quarterly Report on Form 10-Q filed with the SEC on November 10, 2014.  Many of the factors that will determine the outcome of the subject matter of this press release are beyond the Company’s  ability to control or predict.  Except as required by law, the Company is under no duty to update any of the forward-looking statements after the date of this press release to conform to actual results.

 

Contact:

Greg Wood

VirnetX Holding Corporation

775.548.1785

greg_wood@virnetx.com

 

18

David Cuddy

Microsoft Corporation

425.421.2502

dcuddy@microsoft.com

 

VirnetX and GABRIEL Connection Technology are trademarks of VirnetX Holding Corporation. Other company and product names may be trademarks of their respective owners.

 

19

EXHIBIT C1

 

JOINT MOTION TO TERMINATE

IPR2014-01418, AND IPR2014-01421

 

20

Joint Motion to Terminate Proceeding

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

[Parties will edit the following caption and the motion as appropriate depending on the IPR and Board’s guidance.]

Filed on behalf of Microsoft Corporation and VirnetX, Inc.

UNITED STATES PATENT AND TRADEMARK OFFICE

 

 

BEFORE THE PATENT TRIAL AND APPEAL BOARD

 

 

MICROSOFT CORPORATION

Petitioner

 

v.

 

VIRNETX, INC.

Patent Owner

 

 

Case IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

 

JOINT MOTION TO TERMINATE PROCEEDING

 

21

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

	
I.

	
Precise Relief Requested

 

Pursuant to 35 U.S.C. § 317(a), Petitioner Microsoft Corporation (“Microsoft” or “Petitioner”) and Patent Owner VirnetX, Inc. (“Patent Owner” or “VirnetX”) jointly request that this inter partes review proceeding (“this Review”) involving U.S. Patent No. X,XXX,XXX (“the ’XXX patent”) be terminated based on a settlement between Petitioner and Patent Owner (“the Parties”).

 

	
II.

	
Reasons for Granting the Motion

 

Generally, the Board expects that a proceeding will terminate after the filing of a settlement agreement.  See, e.g., Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,768 (Aug. 14, 2012).  The Board authorized the filing of the instant motion in [the order/email] dated [MONTH DAY, YEAR].  IPR2013-00428, Paper No. 56 provides guidance as to the content of a motion to terminate.  There, the Board indicates that a joint motion, such as this one, should (1) include a brief explanation as to why termination is appropriate; (2) identify all parties in any related litigation involving the patents at issue; (3) identify any related proceedings currently before the Office, and (4) discuss specifically the current status of each such related litigation or proceeding with respect to each party to the litigation or proceeding.  Id. at 2.  This motion satisfies each of the above requirements and is accompanied by a copy of the Parties’ settlement agreement, as required by 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(b).

 

22

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

		(1)	Brief Explanation of Why Termination is Appropriate

 

Termination is appropriate because a final written decision has not been reached in this Review.  Indeed, Petitioner filed its petition for inter partes review on [MONTH DAY, YEAR].  Patent Owner filed its preliminary response on MONTH DAY, YEAR].  The Board has not yet instituted this proceeding.

 

Termination of this proceeding is appropriate because, if this Motion is granted, Microsoft will not be participating as a party in this proceeding going forward, and the Board has not decided the merits of the proceeding.  The Parties have settled their dispute and executed a settlement agreement to terminate this proceeding, as well as the Parties’ related district court litigation regarding the ’XXX patent:  VirnetX, Inc. and Science Applications International Corporation v. Microsoft Corporation, Case No. 6:13-cv-00351 (E.D. Tex.).  The Parties expect that this district court litigation will be dismissed per the parties’ settlement agreement.  For all these reasons, the Parties respectfully request termination of this proceeding.

		(2)	All parties in any pending related litigation involving the patents at issue

 

Patent Owner, but not Petitioner, is also involved in several other pending related litigations involving the ’XXX patent.  These related litigations, and their current status with respect to the litigating parties, are as follows:

 

23

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

	
Related Case(s)

	
Defendants

	
Status

	        	            	             
	          	               	               
	               	               	              
	          	               	                 

		(3)	Related proceedings currently before the Office

 

Aside from this inter partes review proceeding, the ’XXX patent is also the subject of the following proceeding(s) currently before the Office:

 

	
Related Proceeding(s)

	
Requester/Petitioner

	
Status

	
Control No. XX/XXXXXX

	             	           
	
IPR2014-000XX

	                 	             

		(4)	Current status of each such related litigation or proceeding with respect to each party to the litigation or proceeding

Above, a status field indicates the status of each such related litigation or proceeding with respect to each party to the litigation or proceeding.

 

24

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

	
III.

	
Settlement Agreement

 

Pursuant to 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(b), the Parties’ settlement agreement is in writing, and a true and correct copy is being filed concurrently herewith as Exhibit [XXXX].1  The Parties are also filing concurrently herewith a joint request under 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(c) to treat the settlement agreement as business confidential information and keep it separate from the files of the involved patent.

 

Respectfully submitted,

 

	
                          

	
 

	
                             

	
 

	
[Name]

	
 

	
[Name]

	
 

	
[Address]

	
 

	
[Address]

	
 

	
 

	
 

	
 

	
 

	
Counsel for Petitioner

	
 

	
Counsel for Patent Owner

	
 

	
Microsoft Corporation

	
 

	
VirnetX, Inc.

	
 

 

Dated:  [MONTH DAY, YEAR]

 

1            The settlement agreement is being filed electronically via the Patent Review Processing System (PRPS) with access to the “Parties and Board Only.”

 

25

EXHIBIT C2

JOINT MOTION TO TERMINATE

IPR2014-00610, IPR2014-00614 (CONSOLIDATED WITH IPR2014-00613), 

IPR2014-00615 (CONSOLIDATED WITH IPR2014-00618)

 

26

Joint Motion to Terminate Proceeding

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

[Parties will edit the following caption and the motion as appropriate depending on the IPR and Board’s guidance.]

Filed on behalf of Microsoft Corporation and VirnetX, Inc.

 

UNITED STATES PATENT AND TRADEMARK OFFICE

 

 

BEFORE THE PATENT TRIAL AND APPEAL BOARD

 

 

MICROSOFT CORPORATION

Petitioner

 

v.

 

VIRNETX, INC.

Patent Owner

 

 

Case IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

 

JOINT MOTION TO TERMINATE PROCEEDING

 

27

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

	
I.

	
Precise Relief Requested

 

Pursuant to 35 U.S.C. § 317(a), Petitioner Microsoft Corporation (“Microsoft” or “Petitioner”) and Patent Owner VirnetX, Inc. (“Patent Owner” or “VirnetX”) jointly request that this inter partes review proceeding (“this Review”) involving U.S. Patent No. X,XXX,XXX (“the ’XXX patent”) be terminated based on a settlement between Petitioner and Patent Owner (“the Parties”).

 

	
II.

	
Reasons for Granting the Motion

 

Generally, the Board expects that a proceeding will terminate after the filing of a settlement agreement.  See, e.g., Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,768 (Aug. 14, 2012).  The Board authorized the filing of the instant motion in [the order/email] dated [MONTH DAY, YEAR].  IPR2013-00428, Paper No. 56 provides guidance as to the content of a motion to terminate.  There, the Board indicates that a joint motion, such as this one, should (1) include a brief explanation as to why termination is appropriate; (2) identify all parties in any related litigation involving the patents at issue; (3) identify any related proceedings currently before the Office, and (4) discuss specifically the current status of each such related litigation or proceeding with respect to each party to the litigation or proceeding.  Id. at 2.  This motion satisfies each of the above requirements and is accompanied by a copy of the Parties’ settlement agreement, as required by 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(b).

 

28

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

		(1)	Brief Explanation of Why Termination is Appropriate

 

Termination is appropriate because a final written decision has not been reached in this Review.  Indeed, Petitioner filed its petition for inter partes review on [MONTH DAY, YEAR].  The Board instituted this proceeding on [MONTH DAY, YEAR].  Patent Owner has not filed a Patent Owner’s Response, and one is not due until [MONTH DAY, YEAR].

 

Termination of this proceeding is appropriate because, if this Motion is granted, Microsoft will not be participating as a party in this proceeding going forward, and the Board has not decided the merits of the proceeding.  The Parties have settled their dispute and executed a settlement agreement to terminate this proceeding, as well as the Parties’ related district court litigation regarding the ’XXX patent:  VirnetX, Inc. and Science Applications International Corporation v. Microsoft Corporation, Case No. 6:13-cv-00351 (E.D. Tex.).  The Parties expect that this district court litigation will be dismissed per the parties’ settlement agreement.  For all these reasons, the Parties respectfully request termination of this proceeding.

 

29

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

		(2)	All parties in any pending related litigation involving the patents at issue

 

Patent Owner, but not Petitioner, is also involved in several other pending related litigations involving the ’XXX patent.  These related litigations, and their current status with respect to the litigating parties, are as follows:

 

	
Related Case(s)

	
Defendants

	
Status

	                 	                 	               
	               	                	                
	               	                   	                
	                      	                   	                       

		(3)	Related proceedings currently before the Office

 

Aside from this inter partes review proceeding, the ’XXX patent is also the subject of the following proceeding(s) currently before the Office:

 

	
Related Proceeding(s)

	
Requester/Petitioner

	
Status

	
Control No. XX/XXXXXX

	                    	             
	
IPR2014-000XX

	                      	                      

		(4)	Current status of each such related litigation or proceeding with respect to each party to the litigation or proceeding

Above, a status field indicates the status of each such related litigation or proceeding with respect to each party to the litigation or proceeding.

 

30

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

	
III.

	
Settlement Agreement

 

Pursuant to 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(b), the Parties’ settlement agreement is in writing, and a true and correct copy is being filed concurrently herewith as Exhibit [XXXX].2  The Parties are also filing concurrently herewith a joint request under 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(c) to treat the settlement agreement as business confidential information and keep it separate from the files of the involved patent.

 

Respectfully submitted,

 

	
                       

	
 

	
                        

	
 

	
[Name]

	
 

	
[Name]

	
 

	
[Address]

	
 

	
[Address]

	
 

	
 

	
 

	
 

	
 

	
Counsel for Petitioner

	
 

	
Counsel for Patent Owner

	
 

	
Microsoft Corporation

	
 

	
VirnetX, Inc.

	
 

 

Dated:  [MONTH DAY, YEAR]

 

2            The settlement agreement is being filed electronically via the Patent Review Processing System (PRPS) with access to the “Parties and Board Only.”

 

31

EXHIBIT C3

JOINT MOTION TO TERMINATE

IPR2014-00403 AND IPR2014-00404

 

32

Joint Motion to Terminate Proceeding

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

[Parties will edit the following caption and the motion as appropriate depending on the IPR and Board’s guidance.]

Filed on behalf of Microsoft Corporation and VirnetX, Inc.

 

UNITED STATES PATENT AND TRADEMARK OFFICE

 

 

BEFORE THE PATENT TRIAL AND APPEAL BOARD

 

 

MICROSOFT CORPORATION

Petitioner

 

v.

 

VIRNETX, INC.

Patent Owner

 

 

Case IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

 

JOINT MOTION TO TERMINATE PROCEEDING WITH RESPECT TO MICROSOFT CORPORATION

 

33

	
I.

	
Precise Relief Requested

 

Pursuant to 35 U.S.C. § 317(a), Petitioner Microsoft Corporation (“Microsoft” or “Petitioner”) and Patent Owner VirnetX, Inc. (“Patent Owner” or “VirnetX”) jointly request that this inter partes review proceeding (“this Review”) involving U.S. Patent No. X,XXX,XXX (“the ’XXX patent”) be terminated with respect to Microsoft based on a settlement between Petitioner and Patent Owner (“the Parties”).

 

	
II.

	
Reasons for Granting the Motion

 

Generally, the Board expects that a proceeding will terminate after the filing of a settlement agreement.  See, e.g., Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,768 (Aug. 14, 2012).  The Board authorized the filing of the instant motion in [the order/email] dated [MONTH DAY, YEAR].  IPR2013-00428, Paper No. 56 provides guidance as to the content of a motion to terminate.  There, the Board indicates that a joint motion, such as this one, should (1) include a brief explanation as to why termination is appropriate; (2) identify all parties in any related litigation involving the patents at issue; (3) identify any related proceedings currently before the Office, and (4) discuss specifically the current status of each such related litigation or proceeding with respect to each party to the litigation or proceeding.  Id. at 2.  This motion satisfies each of the above requirements and is accompanied by a copy of the Parties’ settlement agreement, as required by 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(b).

 

34

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

		(1)	Brief Explanation of Why Termination is Appropriate

 

With respect to Microsoft, termination is appropriate because a final written decision has not been reached in this Review.  Indeed, Petitioner filed its petition for inter partes review on [MONTH DAY, YEAR].  The Board instituted this proceeding on [MONTH DAY, YEAR].  Patent Owner filed a Patent Owner’s Response on [MONTH DAY, YEAR], but Petitioner has not filed its Reply, which is not due until [MONTH DAY, YEAR].

 

Termination of this proceeding with respect to Microsoft is appropriate because, if this Motion is granted, Microsoft will not be participating as a party in this proceeding going forward, and the Board has not decided the merits of the proceeding.  The Parties have settled their dispute and executed a settlement agreement to terminate this proceeding as to Microsoft, as well as the Parties’ related district court litigation regarding the ’XXX patent:  VirnetX, Inc. and Science Applications International Corporation v. Microsoft Corporation, Case No. 6:13-cv-00351 (E.D. Tex.).  The Parties expect that this district court litigation will be dismissed per the parties’ settlement agreement.  For all these reasons, the Parties respectfully request termination of this proceeding with respect to Microsoft.

35

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

		(2)	All parties in any pending related litigation involving the patents at issue

 

Patent Owner, but not Petitioner, is also involved in several other pending related litigations involving the ’XXX patent.  These related litigations, and their current status with respect to the litigating parties, are as follows:

 

	
Related Case(s)

	
Defendants

	
Status

	              	                 	                    
	                 	                     	                  
	                  	                  	                 
	                      	                    	                      

		(3)	Related proceedings currently before the Office

 

Aside from this inter partes review proceeding, the ’XXX patent is also the subject of the following proceeding(s) currently before the Office:

 

	
Related Proceeding(s)

	
Requester/Petitioner

	
Status

	
Control No. XX/XXXXXX

	                   	                  
	
IPR2014-000XX

	                      	                 

		(4)	Current status of each such related litigation or proceeding with respect to each party to the litigation or proceeding

Above, a status field indicates the status of each such related litigation or proceeding with respect to each party to the litigation or proceeding.

 

36

IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

	
III.

	
Settlement Agreement

 

Pursuant to 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(b), the Parties’ settlement agreement is in writing, and a true and correct copy is being filed concurrently herewith as Exhibit [XXXX].3  The Parties are also filing concurrently herewith a joint request under 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(c) to treat the settlement agreement as business confidential information and keep it separate from the files of the involved patent.

 

Respectfully submitted,

 

	
                    

	
 

	
                         

	
 

	
[Name]

	
 

	
[Name]

	
 

	
[Address]

	
 

	
[Address]

	
 

	
 

	
 

	
 

	
 

	
Counsel for Petitioner

	
 

	
Counsel for Patent Owner

	
 

	
Microsoft Corporation

	
 

	
VirnetX, Inc.

	
 

 

Dated:  [MONTH DAY, YEAR]

 

3            The settlement agreement is being filed electronically via the Patent Review Processing System (PRPS) with access to the “Parties and Board Only.”

 

37

EXHIBIT D

JOINT REQUEST TO TREAT SETTLEMENT

AGREEMENT AS CONFIDENTIAL

 

38

[Parties will edit the following caption and the request as appropriate depending on the IPR and Board’s guidance.]

Filed on behalf of Microsoft Corporation and VirnetX, Inc.

UNITED STATES PATENT AND TRADEMARK OFFICE

 

 

BEFORE THE PATENT TRIAL AND APPEAL BOARD

 

 

MICROSOFT CORPORATION

Petitioner

v.

VIRNETX, INC.

Patent Owner

 

 

Case IPR2014-000XX

U.S. Patent No. X,XXX,XXX

 

 

JOINT REQUEST TO TREAT SETTLEMENT

AGREEMENT AS BUSINESS CONFIDENTIAL

UNDER 35 U.S.C. § 317(b) AND 37 C.F.R. § 42.74(c)

 

39

Pursuant to 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(c), and the Board’s [order/email] of [MONTH DAY, YEAR], authorizing the filing of this joint request, Petitioner Microsoft Corporation (“Petitioner”) and Patent Owner VirnetX, Inc. (“Patent Owner”), hereby jointly request that a true copy of the settlement agreement filed concurrently herewith as Exhibit [XXXX] be treated as business confidential information and be kept separate from the file of U.S. Patent No. X,XXX,XXX (“the ’XXX Patent”).  Exhibit [XXXX] is being submitted in the PRPS system as “Parties and Board Only.”  The Parties further request the Board to not make Exhibit [XXXX] available to any third party, except as provided for in 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(c).

 

Respectfully submitted,

 

	
                              

	
 

	
                    

	
 

	
[Name]

	
 

	
[Name]

	
 

	
[Address]

	
 

	
[Address]

	
 

	
 

	
 

	
 

	
 

	
Counsel for Petitioner

	
 

	
Counsel for Patent Owner

	
 

	
Microsoft Corporation

	
 

	
VirnetX, Inc.

	
 

 

Dated:  [MONTH DAY, YEAR]

40

EXHIBIT E

 

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS

TYLER DIVISION

	
VIRNETX, INC., and

LEIDOS, INC.,

 

Plaintiffs/Counterclaim Defendants,

 

v.

 

MICROSOFT CORPORATION,

 

Defendant/Counterclaimant.

 

	
§

§

§

§

§

§

§

§

§

§

§

	
 

 

 

 

Civil Action No. 6:13-cv-00351-LED

 

 

JOINT MOTION TO DISMISS BY ALL PARTIES

 

In accordance with a certain agreement between VirnetX, Inc. and Microsoft Corporation, VirnetX, Inc., Leidos, Inc. (formerly Science Applications International Corp.) (VirnetX, Inc. and Leidos, Inc. collectively “Plaintiffs”) and Microsoft Corporation (“Microsoft”) file this joint motion to dismiss the litigation captioned above.

 

Plaintiffs dismiss all claims in this action against Microsoft with prejudice.  Microsoft dismisses without prejudice its affirmative defenses and counterclaims of (i) non-infringement and invalidity and (ii) unenforceability in this action.  Microsoft dismisses with prejudice its other counterclaims in this action.

 

Each party shall bear its own costs, expenses, and attorney’s fees.

(signatures                 follow)

 

41

	
Dated:  February 28, 2015

	
Respectfully submitted,

	 	 
	 	
FISH & RICHARDSON, P.C.

	 	 
	 	
/s/                                                      

	 
	 	
Melissa R. Smith (Texas Bar No. 24001351)

	 	
303 South Washington Avenue

	 	
Marshall, Texas 75670

	 	
Telephone:  903.934.8450

	 	
Facsimile:  903.934.9257

	 	 
	 	
Ruffin B. Cordell (Texas Bar No. 04820550)

	 	
Indranil Mukerji (Massachusetts Bar No. 644059)

	 	
FISH & RICHARDSON P.C.

	 	
1425 K Street NW, Suite 1100

	 	
Washington, DC 20005

	 	
Telephone:  202.783.5070

	 	
Facsimile:  202.783.5331

	 	 
	 	
David J. Healey (Texas Bar No. 09327980)

	 	
Benjamin C. Elacqua (Texas Bar No. 24055443)

	 	
Tony Nguyen (Texas Bar No. 24083565)

	 	
FISH & RICHARDSON P.C.

	 	
1221 McKinney Street, Suite 2800

	 	
Houston, Texas 77010

	 	
Telephone:  713.654.5300

	 	
Facsimile:  713.652.0109

42

	 	
Katrina G. Eash (Texas Bar No. 24074636)

	 	
FISH & RICHARDSON P.C.

	 	
1717 Main Street, Suite 5000

	 	
Dallas, Texas 75201

	 	
Telephone:  214.747.5070

	 	
Facsimile:  214.747.2091

	 	 
	 	
Benjamin K. Thompson (Georgia Bar No. 633211)

	 	
FISH & RICHARDSON P.C.

	 	
1180 Peachtree Street, NE, 21st Floor

	 	
Atlanta, Georgia 30309

	 	
Telephone:  404.892.5005

	 	
Facsimile:  404.892.5002

	 	 
	 	
Attorneys for Defendant

	 	
MICROSOFT CORPORATION

	 	 
	 	
Caldwell Cassady & Curry

	 	
	 	/s/	
	 	
Bradley W. Caldwell

	 	
Texas State Bar No. 24040630

	 	
E-mail: bcaldwell@caldwellcc.com

	 	
Jason D. Cassady

	 	
Texas State Bar No. 24045625

	 	
E-mail: jcassady@caldwellcc.com

	 	
John Austin Curry

	 	
Texas State Bar No. 24059636

	 	
E-mail: acurry@caldwellcc.com

	 	
Daniel R. Pearson

	 	
Texas State Bar No. 24070398

	 	
E-mail: dpearson@caldwellcc.com

	 	
Hamad M. Hamad

	 	
Texas State Bar No. 24061268

	 	
E-mail: hhamad@caldwellcc.com

	 	
Justin T. Nemunaitis

	 	
Texas State Bar No. 24065815

	 	
E-mail:  jnemunaitis@caldwellcc.com

	 	
Christopher S. Stewart

	 	
Texas State Bar No. 24079399

	 	
E-mail: cstewart@caldwellcc.com

	 	
John F. Summers

	 	
Texas State Bar No. 24079417

	 	
E-mail: jsummers@caldwellcc.com

	 	
Jason S. McManis

	 	
Texas State Bar No. 24088032

	 	
E-mail: jmcmanis@caldwellcc.com

 

43

	 	
Warren J. McCarty, III

	 	
Illinois State Bar No. 6313452

	 	
E-mail:  wmccarty@caldwellcc.com

	 	
CALDWELL CASSADY CURRY P.C.

	 	
2101 Cedar Springs Road, Suite 1000

	 	
Dallas, Texas 75201

	 	
Telephone: 214.888.4848

	 	
Facsimile: 214.888.4849

	 	 
	 	
Robert M. Parker

	 	
Texas State Bar No. 15498000

	 	
Email:  rmparker@pbatyler.com

	 	
R. Christopher Bunt

	 	
Texas State Bar No. 00787165

	 	
Email:  rcbunt@pbatyler.com

	 	
Charles Ainsworth

	 	
Texas State Bar No. 00783521

	 	
Email:  charley@pbatyler.com

	 	
PARKER, BUNT & AINSWORTH, P.C.

	 	
100 East Ferguson, Suite 1114

	 	
Tyler, Texas 75702

	 	
Telephone: 903.531.3535

	 	
Telecopier: 903.533.9687

	 	 	
	 	
ATTORNEYS FOR PLAINTIFF LEIDOS, INC.

	 	
	 	/s/	
	 	
ANDY TINDEL (Lead Counsel)

	 	
State Bar No. 20054500

	 	
MT2 LAW GROUP

	 	
Mann | Tindel | Thompson

	 	
112 East Line Street, Suite 304

	 	
Tyler, Texas 75702

	 	
Telephone: 903.596.0900

	 	
Facsimile: 903.596.0909

	 	
Email: atindel@andytindel.com

	 	 
	 	
Of Counsel:

44

	 	
DONALD URRABAZO

	 	
California State Bar No. 189509

	 	
ARTURO PADILLA

	 	
California State Bar No. 188902

	 	
URRABAZO LAW, P.C.

	 	
2029 Century Park East, 14th Floor

	 	
Los Angeles, CA 90067

	 	
Direct: 310.388.9099

	 	
Facsimile: 310.388.9088

	 	
Email: durrabazo@ulawpc.com

	 	
Email: apadilla@ulawpc.com

	 	 
	 	
ATTORNEYS FOR PLAINTIFF LEIDOS, INC., FORMERLY KNOWN AS SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

 

CERTIFICATE OF SERVICE

 

The undersigned certifies that the foregoing document was filed electronically in compliance with Local Rule CV-5(a).  As such, this document was served on all counsel who have consented to electronic service on this 17th day of December, 2014.  Local Rule CV-5(a)(3)(A).

 

	
 

	
/s/ Jason D. Cassady

	
 

	
 

	
Jason D. Cassady

	
 

 

45

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION

	
VIRNETX, INC. and

LEIDOS, INC.,

 

Plaintiffs,

 

v.

 

MICROSOFT CORPORATION,

 

Defendant.

 

	
§

§

§

§

§

§

§

§

§

§

§

	
 

 

 

 

Civil Action No. 6:13-cv-00351

 

 

JURY TRIAL DEMANDED

[PROPOSED] ORDER OF DISMISSAL

On this day came on to be heard the parties’ Joint Motion to Dismiss, and the Court having considered same, is of the opinion the dismissal should be GRANTED.

 

IT IS THEREFORE ORDERED that all claims asserted against Microsoft Corporation (“Microsoft”) in this action are dismissed with prejudice.

 

  Microsoft’s affirmative defenses and counterclaims of (i) non-infringement and invalidity and (ii) unenforceability in this action are dismissed without prejudice.  Microsoft’s other counterclaims in this action are dismissed with prejudice.

 

Each party shall bear its own costs, expenses, and attorney’s fees.

 

This is a final judgment.

 

 

46EX-4.53

 Exhibit 4.53 

English Translation 
 Convertible
Bond Subscription Agreement 
 Signed on July 16, 2014 

MoboTap Inc. (“the Company”) 

Glory Loop Limited (“the Investor”) 

 Convertible Bond Subscription Agreement 

Contents 
  

							
	Detailed Information		 	4	  
		
	General Provisions		 	6	  
			
	1		 Definitions and Interpretations
		 	6	  
	1.1		 Definitions
		 	6	  
	1.2		 Interpretations
		 	6	  
	1.3		 Headlines
		 	7	  
			
	2		 Subscription of Convertible Bonds
		 	7	  
	2.1		 Subscription of Convertible Bonds
		 	7	  
	2.2		 Consideration
		 	7	  
			
	3		 Conditions Precedent
		 	7	  
	3.1		 Conditions Precedent to the Investor’s Closing
		 	7	  
	3.2		 Conditions Precedent to the Company’s Closing
		 	8	  
	3.3		 Reasonably Best Efforts
		 	9	  
			
	4		 Representations and Warranties
		 	9	  
	4.1		 The Company’s Representations and Warranties
		 	9	  
	4.2		 The Investor’s Representations and Warranties
		 	10	  
			
	5		 Closing
		 	10	  
	5.1		 Closing Time and Place
		 	10	  
	5.2		 The Company’s Obligations to the Closing
		 	10	  
	5.3		 The Investor’s Obligations to the Closing
		 	11	  
			
	6		 Termination
		 	11	  
	6.1		 Termination of the Agreement
		 	11	  
	6.2		 Termination Effect
		 	11	  
	6.3		 Surviving Clauses
		 	12	  
			
	7		 Confidentiality
		 	12	  
	7.1		 Confidentiality Obligations
		 	12	  
	7.2		 Allowed Disclosure
		 	12	  
			
	8		 Announcement
		 	13	  
			
	9		 Notice and Other Communications
		 	13	  
	9.1		 Form – All Communications
		 	13	  
	9.2		 Form – E-mail Communications
		 	13	  
	9.3		 Delivery
		 	13	  
	9.4		 Change of Communication Materials
		 	14	  
	9.5		 Effective Delivery
		 	14	  
			
	10		 General Provisions
		 	14	  
	10.1		 Severability
		 	14	  

  

			
	Convertible Bond Subscription Agreement		2

							
	10.2		 Complete Agreement
		 	14	  
	10.3		 Transfer
		 	14	  
	10.4		 Discretion of Exercising Rights
		 	15	  
	10.5		 Failure to Exercise Rights or Failure to Promptly Exercise Rights
		 	15	  
	10.6		 Cumulative Relief
		 	15	  
	10.7		 Alteration and Exemption
		 	15	  
	10.8		 Follow-up Actions
		 	15	  
	10.9		 Explanations
		 	15	  
	10.10		 Language
		 	15	  
	10.11		 Expenses
		 	15	  
	10.12		 Duplicates
		 	15	  
			
	11		 Governing Law and Settlement of Disputes
		 	16	  
	11.1		 Governing Law
		 	16	  
	11.2		 Settlement of Disputes
		 	16	  
	11.3		 Appointment of Agent
		 	16	  

					
		
	 Appendix I – Definitions
		 	18	  
		
	 Appendix II – Convertible Bonds and Terms and Conditions
		 	23	  
		
	 Signature Page
		 	34	  

  

			
	Convertible Bond Subscription Agreement		3

 Convertible Bond Subscription Agreement 

Detailed Information 
 The Convertible Bond Subscription
Agreement (hereinafter referred to as the “Agreement”) is made by and between the following parties: 
  

					
	The Company		Name		MoboTap Inc.
			
			Company No.		CF254908
			
			Place of establishment		Cayman Islands
			
			Address		P.O. Box 613 GT, 4th Floor Harbour Centre, George Town, Grand Cayman KY1-1107, Cayman Islands
			
			Fax		027-87782005-8056
			
			E-mail		tfliu@bainainfo.com
			
			Attn.		Tiefeng Liu
			
	The Investor		Name		Glory Loop Limited
			
			Company No.		1829105
			
			Place of establishment		British Virgin Islands
			
			Address		P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
			
			Fax		+86 010-6192 0961
			
			E-mail		legal@cyou-inc.com
			
			Attn.		Legal Department

 The Company and the Investor are referred to as “both Parties” collectively and “either Party” severally
herein. 
 Whereas: 
  

	(A)	The Investor and the existing shareholders of the Company signed an investment agreement (the “Investment Agreement”) on July 16, 2014, under which the Investor agrees to purchase from the existing
shareholders and the existing shareholder agree to sell 138,015,466 shares of all types of the Company in total which such shareholders hold (including ordinary shares, Series A preferred shares and Series A-1 preferred shares), accounting for about
fifty-one percents (51%) of issued share capital of the Company (the “Equity Transaction”). 

  

			
	Convertible Bond Subscription Agreement		4

	(B)	According to the terms and conditions hereof and those about convertible bonds, the Company agrees to issue and the Investor agrees to subscribe the convertible bonds with the principal of US$30,000,000 (the
“Convertible Bonds”). After the full conversion of such Convertible Bonds, the Investor will hold 60% of all of outstanding shares of the Company (on the basis of full dilution, including the equity securities issued under any existing
employee stock option plan). 

  

	(C)	The price of the Convertible Bonds will be mainly used for the promotion of Dolphin Browser overseas and daily business operations of target companies, subsidiaries or affiliated companies controlled by the Company.

 Therefore, based on the aforesaid conditions, in consideration of both Parties’ covenants and undertakings hereunder and their
agreements upon the constraint force of the Agreement and being subject to the terms and consideration hereunder, both Parties reach the following agreement: 

  

			
	Convertible Bond Subscription Agreement		5

 Convertible Bond Subscription Agreement 

General Provisions 
  

	1	Definitions and Interpretations 

  

	1.1	Definitions 

 For the purpose of the Agreement, unless the context otherwise requires,
the terms shall have the meanings ascribed to them in Appendix I. 
  

	1.2	Interpretations 

 For the purpose of the Agreement, unless the context otherwise
requires, 
  

	 	(a)	Any reference to the Agreement includes the appendices or attachments hereof. 

  

	 	(b)	Any reference to any document (including the Agreement) refers to the document as revised, incorporated, supplemented, updated or replaced from time to time. 

 

	 	(c)	Unless otherwise explicitly stated, any reference to any clauses, appendices or attachments refers to the appropriate clauses in the body hereof, appendices and attachments to the Agreement. 

 

	 	(d)	“Including”, “e.g.” or any similar term refers to “including but not limited”. 

  

	 	(e)	Any reference to any party to the Agreement, any other agreements or documents includes the said party’s successors or replacers (including the party after replacement procedures) or permitted assignees.

  

	 	(f)	Any reference to any “ordinances”, “laws” or “regulations” includes all the ordinances, laws or regulations, all instruments and texts thereunder, as well as all of them as revised,
altered, incorporated, revised or replaced in part or in whole. 

  

	 	(g)	Any reference to “writing” or “written” includes any readable and non-temporary copied word modes, including e-mail and fax. 

 

	 	(h)	Any pronouns about gender or figure shall be deemed as having the attribute of masculine, feminine, singular or plural according to contents. 

 

	 	(i)	Unless the context otherwise requires, any obligations or undertakings fulfilled or made by more than one party hereunder shall be deemed as being fulfilled or made by such parties jointly and severally.

  

	 	(j)	Any time limit explicitly specified and/or the number of days calculated from some date or the date of any known action or matter shall exclude the current day when calculating the said time limit and/or the number of
days. 

  

			
	Convertible Bond Subscription Agreement		6

	 	(k)	A day shall start from 0:00 midnight and end 24 hours later; any reference to time or date refers to Hong Kong time or date. 

  

	1.3	Headlines 

 The headline of each clause or sub-clause is set to facilitate reference
only, and does not impact the explanations or meanings of the Agreement. 
  

	2	Subscription of Convertible Bonds 

  

	2.1	Subscription of Convertible Bonds 

 Subject to the terms and conditions hereof, the
Investor agrees to purchase from the Company, and the Company agrees to issue and sell to the Investor the Convertible Bonds with the principal of US&30,000,000 and attached with terms and conditions. 

 

	2.2	Consideration 

 The Investment agrees to pay the Company the consideration for the
Convertible Bonds of US$30,000,000 (the “Consideration”). 
  

	3	Conditions Precedent 

  

	3.1	Conditions Precedent to the Investor’s Closing 

 The completion of closing
obligations of the Investor according to Article 5 hereof shall be subject to the following conditions or the written exemption issued by the Investor (in whole or in part, the said exemption may be subject to the terms and conditions probably
required by the Investor): 
  

	 	(a)	The Company has obtained all necessary internal approvals, including resolutions passed by the board of directors and the board of shareholders, to authorize and approve the conclusion of the Agreement and fulfilment of
obligations hereunder; 

  

	 	(b)	(If applicable) in terms of the Agreement and the transaction hereunder, the Company has obtained all necessary authorizations, consents and approvals from competent governmental agencies or relevant persons, and has
properly handled all archives and registrations necessary for the conclusion, delivery and performance of the Agreement and met other formal requirements according to appropriate ordinances or any agreement binding upon the Company or assets
thereof, so as to ensure that the Agreement and the transaction hereunder are legitimate and effective and have legal force; 

  

	 	(c)	The representations and warranties made by the Company and specified in Article 4 hereof shall be true, accurate, complete and exhaustive at the date hereof and every day before closing, just as such representations and
warranties are just made at that time; 

  

	 	(d)	All documents specified in Article 5.2 hereof shall have been properly delivered to the Investor; 

  

	 	(e)	The Company shall have fulfilled and followed all obligations and conditions which are required hereunder to be fulfilled or followed at the time of or before closing; 

  

			
	Convertible Bond Subscription Agreement		7

	 	(f)	The written consents of the shareholders and all founders of the Company have been obtained for the Agreement, the transaction contemplated hereunder as well as the exemption of their rights relating to the execution
and performance of the Agreement under the shareholder agreement (including any anti-dilution right or right of first refusal); 

  

	 	(g)	The company controlled by founders shall have signed a share pledge agreement (the “Share Pledge Agreement”), to pledge the ordinary shares held by it (the number thereof equals nine percents (9%) of
outstanding shares of the Company at that time, excluding Convertible Bonds issued hereunder) to the Investor as the guarantee for the Company’s obligations under Convertible Bonds; 

 

	 	(h)	Founders have signed the individual warranty deed of founders; and 

  

	 	(i)	There are no court orders effective at that time or issued to prohibit the transaction contemplated hereunder. 

  

	3.2	Conditions Precedent to the Company’s Closing 

 The completion of closing
obligations of the Company according to Article 5 hereof shall be subject to the following conditions or the written exemption issued by the Company (in whole or in part, the said exemption may be subject to the terms and conditions probably
required by the Company): 
  

	 	(a)	The Investor has obtained all necessary internal approvals, including resolutions passed by the board of directors and the board of shareholders, to authorize and approve the conclusion, delivery and performance of the
Agreement and other transaction documents; 

  

	 	(b)	(If applicable) in terms of the Agreement and the transaction hereunder, the Investor has obtained all necessary authorizations, consents and approvals from competent governmental agencies or relevant persons, and has
properly handled all archives and registrations necessary for the conclusion, delivery and performance of the Agreement and met other formal requirements according to appropriate ordinances or any agreement binding upon the Investor or assets
thereof, so as to ensure that the Agreement and the transaction hereunder are legitimate and effective and have legal force; 

  

	 	(c)	The representations and warranties made by the Investor and specified in Article 4 hereof shall be true and complete at the date hereof and at the time of closing, just as such representations and warranties are just
made at the date of closing; 

  

	 	(d)	The Investor shall have fulfilled and followed all obligations and conditions which are required hereunder to be fulfilled or followed at the time of or before closing; and 

 

	 	(e)	There are no court orders effective at that time or issued to prohibit the transaction contemplated hereunder. 

  

			
	Convertible Bond Subscription Agreement		8

	3.3	Reasonably Best Efforts 

 According to the terms and conditions hereunder, either party
hereto shall make reasonably best efforts to take or cause any other entity to take all actions in the most pragmatic way to conclude all further instruments and assist and cooperate with the other party to complete all matters necessary for the
completion and validation of the transaction contemplated hereunder according to applicable laws (both Parties understand that either Party is not obliged to grant any or other exemptions because of this clause). 

 

	4	Representations and Warranties 

  

	4.1	The Company’s Representations and Warranties 

 The Company hereby makes the
representations, warranties and undertakings to the Investor that the following expressions are true and accurate and not misleading in all aspects at the date hereof: 
  

	 	(a)	The Company was established and effectively subsists under laws of the place of establishment thereof; 

  

	 	(b)	The Company has all rights to execute the Agreement, can exercise its rights and fulfil its obligations hereunder, and has taken all corporate actions to conclude and deliver the Agreement and fully fulfil its
obligations and complete the transaction contemplated hereunder; 

  

	 	(c)	After being formally authorized, executed and delivered by the Company, the Agreement shall constitute an agreement effective for and bonding upon the Company and be compulsorily enforceable for the Company according to
clauses hereof, but shall be subject to bankruptcy matters; 

  

	 	(d)	As for the execution, delivery and performance of the Agreement, the Company does and will not (i) be required to obtain the consent or approval of any competent governmental authority or any third party;
(ii) violate any of the following provisions in any material respect: (A) any applicable laws or regulations or any order or decree of any governmental authority validating at the date hereof, or (B) any constitutional document; or
(C) any agreement to which the Company is a party or which constraints the Company or any assets thereof; 

  

	 	(e)	Convertible Bonds will obtain the legal authorization of the Company at the time of issue, and will constitute direct, common, non-subordinated, unconditional and unsecured debt repayment obligations of the Company at
the time of issue and delivery according to the Agreement and relevant terms and conditions, and such obligations have the equal sequence of rights and interests and do not have any privilege; 

 

	 	(f)	Converted shares will be ordinary shares with the consideration fully paid at the time of issue and no taxes able to be levied, be allotted and issued properly and legally, and have the equal sequence of rights and
interests with existing ordinary shares in all aspects. Save as otherwise stipulated by applicable laws, converted shares shall not have any claim, mortgage, charge, easement, encumbrance, lease, covenant, mortgage right, right of lien and pledge at
the time of issue; and 

  

			
	Convertible Bond Subscription Agreement		9

	 	(g)	Other representations and warranties made by all warrantors (except Forest, Matrix, Sequoia and Qualcomm) (as defined in the Investment Agreement) specified in Appendix IV to the Investment Agreement. For the purpose of
this paragraph, such representations and warranties shall constitute a part hereof, just as they are specified hereunder. 

  

	4.2	The Investor’s Representations and Warranties 

 The Investor hereby makes the
representations, warranties and undertakings to the Company that the following expressions are true and accurate and not misleading in all aspects at the date hereof: 
  

	 	(a)	The Investor was established and effectively subsists under laws of the place of establishment thereof; 

  

	 	(b)	The Investor has all rights to execute the Agreement, can exercise its rights and fulfil its obligations hereunder, and has taken all corporate actions to conclude and deliver the Agreement and fully fulfil its
obligations and complete the transaction contemplated hereunder; 

  

	 	(c)	After being formally authorized, executed and delivered by the Investor, the Agreement shall constitute an agreement effective for and bonding upon the Investor and be compulsorily enforceable for the Investor according
to clauses hereof, but shall be subject to bankruptcy matters; 

  

	 	(d)	As for the execution, delivery and performance of the Agreement, the Investor does and will not (i) be required to obtain the consent or approval of any competent governmental authority or any third party;
(ii) violate any of the following provisions in any material respect: (A) any applicable laws or regulations or any order or decree of any governmental authority validating at the date hereof, or (B) any constitutional document; or
(C) any agreement to which the Investor is a party or which constrains the Investor or any assets thereof; 

  

	 	(e)	The Investor has enough funds to pay the Consideration necessary for the subscription of Convertible Bonds in full. 

  

	5	Closing 

  

	5.1	Closing Time and Place 

 Closing shall be conducted in the form of virtual electronic
closing within five (5) business days after the closing of the Equity Transaction and all conditions specified in Article 3 hereof being met or exempted from (as the case may be), or be conducted according to other date, time, place and form
agreed by both Parties in writing, provided that all conditions specified in Article 3 hereof are met or exempted from (as the case may be). 
  

	5.2	The Company’s Obligations to the Closing 

 At the time of or before closing, the
Company shall deliver or cause other persons to deliver the following documents to the Investor: 
  

	 	(a)	the copies of resolutions of the board of directors and shareholders of the Company about matters such as approval of execution, performance and delivery of the Agreement (including but not limited to the issue of the
Convertible Bonds); if any director signing the resolution of the board of directors or any shareholder signing the resolution of shareholders is a corporate body, then, the copies of the resolutions of the board of directors and shareholders of the
said corporate body which approve the execution, performance and delivery of the Agreement and authorize the signature of the resolution of the board of directors or shareholders of the Company; 

  

			
	Convertible Bond Subscription Agreement		10

	 	(b)	(i) a certified copy of the Certificate of Incumbency issued by company registration agency and (ii) a certified copy of the Certificate of Good Standing issued by Cayman Company Registry at the closing date or
three (3) business days before; 

  

	 	(c)	an original of the Share Pledge Agreement concluded by the company controlled by founders as well as other documents which shall be delivered according to the said agreement; 

 

	 	(d)	an original of the certificate of Convertible Bonds attached with terms and conditions; 

  

	 	(e)	a certified (i.e. singed by directors of the Company) copy of bonds register issued by the Company and updated, which specifies that the Convertible Bonds have been registered under the name of the Investor;

  

	 	(f)	an original of the individual warranty deed signed by founders; and 

  

	 	(g)	an original of agency appointment letter issued by the Company according to Article 11.3 hereof and properly signed by the agency to receive the said appointment. 

 

	5.3	The Investor’s Obligations to the Closing 

 At the time of closing, the Investor
shall (a) pay the Company the Consideration to the designated bank account in US dollars and in the form of spot T/T two (2) business days before the closing day, and the Investor shall provide the Company with the certification of the T/T
document; or (b) pay the Company in any other form agreed by both Parties. 
  

	6	Termination 

  

	6.1	Termination of the Agreement 

 The Agreement and the transaction contemplated hereunder
may be terminated or waived by both Parties in the following circumstances: 
  

	 	(a)	Approved by the Company and the Investor in writing; or 

  

	 	(b)	If closing does not occur within 30 days after the date hereof or any other date agreed by both Parties, the Agreement shall be terminated automatically. 

 

	6.2	Termination Effect 

 Subject to Article 6.3 hereof, if the Agreement is terminated
according to Article 6.1 hereof or applicable laws, either party shall have no right to make any claim against the other Party concerning expenses, damages, compensations or other matters, except the claim made by the observant party against the
breaching party concerning the violation of any clause hereof before termination. 

  

			
	Convertible Bond Subscription Agreement		11

	6.3	Surviving Clauses 

 Articles 6 (Termination), 7 (Confidentiality), 8 (Announcement), 9
(Notice and Other Communications), 10 (General Provisions) and 11 (Governing Law and Settlement of Disputes) shall survive upon the termination of the Agreement. 
  

	7	Confidentiality 

  

	7.1	Confidentiality Obligations 

 The secrets, non-public or private information hereunder or
relating to the following matters obtained or acquired due to negotiation about and/or conclusion of the Agreement (no matter how such information is stored and delivered or both Parties exchange it in any way) are confidential information (the
“Confidential Information”). Either Party hereto shall strictly keep it confidential, and shall not arbitrarily disclose or use it except in the conditions set out in Article 7.2: 

 

	 	(a)	existence and clauses of the Agreement; 

  

	 	(b)	negotiation relating to the Agreement; and 

  

	 	(c)	business activities conducted by either Party to the Agreement, the said Party or any related party thereof. 

  

	7.2	Allowed Disclosure 

 In spite of Article 7.1, either Party to the Agreement may disclose
or use the Confidential Information only in the following circumstances and scope: 
  

	 	(a)	The disclosure or use is required by any applicable laws, any rules of the exchange on which shares of either Party are listed, or any governmental agency, but the Party concerned shall notify the other Party of such
requirement in time so that the other Party has a change to raise an objection to such disclosure or use, if any; or negotiate with the other Party about the time and contents of such disclosure or use; 

 

	 	(b)	The disclosure or use is necessary because of any legal procedures arising from the Agreement or any relevant agreement, or the disclosing Party discloses tax matters thereof to the tax authorities; 

 

	 	(c)	Regarding the conclusion or performance of the Agreement or any transaction hereunder, disclosure is made to the limited partner, shareholder, manager, director, employee, lawyer, accountant, financial consultant and
other agent or representative (the “Representatives”) of either Party who need to know the Confidential Information, provided that such Representatives shall be subject to the constraints set out in Article 7 hereof in receiving such
information; 

  

	 	(d)	Such Confidential Information may be obtained through open channels (except for the information disclosure incurred by the violation of confidentiality agreement (if any) or the Agreement); or 

 

	 	(e)	The other Party approves the disclosure or use in writing in advance. 

  

			
	Convertible Bond Subscription Agreement		12

	8	Announcement 

 Either Party agrees to negotiate with the other Party before any news is released
or any public statement is published with regard to the Agreement or the transaction contemplated hereunder, and will not release any news or publish any public statement before such negotiation, unless the release of any news or publication of any
public statement is required by any applicable laws or the rules of the exchange on which shares of either Party are listed. 
  

	9	Notice and Other Communications 

  

	9.1	Form – All Communications 

 Save as otherwise explicitly stipulated hereunder, all
notices, certifications, approvals, exemptions and other communications (the “Communications”) relating to the Agreement shall: 
  

	 	(a)	be executed in writing in Chinese or English; 

  

	 	(b)	be sent upon affixing of signature of sender (or authorized signatory thereof); and 

  

	 	(c)	be marked with persons listed in Detailed Information, or be marked according to the latest change notice, if the receiver has sent a change notice. 

 

	9.2	Form – E-mail Communications 

  

	 	(a)	E-mail communications do not need to meet the requirements in Article 9.1, but shall conform to the following provisions: 

  

	 	(i)	Any e-mail shall be written in Chinese or English; and 

  

	 	(ii)	Any e-mail shall be marked with the full name of sender. 

  

	 	(b)	All e-mail communications shall be deemed as being signed by the sender at the time of sending. 

  

	9.3	Delivery 

 All communications relating to the Agreement shall be delivered in any of the
following ways: 
  

	 	(a)	being sent to the address of the receiver listed in Detailed Information by hand; 

  

	 	(b)	being posted to the address of the receiver listed in Detailed Information by local ordinary mail or overseas air mail (if applicable) with postage prepaid; 

 

	 	(c)	being faxed to the fax number of the receiver listed in Detailed Information; or 

  

	 	(d)	being sent to the e-mail address of the receiver listed in Detailed Information by e-mail. 

  

			
	Convertible Bond Subscription Agreement		13

	9.4	Change of Communication Materials 

 If either Party needs to change communication
materials thereof listed in the Detailed Information, it may notify the other party of such a change in writing according to Article 9. The said change notice shall take effect on next business day after delivery or being deemed as having been
delivered effectively. Before the validation of such a change, the notice sent by the other Party to the said Party according to the information before change shall be legal and effective. 

 

	9.5	Effective Delivery 

 Unless otherwise specified, all communications relating to the
Agreement shall be deemed as being effectively delivered at the following time (whichever is the later): 
  

	 	(a)	when the receiver receives such communications; 

  

	 	(b)	in any following circumstances: 

  

	 	(i)	if communications are sent by local ordinary mail, three (3) days after being sent; 

  

	 	(ii)	if communications are sent by overseas air mail, three (7) days after being sent; 

  

	 	(iii)	if communications are sent by fax, the time indicated on the sending report after successful sending of an entire document; or 

  

	 	(iv)	if any communication is sent by e-mail and the sender does not receive automatic information indicating that the e-mail is not sent to the designated e-mail address, the time when the sender successfully sends the
e-mail; otherwise, the time when the receiver receives the e-mail. 

  

	10	General Provisions 

  

	10.1	Severability 

 If any clause hereof is identified as ineffective, illegal or enforceable
in whole or in part within a jurisdiction to some extent, the said part shall be deemed as severable from the other part. The remaining clauses hereof shall be valid and effective fully, and the effectiveness or enforceability of the said part shall
not be impacted within any other jurisdiction. Any non-effective, enforceable or illegal clause hereof shall be deemed as being replaced by another effective and enforceable clause, and the said clause shall have the effectiveness the closest to the
original meaning of the replaced clause. The severability in this clause will not be effective, if it affects the nature of the Agreement or violates public policies. 
  

	10.2	Complete Agreement 

 The Agreement constitutes an entire agreement between both Parties
about the subject matter hereof, and replaces all prior written or oral understandings or agreements about the said matter. 
  

	10.3	Transfer 

 The Agreement shall be binding upon and enforceable for both Parties,
successors and permitted assignees thereof. Save as otherwise approved by the other Party in writing in advance, either Party hereto shall not transfer any of its rights or obligations hereunder, but the Investor shall have the right to transfer all
or part of its rights hereunder to any affiliated party, without the consent of the other Party. 

  

			
	Convertible Bond Subscription Agreement		14

	10.4	Discretion of Exercising Rights 

 Save as otherwise stipulated hereunder, either Party
hereto may exercise its rights, claim reliefs, give a consent or refuse to give a consent in any way it deems appropriate (including imposing conditions). 
  

	10.5	Failure to Exercise Rights or Failure to Promptly Exercise Rights 

 Save as otherwise
stipulated hereunder, either Party’s partial exercise, failure to exercise or delay in exercising rights or reliefs conferred by the Agreement or any applicable laws shall not be deemed as the said Party’s exemption from such such rights
or reliefs, or prevent or restrict the further exercise of such or other rights or reliefs according to the Agreement. 
  

	10.6	Cumulative Relief 

 The rights and reliefs conferred hereunder are those in addition to
other rights and reliefs conferred by laws, and can be exercised independently. 
  

	10.7	Alteration and Exemption 

 Save as otherwise allowed hereunder, written documents about
the amendment, change, waiver, cancellation or termination of the Agreement and clauses hereof shall be signed by both Parties. Clauses hereof or rights hereunder can be only exempted from by beneficiary in writing. 

 

	10.8	Follow-up Actions 

 Either Party agrees (and agrees to cause others) to conduct further
action or behaviour (including obtaining consents, signing or concluding any agreement, certificate and instrument, completing and signing any other instrument or document, as well as archiving or filing any document at any competent governmental
authority) upon reasonably request by the other Party for the following purposes: 
  

	 	(a)	so that the said Party and other relevant persons are bound by the Agreement; 

  

	 	(b)	so that the Agreement becomes legal, valid and legally binding; or 

  

	 	(c)	in order to perform the Agreement, complete the subject matter hereunder and the transaction contemplated hereunder. 

  

	10.9	Explanations 

 All explanation rules unfavourable to either Party for the rules are
drafted by the said Party and depend on all or part of the Agreement shall not be applicable to the Agreement. 
  

	10.10	Language 

 The Agreement is executed in Chinese. 

 

	10.11	Expenses 

 The Company and the Investor shall undertake respective expenses and
expenditures. 
  

	10.12	Duplicates 

 Both Parties may sign one or more duplicates of the Agreement, and all
signed duplicates shall constitute an entire instrument with legal force. 

  

			
	Convertible Bond Subscription Agreement		15

	11	Governing Laws and Settlement of Disputes 

  

	11.1	Governing Laws 

 The Agreement shall be governed and interpreted by Hong Kong laws,
except provisions about conflict of laws. 
  

	11.2	Settlement of Disputes 

  

	 	(a)	Any disputes incurred by or relating to the Agreement, including disputes about its conclusion, validity or termination (the “Disputes”) shall be settled through arbitration after either Party sends an
arbitration notice (the “Arbitration Notice”) to the other Party. 

  

	 	(b)	The Disputes shall be awarded by Hong Kong International Arbitration Center (the “HKIAC”) at Hong Kong in accordance with Hong Kong International Arbitration Center Administered Arbitration Rules (the
“Rules”) valid at the time of sending the arbitration notice. The number of arbitrators shall be three (3), with one designated by the Company, one by the Investor, and one jointly by the arbitrators designated by both Parties. Both
Parties shall respectively designate arbitrators within in fifteen (15) days after sending the arbitration notice, otherwise such arbitrators will be designated by the chairman of the HKIAC. If designated arbitrators do not designate the third
arbitrator within fifteen (15) days after the second arbitrator is designated, the third arbitrator shall be designated by the chairman of the HKIAC and have legal practicing qualifications in Hong Kong. 

 

	 	(c)	Arbitration procedures shall be conducted in English. If the Rules run counter to any clause of Article 11.2, including the clause about designation of arbitrators, the said clause of Article 11.2 shall prevail.

  

	 	(d)	Either party of arbitration procedures shall cooperate with the other party, and fully disclose and provide materials and documents relating to the said arbitration procedures upon request by the other Party, unless the
said party undertakes binding confidentiality obligations. 

  

	 	(e)	The award of the arbitral tribunal shall be final and binding upon both Parties, and the dominant party may apply to the court with jurisdiction to execute the said award. 

 

	 	(f)	The arbitral tribunal shall award the dispute submitted by either Party for arbitration in strict accordance with the substantive laws of Hong Kong (except the rules of conflict of laws), and shall not apply any other
substantive laws. 

  

	 	(g)	If possible, before the constitution of the arbitral tribunal, either Party of the dispute shall have the right to seek preliminary compulsory relief from the court with jurisdiction. 

 

	 	(h)	In the course of the arbitral tribunal making an award for a dispute, both Parties shall continually perform the Agreement, except the disputable part under arbitration. 

 

	11.3	Appointment of Agent 

  

	 	(a)	The Investor irrevocably appoints Changyou.com HK Limited, of Room D, 26/F, Legend Tower, 7 Shing Yip St., Kwun Tong, Hong Kong, as its agent receiving legal procedure documents or arbitration documents (the
“Agent”) to receive all legal procedure documents or arbitration documents relating to the Agreement on behalf of the Investor. 

  

			
	Convertible Bond Subscription Agreement		16

	 	(b)	If the Agent cannot continually work as the Agent of the Investor for any reason, the Investor shall appoint any other person in Hong Kong for substitution, and notify the Company of such a change in time.

  

	 	(c)	The Investor agrees that any legal procedure documents or arbitration documents properly delivered by the Agent are deemed as having been delivered to the Investor fully and properly. 

 

	 	(d)	The Company irrevocably appoints Changyou.com HK Limited, with the company No. 1596431 and of Room C, 21/F, CMA Building, No. 64 Connaught Road, Central, Hong Kong, as its agent receiving legal procedure
documents or arbitration documents (the “Agent”) to receive all legal procedure documents or arbitration documents relating to the Agreement on behalf of the Company. 

 

	 	(e)	If the Agent cannot continually work as the Agent of the Company for any reason, the Company shall appoint any other person in Hong Kong for substitution, and notify the Investor of such a change in time.

  

	 	(f)	The Company agrees that any legal procedure documents or arbitration documents properly delivered by the Agent are deemed as having been delivered to the Company fully and properly. 

  

			
	Convertible Bond Subscription Agreement		17

 Appendix I – Definitions 
  

	 Term 
	Definition 

  

	 Series A preferred shares 
	refer to Series A preferred shares of the Company, with the book value of US$0.0001, and attached with rights and privileges specified in the constitutional documents of the Company. 

 

	 Series A-1 preferred shares 
	refer to Series A-1 preferred shares of the Company, with the book value of US$0.0001, and attached with rights and privileges specified in the constitutional documents of the Company. 

 

	 The Agreement 
	has the meaning ascribed to it in the “Detailed Information” part of the Agreement. 

  

	 Founders 
	refer to Yongzhi Yang, Tiefeng Liu, Na Zeng, Zhou Yu and Sen Li. 

  

	 Individual warranty deed of founders 
	refers to the warranty deed signed by founders about obligations of founders, Baina and all group companies for the transaction contemplated under the warranty investment agreement as well as the obligations about convertible bonds to be
fulfilled by a Cayman company. 

  

	 Company controlled by founders 
	Baina Inc., a company with limited liability established in accordance with laws of the British Virgin Islands, with its registered address at Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands.

  

	 Representatives 
	have the meaning ascribed to them in Article 7.2 (c) of the Agreement. 

  

	 Agent 
	has the meaning ascribed to it in Article 11.3 (a) of the Agreement. 

  

	 Consideration 
	has the meaning ascribed to it in Article 2.2 of the Agreement. 

  

	 Both Parties or either Party 
	have/has the meaning ascribed to them or it in the “Detailed Information” part of the Agreement. 

  

	 Company 
	has the meaning ascribed to it in the “Detailed Information” part of the Agreement. 

  

	 Share pledge agreement 
	has the meaning ascribed to it in Article 3.1 (g) of the Agreement. 

  

	 Equity transaction 
	has the meaning ascribed to them in Paragraph (A) of recitals of the Agreement. 

  

	 Confidential information 
	has the meaning ascribed to it in Article 7.1 hereof. 

  

			
	Convertible Bond Subscription Agreement		18

	 Group companies 
	refer to the Company and any wholly-owned or non-wholly-owned subsidiaries (having the definition ascribed to them in the Companies Ordinance (Chapter 622, Laws of Hong Kong) (for the avoidance of any doubt, including all companies in China,
Hong Kong subsidiaries, the US subsidiary and Japanese subsidiary), and the “Group” refers to the collective reference of all group companies. 

  

	 Closing 
	refers to the completion of the transaction contemplated hereunder according to Article 5 of the Agreement. 

  

	 Closing date 
	refers to the current day of closing. 

  

	 Convertible bonds 
	have the meaning ascribed to them in Paragraph (B) of the “Detailed Information” part of the Agreement. 

  

	 The US 
	refers to the United States of America. 

  

	 US subsidiaries 
	MoboTap Inc., a company with limited liability established in accordance with Delaware laws of the US, with the registration No. 4858587 and its address at Delaware Corporations LLC, 800 Delaware Ave., the City of Wilmington, County of New
Castle, Delaware 19801. 

  

	 Bankruptcy matter 
	refers to the occurrence of any of the following circumstances: (a) the Company or any group company institutes any lawsuit, legal proceedings or other legal act: (i) to seek an award about insolvency or bankruptcy, or seek any relief
order or other order about approving any relevant case or legal procedures according to any current prevailing or future laws about bankruptcy, restructuring, arrangement, debt adjustment, debt relief, dissolution, insolvency or liquidation within
any jurisdiction; or (ii) to appoint any custodian or similar person for its properties or major properties, and the appointment is not cancelled or delayed within sixty (60) days later; (b) there is any lawsuit or legal procedures
instituted against the Company or any group company: (i) resulting in any relief order, or any award or appointment; or (ii) which is not cancelled within sixty (60) days after start; (c) the Company or any group company
(i) transfers all properties for the interests of creditor; (ii) holds meetings with the creditor to negotiate about the reorganization, adjustment or restructuring of debts; or (iii) explicitly expresses its consent, approval or
acquiescence of any of the aforesaid matters through action or inaction, or conducts any corporate or other action in order to make any of the aforesaid matters occur. 

 

	 Ordinary shares 
	refer to ordinary shares of the Company, with the book value of US$0.0001, and attached with rights and privileges specified in the constitutional documents of the Company. 

 

	 Person 
	refers to any individual, or company, partner, limited partner, wholly owned enterprise, business, property, trust, corporate or incorporated body, joint venture enterprise, company with limited liability, joint stock company, government (or the
agent or branch thereof) or the entity of any other type. 

  

	 Japan 
	refers to Japan. 

  

			
	Convertible Bond Subscription Agreement		19

	 Japanese subsidiary 
	refers to Dolphin Browser Inc., a company with limited liability established according to Japanese laws, with its registration No. 011001091188 and address at 4-3-17, Toranomon, Shinjuku, Tokyo Shinjuku. 

 

	 Applicable laws 
	refer to, for the purpose of any person, any constitution, laws, regulations, ordinances, rules, the rule of law, by-laws, approvals, orders, decrees, awards, guidelines, policies, requirements or other governmental restrictions applicable to
the said person, or any subsidiary or assets thereof, or the similar binding formulations, decisions, identifications or interpretations made by any governmental agencies for the aforesaid matters effective at the execution date of the Agreement or
thereafter. 

  

	 Communications 
	have the meaning ascribed to them in Article 9.1 hereof. 

  

	 Investment agreement 
	has the meaning ascribed to them in Paragraph (A) of recitals of the Agreement. 

  

	 Investor 
	has the meaning ascribed to it in the “Detailed Information” part of the Agreement. 

  

	 Shareholder agreement 
	refers to the revised and restated shareholder agreement concluded according to the Investment Agreement by and between the company controlled by founders, the Investor, the Company, MoboTap Inc. Limited, Muse Entertainment Limited, MoboTap
Inc., Baina Zhiyuan (Beijing) Technology Co., Ltd., Baina Zhiyuan (Chengdu) Technology Co., Ltd., Beijing Baina Information Technology Co., Ltd., Baina (Wuhan) Information Technology Co., Ltd. and all founders. 

 

	 Hong Kong 
	refers to Hong Kong Special Administrative Region of the People’s Republic of China. 

  

	 Hong Kong subsidiaries 
	refer to the following companies: 

  

			
	(a)		MoboTap Inc. Limited, a company with limited liability (invested or controlled by a natural person) established under the laws of Hong Kong, with its registration of 420100000199726 and address at 3/F, Building A2, Phase 1 of
Financial Harbor, No.77 Optical Valley Avenue, East Lake High-tech Development Zone, Wuhan;
		
	(b)		Dstore Technology Limited, a company established under the laws of Hong Kong, with its registration No. 2017908 and address at Flat E5, 9/F, Blk E, Wah Lok Industrial Centre (Phase II), Nos. 31-35, Shan Mei Street, Fo Tan,
Shatin, NT, Hong Kong; and
		
	(c)		Muses Entertainment Limited, a company with limited liability established under the laws of Hong Kong, with its registration No. of 1756288 and address at Flat 2, 19, Henan Building, 90-92 Jaffe Road, Wanchai, Hong Kong.

  

	 HKIAC 
	has the meaning ascribed to them in Article 11.2 (b) of the Agreement. 

  

			
	Convertible Bond Subscription Agreement		20

	 Terms and conditions 
	refer to the terms and conditions of issue of convertible bonds specified in Appendix II below. 

  

	 USD or dollar 
	refers to the legitimate currency of the US. 

  

	 Converted shares 
	refer to shares converted into ordinary shares according to terms and conditions and issued to the Investor. 

  

	 Business day 
	refers to any calendar day other than Saturday, Sunday or any statutory holiday of China, British Virgin Islands and Hong Kong. 

  

	 Constitutional documents 
	refer to, for the purpose of any corporate body, its memorandum and articles of association, or other similar organizational and governing documents. 

  

	 Dispute 
	has the meaning ascribed to them in Article 11.2 (a) of the Agreement. 

  

	 Bonds register 
	refers to the register kept by the Company according to terms and conditions in its registration office to record the registration and transfer of convertible bonds. 

 

	 Arbitration rules 
	have the meaning ascribed to them in Article 11.2 (b) of the Agreement. 

  

	 China 
	refers to the People’s Republic of China, excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan only for the purpose of the Agreement. 

 

	 Companies in China 
	refer to the following companies: 

  

			
	(a)		Baina Zhiyuan (Beijing) Technology Co., Ltd., a company with limited liability (solely funded by Hong Kong, Macau or Taiwan legal person) established under the laws of China, with its registration No. 110000450183446 and
address at South 2-1-6, Block A, # 1 Plant, No.5 A Xueyuan Road, Haidian District, Beijing;
		
	(b)		Baina Zhiyuan (Chengdu) Technology Co., Ltd., a company with limited liability (solely funded by Hong Kong, Macau or Taiwan legal person) established under the laws of China, with its registration No. 510100400043032 and
address at Rooms 102-112, 1/F, Building No.1, Zone A, Tianfu Software Park, No. 765 Middle Tianfu Avenue, Chengdu Hi-tech Zone, Sichuan;
		
	(c)		Beijing Baina Information Technology Co., Ltd., a company with limited liability (invested or controlled by a natural person) established under the laws of China, with its registration No. 110108012702434 and address at South 2-1-7,
Block A, # 1 Plant, No.5 A Xueyuan Road, Haidian District, Beijing;
		
	(d)		Baina (Wuhan) Information Technology Co., Ltd., a company with limited liability (invested or controlled by a natural person) established under the laws of China, with its registration No. 420100000199726 and address at 3/F,
Building A2, Phase 1 of Financial Harbor, No.77 Optical Valley Avenue, East Lake High-tech Development Zone, Wuhan;

  

			
	Convertible Bond Subscription Agreement		21

			
		
	(e)		Wuhan Xingyu Science and Technology Co., Ltd. (Company Registration No. 420100000376093), whose registered address is located at Room 2, 5/F, Building 1, Phase 3 Guannan Fuxing Medicine Park, No.58 Optical Valley Avenue, East
Lake High-tech Development Zone, Wuhan;
		
	(f)		Chengdu Xingyu Science and Technology Co., Ltd. (Company Registration No. 510109000353845), whose registered address is located at No.39, 6/F, Unit 2, Building 1, No.222 Tianren Road, Hi-tech Zone, Chengdu;
		
	(g)		Wuhan Hualian Chuangke Science and Technology Co., Ltd. (Company Registration No. 40100000123236), whose registered address is located at Room 401, Block A, 3 # Building, SBI Venture Street, Dongxin Road, East Lake High-tech
Development Zone, Wuhan;
		
	(h)		Beijing Anzhuoxing Science and Technology Co., Ltd. (Company Registration No. 110108010360883), whose registered address is located at Room 4037, Huaqingyuan Hotel 1A, 1B and 1C, Building 13, Huaqingjia Park, Dongsheng Zone,
Wudaokou, Haidian District, Beijing; and
		
	(i)		Shanghai Andepurui Network Science and Technology Co., Ltd. (Company Registration No. 310115002064099), whose registered address is located at Room 112, Building 2, No.700 Shangfeng Road, Pudong New Area, Shanghai.

  

			
	Convertible Bond Subscription Agreement		22

 Appendix II – Convertible Bonds and Terms and Conditions 

No.:              

MOBOTAP INC. 
 (A company with
limited liability established under the laws of Cayman Islands) 
 Initial bond issue date:
                                        
 
 Initial conversion price (subject to the adjustment hereunder): US$0.4926984 per share 

Zero-coupon convertible bonds totalling US$30,000,000 and maturing on
                , 2019 
 The redeemable convertible bonds (the
“Bonds”) are one type of a series of redeemable convertible bonds formally authorized and legally issued by MoboTap Inc. MoboTap Inc. is a company established in Cayman Islands, with its registered office at P.O. Box 613 GT, 4th Floor
Harbour Centre, George Town, Grand Cayman KY1-1107, Cayman Islands (the “Company”). The Bonds are interest-coupon (0%) convertible bonds and mature at the fifth (5th) anniversary after the initial bond issue date (the Bonds and other
convertible bonds of the said series are referred to as the “Convertible Bonds” collectively). 
 For value received, the Company undertakes that
it will pay or have been paid the principal of US$30,000,000 specified hereunder to the holder of the Bonds or allowed assignee thereof (the “Holder”) to redeem the Bonds at the fifth (5th) anniversary after the initial bond issue
date or the date of advance repayment of the Bonds required or allowed hereunder (the “Maturity Date” ). The Bonds shall be subject to the following supplementary provisions: 

 

	1	Definitions 

 For this purpose, save as otherwise agreed by the Bonds, (a) the meanings of terms used for
the Bonds are the same as those of terms used in the Subscription Agreement; and (b) the following terms have the following meanings: 
 Holder has the
meaning ascribed to it in the second paragraph hereof. 
 Initial bond issue date refers to the first date of issue of bonds, in spite of any transfer of
any bonds and the number of instruments which may be issued to certify the said bonds. 
 Initial conversion price refers to the initial conversion price
used at the initial bond issue date, i.e. US$0.4926984 per ordinary share, in spite of any future adjustment made according to Article 5. 
 Warranty
document refers to share pledge agreement. 
 Maturity Date has the meaning ascribed to them in the second paragraph hereof. 

  

			
	Convertible Bond Subscription Agreement		23

 Corporate securities refer to ordinary shares and shares into which other types of securities may be reclassified
or converted later. 
 Corporate security equivalents are the collective reference of options and convertible securities. 

Share delivery date has the meaning ascribed to it in Article 4.4 (b) hereof. 

Key personnel refer to Yongzhi Yang, Tiefeng Liu, Zhou Yu, Sen Li, Huazhen Tan, Yan Yu, Hongliang Li, Jitang Hu and Chaodong Wu. 

Convertible securities refer to any shares and securities which may be converted, exercise or exchanged into any corporate securities, except options. 

Convertible Bonds have the meaning ascribed to them in the first paragraph hereof. 

Transaction documents refer to all documents relating to the subject transactions of the Agreement or the investment agreement, including but not limited to
the Agreement, investment agreement, shareholder agreement (as defined in the investment agreement), share pledge agreement and individual warranty of founders (as defined in the investment agreement). 

Options refer to any rights, warrants or options used to subscribe or purchase any securities or convertible securities of the Company. 

Subscription agreement refers to the convertible bond subscription agreement signed by and between the Company and the investor on [*] [*], 2014, including
the amendment, alteration or supplementation to it from time to time. 
 Initial public offering refers to the initial public offering on any recognized
securities exchange (including but not limited to New York Stock Exchange, the Stock Exchange of China and London Stock Exchange) according to applicable laws and the listing rules of recognized securities exchange. 

Event of default has the meaning ascribed to it in Article 8.1 hereof. 

Reserved shares refer to the ordinary shares reserved by the Company for employee stock option plan. 

Employee stock option plan refers to the employee stock option plan adopted on December 28, 2011 as well as the US appendix adopted on May 4, 2013.

 Bonds have the meaning ascribed to them in the first paragraph hereof. 

Conversion price has the meaning ascribed to it in Article 4.3 hereof. 

Conversion date has the meaning ascribed to it in Article 4.1 (b) of the Bonds. 

Notice of conversion has the meaning ascribed to it in Article 4.1 (b) of the Bonds. 

 

	2	Interest 

  

	2.1	No interest 

 The Bonds are zero-coupon bonds subject to the conditions set out in Article 8.2
hereof and are not attached with rights of payment of interests. 

  

			
	Convertible Bond Subscription Agreement		24

	3	Registration, Transfer and Replacement of the Bonds 

  

	3.1	Bonds register 

  

	 	(a)	The Company shall keep bonds register in its registration office, i.e. the register used by the Company to record the registration and transfer of the Bonds, and record the name and address of Holder and each approved
assignee. Holder shall notify the Company of any change in the name or address, if any, and the Company shall promptly record the said information into the bonds register after receiving the said notice. 

 

	 	(b)	The Bonds are registered bonds. Save as otherwise stipulated by applicable laws, registered Holders shall be absolute owners of the Bonds for all purposes (no matter whether the Bonds are outstanding or there is any
notice about ownership, trust arrangement or other rights, or any notice about any mark (except the countersign for transfer) on the physical bonds) or the loss or theft of the Bonds), and nobody needs to bear any legal liability for the
identification of the said Holder as actual owners. 

  

	3.2	Transfer 

  

	 	(a)	Holder may transfer the Bonds at its discretion at any time. 

  

	 	(b)	The transfer completed as per the following procedures shall come into effect immediately: (i) properly filling in transfer instrument; (ii) submitting the originals of the transfer instrument and physical
bonds to the office of the Company at the registered address; and (iii) paying all amounts payable for the transfer (including but not limited to relevant taxes or charges levied by competent governmental authorities). 

 

	 	(c)	The Company shall post or register the mail (with postage prepaid) of new bonds (originals of physical bonds) within five (5) business days after receiving the transfer instrument, or prepare the originals of
physical bonds at the office at the registered address for the demand of new holder. 

  

	3.3	Replacement 

 If any Bonds are lost, stolen, damaged, stained or destroyed, the Holder may
replace them at the office of the Company at the registered address subject to the requirements of all applicable laws, and the Holder shall pay for all rights relating to the replacement of the Bonds, and provide evidences, guarantee, indemnity or
other things for the replacement as reasonably required by the Company. Destroyed and stained bonds shall be returned to the Company at the replacement of the Bonds. 
  

	4	Conversion 

  

	4.1	Freewill offering 

  

	 	(a)	At any time from the initial bond issue date to the time of complete payment of the Bonds, the Holder may choose to convert all or part of outstanding principal of the Bonds into ordinary shares. 

  

			
	Convertible Bond Subscription Agreement		25

	 	(b)	The Holder shall convert the Bonds by sending a conversion notice to the Company, and definitely specify the principal of the Bonds to be converted as well as the validation date of the conversion (the “Conversion
Date”). The form of the said notice is recorded in Annex A (the “Notice of Conversion”). If the Notice of Conversion does not definitely specify the Conversion Date, the Conversion Date shall be the date when the Notice of Conversion
is deemed as having been delivered. 

  

	 	(c)	After receiving the Notice of Conversion, the Company shall promptly notify the Holder of the number of converted shares to be issued to the Holder according to the Notice of Conversion by phone and fax.

  

	 	(d)	In order to validate the conversion, the Holder shall not be required to actually hand over the originals of the Bonds to the Company, unless all the principal of the Bonds has been converted. According to this
provision, the effect of the provision is reducing the outstanding principal of the Bonds by applicable conversion amount. The Holder and the Company shall make a record of the converted principal of the Bonds as well as the Conversion Date.

  

	 	(e)	Once receiving the Bonds, the Holder and any assignee thereof recognize and agree that due to the conditions in Article 4.1, the outstanding and unconverted principal may be less than the marked par value of the Bonds
after partial transfer of the Bonds. 

  

	4.2	Automatic transfer 

 Although there is any provision hereunder, at the date of initial public
offering, the outstanding principal of the Bonds shall be deemed as being automatically converted into ordinary shares at an applicable conversion price. When automatic conversion occurs, any conversion right conferred in Article 4 shall cease. For
the purpose of automatic conversion, the Conversion Date shall be the date of automatic conversion. 
  

	4.3	Conversion price 

 Subject to the adjustment specified in Article 5, conversion price shall be
as the same as the initial conversion price (the “Conversion Price”). 
  

	4.4	Conversion procedures 

  

	 	(a)	The number of ordinary shares to be issued at the time of conversion depends on a quotient, which is obtained by dividing (i) the outstanding principal to be converted of the Bonds by (ii) currently effective
Conversion Price. 

  

	 	(b)	Within five (5) working days after each Conversion Date (the “Delivery Date of Shares”), the Company shall hand over or cause others hand over one or more certificates of converted shares to the Holder,
which shall specify the number of ordinary shares obtained by the conversion of the Bonds. 

  

	 	(c)	The Company undertakes that the aforesaid issued ordinary shares are officially authorized, effective issued and fully paid and are not taxed at the time of issue. 

  

			
	Convertible Bond Subscription Agreement		26

	 	(d)	At the time conversion hereunder, the Company does not need to issue the share certificates showing the number of ordinary shares. If the number of ordinary shares finally calculated is not an integer, the Company shall
increase or lower the said number to the closest integer of ordinary shares (when the decimal is 0.5 or above, the Company shall increase the number; otherwise, the Company shall lower the number). 

 

	 	(e)	For the share certificates issued to the conversion of the Bonds into ordinary shares, the Holder shall not be charged of any possible documentary stamp taxes or similar taxes at the time of issue or delivery of such
share certificates, provided that the Company does not need to pay any taxes probably payable for the transfer involved in the issue or delivery of such certificates at the time of conversion, and the Company does not need to issue or deliver such
share certificates, unless and until the Company requires that the person with the certificates issued has paid the said taxes to the Company or has submitted a certification (satisfactory to the Company) to the Company that the taxes have been
paid. 

  

	 	(f)	When (i) all the principal of the Bonds has been paid off and received, or (ii) all the Bonds have been converted according to clauses hereunder, all rights under the Bonds shall be terminated.

  

	5	Adjustment 

  

	5.1	Adjustment 

 The initial conversion price shall be adjusted according to the following items:

  

	 	(a)	Dividends and share split 

 When the Bonds are outstanding at any time, if the Company:
(i) pays dividends by securities or security equivalents of the Company or distributes dividends in any way (for the avoidance of any doubt, any ordinary shares issued by the Company for the conversion of the Bonds and the reserved shares
distributed under the employee stock option plan shall be excluded); (ii) splits the outstanding securities of the Company in order to increase the number of shares; or (iii) incorporates outstanding securities of the Company (including
the form reverse to share split) to decrease the number of shares, the Conversion Price shall be multiplied by a fraction, whose numerator is the number of outstanding securities of the Company immediate before the occurrence of the matter
(excluding treasury shares but including reserved shares of the Company), and denominator is the number of outstanding securities of the Company immediate after the occurrence of the matter (including reserved shares). Any adjustment made according
to the aforesaid conditions shall come into effect immediately after the record date of deciding the shareholders having rights to obtain dividends or allocations, and for the purpose of share split, incorporation or reclassification, shall come
into effect immediate after such matters come into effect. 
  

	 	(b)	Distribution of dividends in cash or allocations 

 When the Bonds are outstanding, if the
Company distributes dividends or conducts allocations for the holders of the securities of the Company in cash only, the Conversion Price shall be decreased accordingly, the decreased amount shall be obtained by multiplying the Conversion Price
effective at the record date of deciding the shareholders having rights to obtain the dividends or allocations by a fraction, whose (i) numerator is the Conversion Price effective at the said record date minus the cash amount to be distributed
per security of the Company; and (ii) denominator is the Conversion Price effective at the said record date. 

  

			
	Convertible Bond Subscription Agreement		27

	 	(c)	Adjustment to other dividends or allocations 

 If the Company distributes dividends or conducts
other allocations (excluding reserved shares distributed under the employee stock option plan) by allotting securities other than the securities of the Company at any time or from time to time (or setting a fixed record date of deciding the Holder
of securities of the Company having rights to obtain dividends or allocations), the Company shall make a reserve, so that when converting any Convertible Bonds, the Holder may obtain a certain number of such other securities, except the ordinary
shares to be allotted, just as the Holder converts the Convertible Bonds into ordinary shares immediately before the allotment of such other securities, which shall be subject to any other adjustment hereunder. 

 

	 	(d)	Waiver 

 If the Company sets a record date of deciding the shareholders having rights to obtain
dividends or allocations of the securities or any security equivalents of the Company according to conditions specified in Items (a), (b) and (c) of Article 5.1, and thereafter and before distributing the securities or any security
equivalents of the Company to the Holder, legally waives the plan of payment or delivery of dividends or allocations, the Conversion Price shall not be adjusted for the reason of setting the said record date. 

 

	 	(e)	Exceptions 

 In spite of other provisions, the Conversion Price shall not be adjusted for the
following items: 
  

	 	(i)	the securities or security equivalents of the Company issued to the key employees, consultants, personnel or directors of any group companies under the employee stock option plan; or 

 

	 	(ii)	the amounts paid by the Company under the Bonds. 

  

	5.2	Calculation 

 All calculation results under Article 5 shall be recorded to the closest one
(1) cent or 0.001 (as the case may be). For the purpose of Article 5, the number of securities of the Company issued and outstanding at a special date shall be the total of securities of the Company of different types or classes issued and
outstanding (including any treasury shares but including reserved shares of the Company). 
  

	5.3	Notifying the Holder 

 When the Conversion Price shall be adjusted according to any provision of
Article 5, the Company shall promptly send a notice to each Holder, specifying the Conversion Price after adjustment and a brief description of facts about necessity of the said adjustment. 

  

			
	Convertible Bond Subscription Agreement		28

	6	Redemption 

 During the period when the Convertible Bonds are outstanding, the Company shall not
redeem any of the Convertible Bonds in advance. 
  

	7	Status 

  

	 	(a)	The Bonds at least constitute the direct, unconditional, non-subordinated and secured debt repayment obligations of the Company, have the same sequence of rights and interests as all existing or future outstanding
secured debts of the Company, and are not attached with any priorities or privileges (except liabilities relating to taxation and other statutory special cases). 

  

	 	(b)	The Bonds, obligations of paying any amounts hereunder, and the Company, founders and obligations to be fulfilled by the Company under all transaction documents are guaranteed by guarantee documents. 

 

	 	(c)	The Bonds, existing or future certifications, other instruments about liabilities hereunder or any clause of agreements will not: (i) for the Company and the Holder, impair all debt repayment obligations mature and
payable by the Company to the Holder according to clauses hereof (such obligations are absolute and unconditional); (ii) intentionally or probably affect relevant rights of the Holder and creditors of the Company; or (iii) hinder the
Holder from exercising all rights, powers and reliefs allowed by applicable laws or otherwise allowed due to breach or any event of default specified hereunder. 

  

	8	Event of Default 

  

	8.1	Event of default 

 “Event of default” refers to, for the purpose of the Bonds, any of
the following events (no matter what reason for the event is and whether the event occurs voluntarily or involuntarily, due to the implementation of any law or according to any judgment, award or order of any court, or any order, regulation or rule
of any administrative or governmental authority): 
  

	 	(a)	Any of the following: (i) the principal of any bonds; or (ii) compensations for breach and other arrears under any bonds for the Holder, is overdue (no matter whether it is overdue on the Conversion Date or
Maturity Date, or because of requirements of advance repayment or any otherwise regulation). For the breach in Item (ii), the breach is not remedied within twenty (20) business days; 

 

	 	(b)	The Company fails to comply with or perform any other covenant or agreement under the Bonds, and if the breach can be remedied, the breach is not remedied within twenty (20) business days after the Holder sends a
notice of the breach to the Company; 

  

	 	(c)	Existing shareholders (as defined in the investment agreement), founders, the company controlled by founders or the Company breaches any obligation under transaction documents (including but not limited to all
undertakings, representations and warranties); 

  

			
	Convertible Bond Subscription Agreement		29

	 	(d)	The fulfilment of any obligation hereunder by the Company is or becomes illegal; 

  

	 	(e)	There is any existing, pending or potent litigation, arbitration or administrative or other judicial procedures against any group company, and such procedures are not put aside or revoked within 45 days after they are
instituted; 

  

	 	(f)	Any key employee resigns during the period when the Bonds (or any part thereof) are outstanding (except the circumstance that any key employee does not involve in a serious breach of law and regulations, or the Holder,
as a listed company, is dismissed by the Company for any reason unacceptable for market management), or any key employee seriously breaches the employment contract concluded by him and the Contract (including non-competition and confidentiality
agreements); or 

  

	 	(g)	The Company or any group company is subject to bankruptcy matters. 

  

	8.2	Relief measures for events of breach 

  

	 	(a)	If any event of breach occurs, the Holder of Convertible Bonds may select: 

  

	 	(i)	to require the Company redeeming the Bonds by the principle which are outstanding and are not converted multiplied by one hundred and thirty-eight percents (138%), and the Company shall redeem the Bonds in cash at the
aforesaid price; or 

  

	 	(ii)	to continually exercise other rights (including conversion rights) under the Bonds, but the principal which are outstanding and are not converted of the Bonds shall be deed as the amount calculated under Item
(a) (i) of this paragraph immediately, with other clauses unchanged. 

  

	 	(b)	The Holder of Convertible Bonds shall notify the Company of the aforesaid matters. If the Company shall pay any amount as per Item (a) (i) of this paragraph, the Company shall pay interests for the period from
the date of sending a notice to the time of irrevocably repayment of all amounts after the date of occurrence of any event of breach (the said event of breach results in the requirement of final advance repayment of the Bonds), with the interest
rate calculated by ten percents each year (10% p.a.), or the maximum value (subject to the lower one) allowed by applicable laws. After irrevocable full payment, the Holder shall exchange the Bonds in time or according to the instructions of the
Company. 

  

	 	(c)	The rights of the Holder of Convertible Bonds specified under this condition are cumulative, are additional and independent rights above other guarantees owned by the Holder at any time regarding the Convertible Bonds
(in whole or in part) and other ancillary rights, powers and reliefs, and do not exclude general rights enjoyed by the Holder under laws. 

  

			
	Convertible Bond Subscription Agreement		30

	9	Miscellaneous 

  

	9.1	Applicable clauses 

 Articles 1 (Definitions and Interpretations), 9 (Notice and Other
Communications), 10.1 (Severability), 10.5 (Failure to Exercise Rights or Failure to Promptly Exercise Rights), 10.7 (Alteration and Exemption), 10.9 (Explanations), 10.10 (Language) and 11 (Governing Law
and Settlement of Disputes) of the Convertible Bond Subscription Agreement are applicable to the Bonds, just as such clauses are all listed in the Bonds, and any reference to “the Agreement” in such clauses shall be deemed as reference
to “the Bonds” too (unless the context otherwise requires). 
  

	9.2	Taxes and other charges 

 All amounts which the Company shall pay for the Holder under the
Agreement (including but not limited to the principal and interests) shall not include taxes or other charges which shall be paid in Hong Kong or other jurisdiction according to the applicable laws of the said region at present or in future, and
shall not be reduced due to withholding. If the Company shall be reduced according to applicable laws or makes the amount paid to the Holder less than the amount receivable originally for any reason, the Company shall increase the amount so that the
amount received by the Holder equals the amount receivable originally. 
  

	9.3	Notice 

 All notices or other communications sent under the Agreement shall be sent by hand,
registered mail, fax or e-mail in writing. All such notices shall be marked with senders and receivers, and be marked as notices under the Bonds. If any notice is sent by hand, the notice shall come into effect at the time of personal delivery; if
by registered mail, the notice shall come into effect at the time marked on receipt; if by fax, the notice shall come into effect at the time indicated on the report about successful transmission of entire document automatically listed on the fax
(or similar machine); and, if by e-mail, the notice shall come into effect at the time of sending (if the sender receives the automatic information about failure of transmission, the notice shall come into effect at the time when the receiver
receives it). The notices delivered hereunder do not hinder the delivery means allowed by applicable laws. For the purpose of this clause, the details of delivery of notices are as below: 

If notice is sent to the Company: 
  

			
	Address:		P.O. Box 613 GT, 4th Floor Harbour Centre, George Town, Grand Cayman KY1-1107, Cayman Islands
	Fax:		027-87782005-8056
	E-mail:		tfliu@bainainfo.com
	Attn:		Tiefeng Liu

 If notices are sent to the Holder: refer to the materials of the Holder listed in the register. 

 

	9.4	Absolute obligations 

 Save as otherwise definitely stipulated, all clauses hereof shall not
change or damage the Company’s obligations (if applicable) of paying the principal of Convertible Bonds as per the time, place and interest rate specified hereunder, compensations for breach as well as interests arising therefrom (such
obligations are absolute and unconditional). The Bonds are the direct debt repayment obligations of the Company. The Bonds at least have the same status as other existing or future bonds issued according to clauses hereof. 

  

			
	Convertible Bond Subscription Agreement		31

	9.5	Successors and assignees 

 The Bonds shall be binding upon the successors of the Company or the
Holder, and can effective inherit interests thereof. The Holder may freely transfer the Bonds (in whole or in part) (the “Approved Assignees”). 

********************* 
 To witness hereof, the Bonds have
been legally executed at the date first written above in the form of covenant. 
  

					
	Executed, sealed and delivered by Yongzhi Yang in the form of covenant and on behalf of MoboTap Inc., a company established on the Cayman Islands, handling matters as authorized by the Company
according to laws of the said region, in the presence of the following person, and:		)
 )
 )

)
 )

)
 )

)
 )

)
 )
		  

[Corporate seal]
  

	Signature of witness		)	
	 		)
 )
	
	Name of witness (standardized form)		)		
			)		Signature of Yongzhi Yang
	 		)		
	Address of witness		)		

  

			
	Convertible Bond Subscription Agreement		32

 ANNEX A – Form of Notice of Conversion 

 

					
	 To
		 	:	  
	 Address
		 	:	  
	 Attn.
		 	:	  

 Dear Sir, 

Zero-coupon convertible bonds totalling US$30,000,000 and maturing on
                , 2019 (No. [*]) (the “Bonds”) 
 According
to the aforesaid Bonds, this text is a notice of conversion. Terms used hereunder have the same meanings as defined in the Bonds. 
 The signatory hereby
selects to convert the principal of the Bonds into ordinary shares according to relevant conditions, and the amount of principal and the conversion date are specified hereunder. If shares are issued to any non-signatory, the signatory shall pay all
relevant transfer taxes, and submit relevant share certificate and opinions as reasonably required by the Company according to provisions. Except the transfer taxes (if any), service fees will not be charged from the Holder for any conversion. 

 

			
	Principal of the Bonds		:     US$[30,000,000]
	Previously converted principal		:     US$[*]
	Principal to be converted under the Bonds		:     US$[*]
	Outstanding principal immediately after conversion		:     US$[*]
		
	Initial conversion price		:     US$[*] per share
	Price after adjustment of initial conversion price		:     US$[*] per share
	Number of ordinary shares		:     [*]

 For and on behalf of 

[    ] 

	
	   

	Name:
	Position:

  

			
	Convertible Bond Subscription Agreement		33

 Signature Page 
 To
witness hereof, both Parties conclude the Agreement at the date first written above. 
 Company 

 

					
	Executed by the authorized signature on behalf of MoboTap Inc., a company established on the Cayman Islands, handling matters as authorized by the Company according to laws of the said region, and in the presence of the following
person,		)
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)
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)
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)
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)
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)
		
	Name of authorized signatory (standardized form)		)
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)
		  
 The signatory undertakes that at
the time of execution, he has been fully authorized to execute the Agreement on behalf of MoboTap Inc.

			)		
			)		
			)		

  

			
	Signature Page of Convertible Bond Subscription Agreement		34

 Investor 
  

					
	Executed by the authorized signature on behalf of Glory Loop Limited, a company established on the British Virgin Islands, handling matters as authorized by the Investor according to laws of
the said region, and in the presence of the following person,		)
 )
 )

)
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)
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)
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)
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	Name of authorized signatory (standardized form)		)		 
			)
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 Execution by authorized signatory

			)		
			)		
			)		
			)		

  

			
	Signature Page of Convertible Bond Subscription Agreement		35

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