Document:

Exhibit 10.5

 

EXECUTION COPY

 

YDON HOLDINGS LTD.

 

SERIES A PREFERRED SHARE AND NOTE
PURCHASE AGREEMENT

 

APRIL 22, 2008

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

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

  	
   

  	
  2

  
	
   

  	
   

  	
  1.1.

  	
   

  	
  Authorization of the Shares, Note and Warrants

  	
   

  	
  2

  
	
   

  	
   

  	
  1.2.

  	
   

  	
  Purchase and Sale of the Shares and Note

  	
   

  	
  2

  
	
   

  	
   

  	
  1.3.

  	
   

  	
  Closing

  	
   

  	
  2

  
	
   

  	
   

  	
  1.4.

  	
   

  	
  Deliveries

  	
   

  	
  3

  
	
   

  	
   

  	
  1.5.

  	
   

  	
  No Security for the Note

  	
   

  	
  3

  
	
   

  	
   

  	
  1.6.

  	
   

  	
  Conversion of the Note

  	
   

  	
  3

  
	
   

  	
   

  	
  1.7.

  	
   

  	
  Use of Proceeds

  	
   

  	
  3

  
	
   

  	
   

  	
  1.8.

  	
   

  	
  Incurrence of Indebtedness; Issuance of Equity

  	
   

  	
  3

  
	
   

  	
   

  	
  1.9.

  	
   

  	
  Payments;

  	
   

  	
  3

  
	
   

  	
   

  	
  1.10.

  	
   

  	
  Defined Terms Used in this Agreement

  	
   

  	
  3

  
	
  2.

  	
   

  	
  Representations and Warranties of the Company

  	
   

  	
  6

  
	
   

  	
   

  	
  2.1.

  	
   

  	
  Organization, Good Standing, Corporate Power and
  Qualification

  	
   

  	
  6

  
	
   

  	
   

  	
  2.2.

  	
   

  	
  Capitalization

  	
   

  	
  6

  
	
   

  	
   

  	
  2.3.

  	
   

  	
  Subsidiaries

  	
   

  	
  7

  
	
   

  	
   

  	
  2.4.

  	
   

  	
  Authorization

  	
   

  	
  8

  
	
   

  	
   

  	
  2.5.

  	
   

  	
  Valid Issuance of the Shares and Conversion Shares

  	
   

  	
  8

  
	
   

  	
   

  	
  2.6.

  	
   

  	
  Governmental Consents and Filings

  	
   

  	
  8

  
	
   

  	
   

  	
  2.7.

  	
   

  	
  Litigation

  	
   

  	
  8

  
	
   

  	
   

  	
  2.8.

  	
   

  	
  Intellectual Property

  	
   

  	
  9

  
	
   

  	
   

  	
  2.9.

  	
   

  	
  Compliance with Other Instruments

  	
   

  	
  9

  
	
   

  	
   

  	
  2.10.

  	
   

  	
  Agreements; Actions

  	
   

  	
  10

  
	
   

  	
   

  	
  2.11.

  	
   

  	
  Certain Transactions

  	
   

  	
  10

  
	
   

  	
   

  	
  2.12.

  	
   

  	
  Rights of Registration and Voting Rights

  	
   

  	
  11

  
	
   

  	
   

  	
  2.13.

  	
   

  	
  Absence of Liens

  	
   

  	
  11

  
	
   

  	
   

  	
  2.14.

  	
   

  	
  Financial Statements

  	
   

  	
  11

  
	
   

  	
   

  	
  2.15.

  	
   

  	
  Changes

  	
   

  	
  12

  
	
   

  	
   

  	
  2.16.

  	
   

  	
  Employee Matters

  	
   

  	
  13

  
	
   

  	
   

  	
  2.17.

  	
   

  	
  Tax Returns and Payments

  	
   

  	
  14

  
	
   

  	
   

  	
  2.18.

  	
   

  	
  Insurance

  	
   

  	
  15

  
	
   

  	
   

  	
  2.19.

  	
   

  	
  Inventions Assignment Agreements

  	
   

  	
  15

  
	
   

  	
   

  	
  2.20.

  	
   

  	
  Permits

  	
   

  	
  15

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  2.21.

  	
   

  	
  Corporate Documents

  	
   

  	
  15

  
	
   

  	
   

  	
  2.22.

  	
   

  	
  Environmental and Safety Laws

  	
   

  	
  15

  
	
   

  	
   

  	
  2.23.

  	
   

  	
  Disclosure

  	
   

  	
  16

  
	
   

  	
   

  	
  2.24.

  	
   

  	
  Capitalization of Existing Subsidiaries

  	
   

  	
  16

  
	
  3.

  	
   

  	
  Representations and Warranties of the Purchaser

  	
   

  	
  16

  
	
   

  	
   

  	
  3.1.

  	
   

  	
  Authorization

  	
   

  	
  16

  
	
   

  	
   

  	
  3.2.

  	
   

  	
  Purchase Entirely for Own Account

  	
   

  	
  16

  
	
   

  	
   

  	
  3.3.

  	
   

  	
  Knowledge

  	
   

  	
  17

  
	
   

  	
   

  	
  3.4.

  	
   

  	
  Restricted Securities

  	
   

  	
  17

  
	
   

  	
   

  	
  3.5.

  	
   

  	
  No Public Market

  	
   

  	
  17

  
	
   

  	
   

  	
  3.6.

  	
   

  	
  Legends

  	
   

  	
  17

  
	
  4.

  	
   

  	
  Conditions to the Purchaser’s Obligations at Closing

  	
   

  	
  17

  
	
   

  	
   

  	
  4.1.

  	
   

  	
  Representations and Warranties

  	
   

  	
  17

  
	
   

  	
   

  	
  4.2.

  	
   

  	
  Performance

  	
   

  	
  17

  
	
   

  	
   

  	
  4.3.

  	
   

  	
  Compliance Certificate

  	
   

  	
  18

  
	
   

  	
   

  	
  4.4.

  	
   

  	
  Qualifications

  	
   

  	
  18

  
	
   

  	
   

  	
  4.5.

  	
   

  	
  Corporate/Capital Structure

  	
   

  	
  18

  
	
   

  	
   

  	
  4.6.

  	
   

  	
  Opinion of Company Counsel

  	
   

  	
  18

  
	
   

  	
   

  	
  4.7.

  	
   

  	
  Board of Directors

  	
   

  	
  18

  
	
   

  	
   

  	
  4.8.

  	
   

  	
  Indemnification Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.9.

  	
   

  	
  Shareholder Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.10.

  	
   

  	
  Employment Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.11.

  	
   

  	
  Inventions Assignment Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.12.

  	
   

  	
  Share Restriction Agreement

  	
   

  	
  18

  
	
   

  	
   

  	
  4.13.

  	
   

  	
  Note

  	
   

  	
  18

  
	
   

  	
   

  	
  4.14.

  	
   

  	
  Warrant

  	
   

  	
  18

  
	
   

  	
   

  	
  4.15.

  	
   

  	
  Memorandum and Articles

  	
   

  	
  19

  
	
   

  	
   

  	
  4.16.

  	
   

  	
  Secretary’s Certificate

  	
   

  	
  19

  
	
   

  	
   

  	
  4.17.

  	
   

  	
  Proceedings and Documents

  	
   

  	
  19

  
	
   

  	
   

  	
  4.18.

  	
   

  	
  Preemptive Rights

  	
   

  	
  19

  
	
   

  	
   

  	
  4.19.

  	
   

  	
  Business Plan

  	
   

  	
  19

  
	
   

  	
   

  	
  4.20.

  	
   

  	
  Diligence Review

  	
   

  	
  19

  
	
  5.

  	
   

  	
  Conditions of the Company’s Obligations at Closing

  	
   

  	
  19

  
	
   

  	
   

  	
  5.1.

  	
   

  	
  Representations and Warranties

  	
   

  	
  19

  
	
   

  	
   

  	
  5.2.

  	
   

  	
  Performance

  	
   

  	
  19

  
	
   

  	
   

  	
  5.3.

  	
   

  	
  Qualifications

  	
   

  	
  19

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
  6.

  	
   

  	
  Covenants

  	
   

  	
  19

  
	
   

  	
   

  	
  6.1.

  	
   

  	
  Payment of Principal, Premium and Interest

  	
   

  	
  20

  
	
   

  	
   

  	
  6.2.

  	
   

  	
  Conduct of Business and Maintenance of Existence

  	
   

  	
  20

  
	
   

  	
   

  	
  6.3.

  	
   

  	
  Maintenance of Properties

  	
   

  	
  20

  
	
   

  	
   

  	
  6.4.

  	
   

  	
  Change of Jurisdiction of Organization, Relocation
  of Business

  	
   

  	
  20

  
	
   

  	
   

  	
  6.5.

  	
   

  	
  Compliance with Law

  	
   

  	
  20

  
	
   

  	
   

  	
  6.6.

  	
   

  	
  Compliance with Transaction Documents

  	
   

  	
  20

  
	
   

  	
   

  	
  6.7.

  	
   

  	
  Payment of Obligations

  	
   

  	
  20

  
	
   

  	
   

  	
  6.8.

  	
   

  	
  Insurance

  	
   

  	
  21

  
	
   

  	
   

  	
  6.9.

  	
   

  	
  Future Subsidiaries and Future Affiliates

  	
   

  	
  21

  
	
   

  	
   

  	
  6.10.

  	
   

  	
  Investments

  	
   

  	
  21

  
	
   

  	
   

  	
  6.11.

  	
   

  	
  Restricted Payments

  	
   

  	
  21

  
	
   

  	
   

  	
  6.12.

  	
   

  	
  Mergers, Consolidations, Asset Dispositions and
  Acquisitions

  	
   

  	
  22

  
	
   

  	
   

  	
  6.13.

  	
   

  	
  Guarantees

  	
   

  	
  22

  
	
   

  	
   

  	
  6.14.

  	
   

  	
  Books, Records and Inspections; Information Rights

  	
   

  	
  22

  
	
   

  	
   

  	
  6.15.

  	
   

  	
  Transactions with Related Parties

  	
   

  	
  22

  
	
   

  	
   

  	
  6.16.

  	
   

  	
  ESOP

  	
   

  	
  22

  
	
   

  	
   

  	
  6.17.

  	
   

  	
  Notice of Developments

  	
   

  	
  22

  
	
   

  	
   

  	
  6.18.

  	
   

  	
  Further Assurances

  	
   

  	
  22

  
	
  7.

  	
   

  	
  Events Of Default; Remedies

  	
   

  	
  23

  
	
   

  	
   

  	
  7.1.

  	
   

  	
  Events of Default

  	
   

  	
  23

  
	
   

  	
   

  	
  7.2.

  	
   

  	
  Remedies

  	
   

  	
  23

  
	
  8.

  	
   

  	
  Miscellaneous

  	
   

  	
  24

  
	
   

  	
   

  	
  8.1.

  	
   

  	
  Survival of Warranties

  	
   

  	
  24

  
	
   

  	
   

  	
  8.2.

  	
   

  	
  Successors and Assigns

  	
   

  	
  24

  
	
   

  	
   

  	
  8.3.

  	
   

  	
  Governing Law

  	
   

  	
  24

  
	
   

  	
   

  	
  8.4.

  	
   

  	
  Counterparts

  	
   

  	
  24

  
	
   

  	
   

  	
  8.5.

  	
   

  	
  Titles and Subtitles

  	
   

  	
  24

  
	
   

  	
   

  	
  8.6.

  	
   

  	
  Notices

  	
   

  	
  24

  
	
   

  	
   

  	
  8.7.

  	
   

  	
  No Finder’s Fees

  	
   

  	
  25

  
	
   

  	
   

  	
  8.8.

  	
   

  	
  Attorneys’ Fees

  	
   

  	
  25

  
	
   

  	
   

  	
  8.9.

  	
   

  	
  Amendments and Waivers

  	
   

  	
  25

  
	
   

  	
   

  	
  8.10.

  	
   

  	
  Severability

  	
   

  	
  25

  
	
   

  	
   

  	
  8.11.

  	
   

  	
  Delays or Omissions

  	
   

  	
  25

  
	
   

  	
   

  	
  8.12.

  	
   

  	
  Entire Agreement

  	
   

  	
  25

  
	
   

  	
   

  	
  8.13.

  	
   

  	
  Dispute Resolution

  	
   

  	
  26

  
	
   

  	
   

  	
  8.14.

  	
   

  	
  No Commitment for Additional Financing

  	
   

  	
  26

  
	
   

  	
   

  	
  8.15.

  	
   

  	
  Confidentiality

  	
   

  	
  26

  

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
  Exhibit A

  	
  Memorandum of
  Association

  
	
   

  	
   

  
	
  Exhibit B

  	
  Articles of Association

  
	
   

  	
   

  
	
  Exhibit C

  	
  Disclosure Schedule

  
	
   

  	
   

  
	
  Exhibit D

  	
  Form of Note

  
	
   

  	
   

  
	
  Exhibit E

  	
  Form of Warrant

  
	
   

  	
   

  
	
  Exhibit F

  	
  Form of Employment
  Agreement

  
	
   

  	
   

  
	
  Exhibit G

  	
  Form of
  Indemnification Agreement

  
	
   

  	
   

  
	
  Exhibit H

  	
  Form of Inventions
  Assignment Agreement

  
	
   

  	
   

  
	
  Exhibit I

  	
  Form of
  Shareholders Agreement

  
	
   

  	
   

  
	
  Exhibit J

  	
  Form of Share
  Restriction Agreement

  
	
   

  	
   

  
	
  Exhibit K

  	
  Form of Legal
  Opinion of Company’s Counsel

  

 

iv

 

SERIES A PREFERRED SHARE AND NOTE
PURCHASE AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

AGREEMENT

 

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

 

 

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

 

1.1.      Authorization of the
Shares, Note and Warrants.

 

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

 

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

 

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

 

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

 

1.2.      Purchase and Sale of the
Shares and Note.

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

9

 

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

 

2.10.    Agreements; Actions.

 

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

 

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

 

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

 

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

 

2.11.    Certain Transactions.

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

2.16.            Employee Matters.

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

3.2.                  Purchase
Entirely for Own Account. The Shares, Note and Warrants to be acquired by
the Purchaser will be acquired for investment for the Purchaser’s own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any
Person to sell, transfer or grant participations to such Person or to any third
Person, with respect to any of the Shares, Note or Warrants. The Purchaser has
not been formed for the specific purpose of acquiring the Shares.

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

7.                          Events
Of Default; Remedies.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

8.                          Miscellaneous.

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

SIGNATURE PAGE FOLLOWS

 

26

 

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

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  YDON HOLDINGS LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Xin Ye

  
	
   

  	
  Name:

  	
  Xin Ye

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Ying Du Plaza A-9B

  
	
   

  	
   

  	
  48 Zhi Chun Rd.

  
	
   

  	
   

  	
  Haidian Dist, Beijing

  
	
   

  	
   

  	
  China 100086

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  VELTI PLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alexandros Moukias

  
	
   

  	
  Name:

  	
  Alexandros Moukias

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
					

 

 

SERIES A PREFERRED SHARE AND NOTE PURCHASE AGREEMENT

SIGNATURE PAGE

 

 

	
   

  	
  FOUNDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Xin Ye

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: Xin Ye

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Ying Du Plaza A-9B,

  
	
   

  	
   

  	
  48 Zhi Chun Rd.

  
	
   

  	
   

  	
  Haidian Dist, Beijing.

  
	
   

  	
   

  	
  China

  
	
   

  	
   

  
	
   

  	
  c/o

  
	
   

  	
   

  
	
   

  	
  /s/ Kaiyang Liu

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: Kaiyang Liu

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Ying Du Plaza A-9B,

  
	
   

  	
   

  	
  48 Zhi Chun Rd.

  
	
   

  	
   

  	
  Haidian Dist, Beijing
  100098

  
	
   

  	
   

  	
  China.

  

 

SERIES A PREFERRED SHARE AND NOTE PURCHASE
AGREEMENT

SIGNATURE PAGE

 

 

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

 

AMENDMENT 1

TO

SERIES A PREFERRED SHARE PURCHASE
WARRANT

BETWEEN

YDON HOLDINGS LTD.

AND

VELTI PLC.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

	
  Velti
  Plc.

  	
   

  	
  Ydon Holdings Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  David J. Powers

  	
   

  	
  By:

  	
  /s/ Xin Ye

  
	
  Name:

  	
  David
  J. Powers

  	
   

  	
  Name:

  	
  Xin
  Ye

  
	
  Title:

  	
  General
  Counsel

  	
   

  	
  Title:

  	
  CEOExhibit 10.8

 

Private &
Confidential

 

JOINT
VENTURE AND SHAREHOLDERS’ AGREEMENT

 

BETWEEN

 

Firefly e-Ventures Limited, a company duly incorporated
and existing under the Companies Act, 1956 (“Companies Act”),  having its registered office at 18-20, Kasturba Gandhi
Marg, New Delhi — 110 001, hereinafter: “FEVL”  which
expression shall, unless repugnant to the context or meaning thereof, be deemed
to mean and include its successors and permitted assigns, on the one side

 

AND

 

VELTI PLC., a company duly incorporated
under the laws of England and Wales (company reg. number 5552480), with its
registered office at 2, Paris Garden, Bastille Court, 4th floor, London, SE1 8ND, UK, hereinafter: “VELTI”  which expression shall,
unless repugnant to the context or meaning thereof, be deemed to mean and
include its successors and permitted assigns, on the
other side

 

This
joint venture and shareholders’ agreement (“Agreement”)  is made by and between FEVL and VELTI,  herein after
collectively referred to as the “Shareholders”,  or the “Parties” (and “Shareholder”  or “Party”  means any one of them), for
the purpose of setting up a Joint Venture Company in India.

 

WHEREAS FEVL is engaged, inter alia, in
the business of dissemination of news, knowledge and information of general
interest, running of job portal & social networking web-site through
the Internet, various other web based services.

 

WHEREAS VELTI is a world leader in
delivering mobile marketing and mobile advertising technologies for a plethora
of companies including mobile operators, advertising agencies, brands and media
groups.

 

 

 

WHEREAS FEVL and VELTI have had discussions
concerning the possibility of establishing a Joint Venture Company in India for
carrying of B2B Business;

 

WHEREAS the Parties are desirous of
forming a joint venture (the “Venture”)
through the incorporation of the Company (as defined below)
under the laws of India for the purposes set forth herein and are desirous of
fixing and defining between themselves their respective responsibilities,
interests, and liabilities in connection with the performance of the Venture
and their joint management of the Company.

 

Whereas
both parties have signed this JV agreement in their respective legal entities
but are fully open to replacing the current legal entity with another legal
entity, as may be advised to them on or before the formation of the Joint
Venture Company (as defined below), as long as the substitute legal entity is a
‘Affiliate’ of the respective equity.

 

NOW, THEREFORE, in consideration of the mutual
covenants and promises herein contained, the Parties, intending to be legally
bound, covenant, agree and certify as follows:

 

1.             FORMATION,
PURPOSE, NAME, AND PRINCIPAL PLACE OF BUSINESS

 

1.1          Formation
and Purpose

 

(a)           The Shareholders agree to pursue the Venture under
the laws of India in order to establish/conduct the business as defined below
(the “Business”)  and all other activities related to
and/or necessary in the context of the Business:-

 

 

(i)    The Venture endeavours to conduct business in field
of mobile/wireless communication providing Business to Business (B2B) solutions
in the areas defined below:

 

i.         Mobile marketing solutions
for brands;

ii.           Mobile / wireless
communication solution for enterprise/s; and

iii.            Value Added Service ((1) Large scale competition
where the Company shall underwrite the set-up charges etc) and platform
solutions (MCD, MMP etc) for mobile network/service providers

 

For
the sake of clarity “B2B Business”
means:

 

·      Where a
consumer brand requires a mobile campaign from any of the affiliates of FEVL;
such business shall be diverted to the Company (as defined below) and Company
shall receive 100% of that mobile revenue;

·      Where a
consumer brand requires a composite campaign from any of the affiliates of
FEVL; mobile campaign component shall be diverted to the Company and Company
shall receive 100% of the mobile portion of the revenue attributed to mobile;
and

·      Where a
consumer brand is contracted by the Company, Company shall receive 100% of the
revenue including the revenue from any mobile element of the campaign that uses
channels of any of the affiliates of the FEVL.

 

Any
other mobile related Business not stated above, will be considered as B2C
(Business to Consumer) Business.

 

The
Parties shall comply with the provisions of this Agreement and shall exercise
their respective rights and powers, including as shareholders of the Company,
in accordance with and so as to give effect to this Agreement.

 

(1)
In Velti’s Large Scale Competition offering, Velti and its partners usually
underwrites all the cost or set-up to minimise risk to
the customer. These costs include items such as Prizes, Operator costs, Media
costs, Ad production, Local Taxes and other agreed costs.

 

 

(b)           The Venture shall be organized in the form of a
Public Limited Company (the “Company”)
incorporated under the provisions of the Companies Act. The
Shareholders shall make best efforts to incorporate the Company as quickly as
possible. All the cost incurred by either of the Parties in relation to the
incorporation of the Company shall be reimbursed by the Company to such Party
post its incorporation. FEVL and VELTI, through themselves and their respective
nominees (who may be appointed for the purpose of satisfying the requirements
of the Companies Act in relation to the minimum number of shareholders in a
public limited company in India), shall hold 65% and 35% respectively in the
equity share capital of the Company. Any other expenditure (as may be agreed
between the parties in writing), incurred by either of the parties solely for
the purpose of the Company, post incorporation but before the commencement of
business will be reimbursed by the Company to the respective parties.

 

(c)           The Parties shall procure within ninety (90) days
from the Effective Date (i.e. the date both Parties have signed this agreement)
of this agreement, the Memorandum and Articles of Association (“Charter
Documents”) in the form that they reflect the provisions of this agreement in
the best possible manner. Notwithstanding that the Charter Documents may not give
full  effect to this
Agreement, each Party shall nevertheless be bound by the terms of this
Agreement enforceable as personal obligations binding on each Party. Further, if,
and to the extent that the Charter Documents do not incorporate the terms and
conditions of this Agreement, such omission shall not constitute a waiver of
all or any such terms or conditions of this Agreement.

 

(d)           As between the Parties, in the event of any
conflicts between the provisions of this Agreement and the Charter Documents,
the provisions in this Agreement shall prevail and the Shareholders shall
exercise their voting rights in the Board (as hereinafter defined) and at
general meetings of the Company to

 

 

give
effect to the provisions of this Agreement, including by amending the Charter
Documents.

 

(e)           The Shareholders shall execute such applications and
any documents as may be required by the laws of India or of any other state in
order for the Company to operate its Business and shall do all other acts and
things requisite for the continuation of the Venture as a joint
venture pursuant to applicable law.

 

1.2          Name

 

(a)           The Parties shall use their best efforts to procure
that the name under which the Company shall be incorporated is: “HT Mobile
Ltd.” or any other name as may be agreed between the parties subject to
approval of the Registrar of Companies, NCT of Delhi and Haryana, New Delhi and
undertake to furnish no-objection letters for the use of their respective names
in the proposed name of the Company.

 

(b)           FEVL and VELTI shall always remain the sole
owner/proprietor of their respective brand names and, subject to agreement
between the Parties, the Company shall not in any manner have any right to use
the brand names of a Shareholder if such Shareholder’s equity participation in
the Company is reduced below twenty per cent [20%] of the paid up equity share
capital of the Company.

 

1.3          Principal place of business

 

The
Company initially shall have its registered office and principal place of
business at New Delhi.

 

 

2.           TERM OF THE
VENTURE

 

This
Agreement shall become effective as of the date hereof and shall continue to
remain in effect until terminated in accordance with its provisions.

 

3.           REPRESENTATION
AND WARRANTIES OF SHAREHOLDERS

 

3.1         Each of VELTI and FEVL
represents and warrants individually to each other that:

 

(a)           it is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation;

 

(b)           neither the execution or delivery of the Agreement,
nor the consummation of the transactions contemplated herein, will conflict
with or result in a breach of, or give rise to a right of termination of, or
accelerate the performance required by, any terms of any agreement to which it
is now a party or constitute a default, or result in the creation of any lien,
charge or encumbrance, upon any of the assets or properties owned by it;

 

(c)           this Agreement, and the transactions contemplated
herein, have been duly authorized by all corporate action on its part and
constitutes its valid and binding obligations enforceable in accordance with
their terms;

 

(d)           there are no actions, suits or proceedings,
commenced or threatened against them before any court, board or governmental or
administrative agencies which, if adversely determined would materially affect
its business, properties, assets or condition, financial or otherwise, it’s
right to conduct their business, or it’s ability to enter

 

 

into
this Agreement and to consummate the transactions contemplated herein; and

 

(e)           it shall from the date hereof, do all such acts and
take all such measures that will benefit the Company and shall exercise its
rights strictly in accordance with the rights available to its under this
Agreement.

 

4.             CONTRIBUTIONS
OF THE SHAREHOLDERS

 

4.1          Initial
cash contribution to the Venture

 

(a)   The Shareholders have agreed
on an investment plan for the Venture (as provided at Exhibit A)  (“Investment
Plan”). According to the Investment Plan, the Company
requires an initial capital contribution of Rs. Forty Million (40,000,000).

 

The Shareholders shall
contribute the following cash amounts to the Company as share subscription
money for equity shares in the Company:

 

VELTI:           According to Investment Plan
Rs. Fourteen Million (14,000,000) as equity share capital.

 

FEVL:            According to Investment Plan
Rs. Twenty Six Million (26,000,000) as equity share capital.

 

(b)         The sum of the contributions i.e., Rs. Forty Million
(40,000,000) shall also be the initial Authorised Share Capital of the Company
and shall be paid up in installments as
per the need of the Company as stated in the Investment Plan or as decided by
the Board (as hereinafter defined) from time to time.

 

(c)          Except as otherwise required by law, further capital
contributions to the shareholding of the Company shall be jointly decided by
the Parties; except to

 

 

the
extent agreed herein, the Parties shall ensure that the equity ratio of 65:35
is maintained in the Company.

 

4.2          Allocations of net profits

 

Subject
to the provisions of applicable law and the discretion of the Board (as
hereinafter defined), the net profits of the Company shall
be allocated to the Shareholders according to their respective shareholdings in
the Company.

 

4.3          Additional contributions of
the Shareholders

 

4.3.1       Obligations
of FEVL:

 

a)   To support the
operations of the Company.

b)   To carry out all marketing
activities of Company.

c)   To arrange all customer
database for Company.

d)   To endeavour,
arrange media and advertisement through its group companies at most preferred
rate to this Company.

e)   To execute the
strategy for the Company as agreed with VELTI

 

4.3.2        Obligations of VELTI:

 

a)      Technology and
software support to the Company including but not limited to the following:

 

Provide
access to all current and future technologies, software, templates and upgrades
developed by VELTI (either directly and/or through any of its Affiliates)
during its normal course of business in any part of the world on the basis that
this does not contravene any legal obligations for current and future clients
for whom specific technology may have been developed i.e any existing
contractual agreements that Velti is committed to shall act as exceptions.
However, any incremental cost directly incurred to develop the forgoing
specifically for the Indian market may be charged to the Company.

 

 

b)    Product support
to the Company.

c)     To provide
technical support to the customers of the Company where the Company fails to
resolve the customer issues.

d)    To extend
technical training to the employees in relation to the various products of the
Company.

e)     Deputation of
technical staff in India for support to the Company. Any incremental cost on
such deputation or in relation thereto, as may be agreed between the parties in
writing shall be borne by the Company. In the first year from the effective
date of this agreement, such incremental cost shall not exceed Indian Rs. 37
Lacs (Rupees Thirty Seven Lacs Only).

f)     To provide
Hardware specifications and Connectivity specifications to support the
Company’s products and services.

g)    To provide
demonstrations where the Company is unable to do so. VELTI will recover
reasonable expenses, agreed by both parties, where it does so.

h)    To execute the
strategy for the Company as agreed with FEVL

i)      To support the
operations of the Company.

 

5.             MANNER
OF SHARE TRANSFER

 

The
Parties have entered into the Venture in good faith and with the intention of
jointly participating in the Venture and holding equity in the Company for a
period of at least three (3) years. For this purpose, the Parties agree
that for a period of at least three (3) years from the effective date of
this Agreement the transfer of shares in the Company by any Shareholder to any
third party shall only be in accordance with the following provisions.

 

5.1          Call option

 

(a)           Each Shareholder hereby
grants to the other Shareholder a right, exercisable at the other Shareholder’s
sole option, to call and acquire all the shares in the

 

 

Company
held by the first Shareholder by requiring the first Shareholder to sell and
transfer such shares to the other Shareholder and/or its Affiliates.

 

(b)           The call option of the other Shareholder shall be
exercisable only if the first Shareholder, intending to transfer shares in the
Company to a third party has identified a third party willing to acquire the
shares of such Shareholder in the Company.

 

(c)           The selling Shareholder shall first notify the other
Shareholder of such intention also notifying the details of the proposed
purchase price and other terms and conditions of the intended sale including
the identity of the third party acquirer.

 

(d)           The Shareholder having a right to call shall then,
within 4 weeks after receipt of such notification under clause 5.1(c), inform
the Shareholder intending to sell, in writing, whether or not it wishes to
exercise its call option. If the call option is exercised, the Shareholder
intending to sell shall be required to sell and transfer all its shares to the
other Shareholder and/or its Affiliates under the terms and conditions
specified in the notice referred to in clause 5.1(c).

 

For
the purposes of this Agreement, “Affiliate”
shall mean any person or entity that, directly or indirectly, controls,
is under common control with, or is controlled by a Shareholder. For purposes
of this definition, “control” (including, with its correlative meanings, the
terms “controlled by” and “under common control with”)
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of the interested person or
entity, whether through the ownership of voting securities or by contract or
otherwise.

 

 

5.2                               Co-sale (tag-along)
Rights

 

If
a Shareholder intends to sell all its shares in the Company to a third party
and has notified the other Shareholder according to clause 5.1(c), the other
Shareholder, who does not wish to exercise its right to call and purchase,
shall alternatively be entitled, by notice to the selling Shareholder within
the 4 week period referred to in clause 5.1(d), to require the selling
Shareholder to sell all the shares held by the other Shareholder to the third
party specified in the notice referred to in clause
5.1(b) in addition to the shares proposed to be sold by the selling Shareholder and
on the same terms and conditions as specified in such notice. If such third
party is not prepared to purchase all the shares of the other Shareholder, the
selling Shareholder shall not be permitted to sell any of the shares held by it
to such third party.

 

5.3                               Transfer
to Third Party, Violation of 5.1 and 5.2

 

(a)                                  If neither the right to call
and purchase is exercised pursuant to clause 5.1 nor the co-sale right pursuant
to clause 5.2, the selling Shareholder, may sell and transfer its shares to the
third party specified in the notice required by clause 5.1(c) provided that the
purchase price and the other terms and conditions of such sale and transfer
shall be those specified in the notice required by clause 5.1(c) and the
sale and transfer shall be completed within 2 months after the term to exercise
the call and purchase right or the co-sale right has expired. If such sale and
transfer is not completed within the said 2 months, the selling Shareholder
shall be prohibited from serving a new notice under clause 5.1(c) for a
period of 6 months from the expiry of the said 2 month period.

 

(b)                                 In the event of a breach of
provisions 5.1 or 5.2 above, the respective sale and transfer of shares shall
not be effective against the Company, the other Shareholder and the Party in
breach. The non-breaching Party shall be entitled to require the Company not to
register such transfer of shares in the Company’s registers of members and
share transfers or with the Registrar of Companies. The Party in breach shall
also be committed to pay to the other

 

 

Party
an amount equal to thirty per cent (30%) of the aggregate gross price at which
such shares are transferred. The Parties agree and acknowledge that such amount
is a genuine pre-estimate of the loss that will be suffered by the other Party
as a result of the actions of the breaching Party.

 

5.4                               Non-Application

 

(a)                                  The provisions
relating to transfers of shares contained in clauses 5.1 and 5.2 shall not
apply:

 

(i)                                          to any transfer of shares by
VELTI or FEVL to their respective Affiliates; or

 

(ii)                                       if a physical person becomes
a shareholder, to any transfer of shares of a deceased shareholder to his or
her heir, executor or administrator.

 

(b)                                 Whenever there is a transfer
of any shares pursuant to this clause 5.4 with the result that the provisions
of clause 5.1 and 5.2 do not apply, the transferor shareholder, in
(a) above, shall within 15 days of the transfer give notice to the other
Shareholders informing them of the share transfer, their compliance with the
provisions of clause 5.5 and the particulars on which that Shareholder is
relying to comply with the provisions of clause 5.4.

 

5.5                               Party to Joint Venture Agreement

 

(a)                                  Notwithstanding the
foregoing but subject to the provisions of clause 5.4(a), no Shareholder shall
sell, transfer or otherwise dispose of its shares (irrespective if to an
Affiliate or to a third party), if the proposed transferee shall not become a
party to this agreement by entering - at the time of the sale, transfer or
disposition - into a deed of adherence with the other shareholders and the
Company whereby the proposed transferee agrees to be bound by the

 

 

terms
hereof to the same extent and with the same rights and obligations as the other
shareholders and, upon delivery of the Deed of Adherence to the other
shareholders and the Company, to the extent the Company is concerned. Upon
failure by the acquiring party to execute and deliver the Deed of Adherence,
the transfer shall not be effective towards the Company and the other
Shareholder; moreover the acquiring party shall not be entitled to any voting
rights.

 

(b)                                 In
the event that a transfer takes place pursuant to clause
5.4(a) the remaining shareholders shall use their best efforts to procure
that the heir, executor or administrator as the case may be of the deceased
shareholder, executes and delivers the Deed of Adherence to the Company and the
other Shareholder. The failure, by the heir, executor or administrator to
execute and deliver the same to the Company and the other Shareholder within
ninety [90] days of the death of the original shareholder shall constitute an
automatic termination event under clause 10.4(c).

 

6.                                      CORPORATE GOVERNANCE

 

6.1                               Management

 

The
Company shall have a chief executive officer (“CEO”) and a chief  financial officer (“CFO”) (collectively the “Executive Officers”)  who, being not members of the Board
(as hereinafter defined), shall be in charge of day-to-day management of the
Company under the supervision and direction of the Board (as hereinafter
defined), and shall represent the Company. CEO shall be nominated by FEVL
whereas CFO will be nominated by VELTI .

 

 

6.2                               Employees

 

The
Parties agree that the Company will hire such people as are necessary for its
business.

 

6.3                               Board
of Directors

 

(a)                                  The Company shall have a
Board of Directors (the “Board”)  comprising of 5 members (the
“Directors”), two of whom
shall be appointed by VELTI for as long as VELTI together with its Affiliates
holds at least twenty six per cent (26%) or more of the issued shares in the
capital of the Company and three of whom shall be appointed by FEVL for as long
as FEVL together with its Affiliates holds at least fifty one per cent (51%) of
the issued shares in the capital of the Company. The Shareholders shall cast
their vote in such a manner as to cause the election of those nominees to the
Board. Each of the Shareholders agrees that the first Board members shall be,
until the next annual general meeting of the Company or annual resolutions of
the Company consented to in writing:

 

(i)                                     Mr. Priyavrat
Bhartia

(ii)                                  Mr. Shamit
Bhartia

(iii)                               Mr. Rajiv
Verma

(iv)                              Mr. Alexandros
Moukas ; and

(v)                                 Mr. Chris
Kaskavelis;

 

Each
Director, in the event he cannot attend a meeting of the Board, shall have the
right to appoint an alternate Director to represent him in such meeting. Such
alternate Director shall have all rights of the appointing Director.

 

The
Chairman (“Chairman”) of the Board shall be
nominated by FEVL at the first meeting of the Board. The Shareholders agree
that Mr. Priyavrat Bhartia shall be the first Chairman of the Board of the
Company.

 

 

(b)                                 In the event of a Board
position becoming vacant, the Shareholder who appointed the leaving Board
member shall, within ten business days after the occurrence of the vacancy,
nominate a new Board member to fill the vacancy. Upon notification of that new
nominee, the Board shall fill the vacancy with that new nominee (if necessary
in the circumstances, the Shareholders shall cast their vote confirming such
appointment in a shareholders’ meeting to be called for the appointment of the new
board member).

 

(c)                                  The quorum of a Directors’
meeting shall be 2 directors with at least one Director each from VELTI and
FEVL.

 

(d)                                 Any resolutions to be passed
by the Board shall be passed by a simple majority.

 

(e)                                  Notwithstanding the
provisions of Clause (d) above, so long as VELTI’s shareholding in the
Company does not fall below twenty six per cent (26%) of the total issued share
Capital of the Company, the Parties shall procure/ensure that no action shall
be taken or resolution be passed by the Board except with the affirmative vote
of nominee Director of VELTI present at the meeting, in respect of the following
matters (hereinafter the “Reserved Matters”), unless consent
in respect of specific items has been given in writing by such nominee Director
prior to the meeting or such consent is specifically waived in writing by
VELTI; other than any changes necessitated by changes in law or because of
statutory requirements.

 

(i)                                     Any consolidation, division
or subdivision, conversion, buyback or cancellation of all or any of the Shares
or any variation of rights attaching to such Shares.

 

(ii)                                  Making of any loan or
advance by the Company, including creation of mortgage, security, charge or any
third party interest on all or any of the assets of the Company or providing
any guarantee, indemnity or surety contract or any contract of similar nature
in excess of Rs 5,000,000/- (Rupees Five Million only).

 

 

(iii)                               Sale of the whole or any
substantial part of the Business and/or undertaking of the Company, including
any merger, demerger, consolidation of the Company with one or more entities.

 

(iv)                              Any change in accounting
policies.

 

(v)                                 Any change in the nature of
the Business of the Company or amendments to the Business Plan.

 

(vi)                              Acquisition, purchase or
subscription for any shares, loanstock, debentures or securities (or any
interest therein) or any other interest in any person/entity of the aggregate
value in excess of Rs. 2,000,000/- (Rupees Two Million only) in a single
transaction excluding any investment in mutual funds or fixed deposits.

 

(vii)                           Any liquidation or
dissolution of the Company.

 

(viii)                        Any contract or amendments
thereto between the Company and any shareholder or the Company except for the
contracts or amendments thereto made on arms length basis.

 

(ix)                                Capital expenditure in
excess of Rs. 20,000,000/- (Rupees Twenty Million only) in any given financial
year subject to individual vendor not exceeding Rs. 5,000,000 (Rupees Five
Million Only).

 

(x)                                   Raising any debt except for
hire-purchase agreements for financing of vehicles, computers or other assets
for Business purposes of the Company.

 

The
money values as prescribed herein above, in relation to the Reserve Rights
would be reviewed on yearly basis between the parties at the meeting of Board
of Directors.

 

(f)                                    The Board shall meet at
least once in every 3 months and at least 4 times in each year at the company’s
offices or another location including video conference mutually agreed upon by
the Board subject to the provisions of Companies Act. The meeting shall be
called by the Chairman of the Board, autonomously or upon request of at least
two Directors, by a notice, including the agenda setting out the items to be
covered at that meeting, to

 

 

be
received by each Director at least three (3) days before the respective
meeting. In the event an item is not included in the agenda, the Board shall be
permitted to deal with it only if all Directors present at that meeting agree
upon the discussion thereof.

 

6.4                               General
Meeting of the Shareholders

 

(a)                                  The general meeting of
shareholders of the Company may be held ordinarily and extraordinarily in
compliance with the Charter Documents and the Companies Act. The annual general
meeting shall be held at least once a year to approve the financial statements
within 6 months after the end of each fiscal year. An extraordinary general
meeting shall be held at any time deemed necessary for the activities of the
Company. Such meeting may be requested at any time by any Shareholder or
Shareholders who hold at least twenty six per cent (26%) of all of the issued
shares of the company.

 

(b)                                 General meetings of the
shareholders can be called by the Board of Directors. Regardless of its type,
and subject to the provisions of the Companies Act in respect of shorter
notice, invitations for all meetings of the general meeting of shareholders
shall be made by courier at least 30 days prior to the meeting date.
Invitations for the general meeting of the shareholders shall indicate the
place, date, time and agenda of the meeting. Topics not included in the agenda
shall not be discussed or decided upon.

 

(c)                                  The general meeting of the
shareholders shall be held at the registered office of the Company or at
another location mutually agreed upon by the Shareholders subject to applicable
law. Shareholders or their proxies present at the general meeting shall have
one vote for each share they hold or represent. The shareholders may be present
in person at the general meeting or have himself or herself represented through
a proxy-holder appointed from among the other shareholders or from among third
party persons.

 

 

Proxies
who are also shareholders are authorized, in addition to their own votes, to
use the voting rights of those they represent.

 

(d)                                 The meeting quorum of the
general meeting of shareholders shall not be reached without the presence of at
least one representative of each of the Shareholders. In the event the quorum
in a general meeting of shareholders, all of whom have been properly invited,
is not reached due to absent shareholders; then, the meeting shall stand
adjourned to the same day in the next week at the same time and place, or to
such other day at such other time and place, as the Board may determine. The
resolutions of the general meeting on decisions shall be adopted by the
affirmative vote of all shareholders.

 

(e)                                  The meetings of the general
meeting of shareholders shall be chaired by the Chairman, or in his absence,
the Vice Chairman of the Board of Directors, or in his absence, by any of the
Directors. Resolutions of the general meeting of shareholders must be recorded
in the minutes of the meeting. The Chairman shall sign the minutes of the
meeting. Votes shall be made by show-of-hands in the meetings of the general
meeting of shareholders.

 

(f)                                    In the event of disputes
arising between the Shareholders in the general meeting on matters that need to
be decided in order to keep the Company as an ongoing concern, and on the
assumption that the dispute is not settled amicably despite all good faith
efforts to resolve such matters within the context of the Board of Directors or
the General Meeting (“Dead Lock”), the
matter in dispute first shall be sent to a Special Shareholder Committee
consisting of Mr. Rajiv Verma from FEVL and Mr. Alexandros Moukas
from VELTI or their nominated successors, which shall conduct another good
faith effort to resolve such conflict amicably within a period of 4 weeks after
the matter has been sent to such committee. Only if such efforts fail, the
following procedure shall apply:

 

 

(i)                                     Any of the Shareholders
shall within 7 days after failure of the reconciliation effort by the Special
Shareholders Committee, give notice to the other Shareholder and the Board
stating that there is a Dead Lock and its relevant circumstances (“Dead Lock Notice”);

 

(ii)                                  Following the giving of a
Dead Lock Notice, FEVL and VELTI shall enter into another bona fide negotiation
with the intent that they shall as soon as reasonably practicable resolve the
Dead Lock or, alternatively, find another solution such as the purchase by one
of the other Party’s shares in the Company. Unless the Dead Lock is resolved by
other means, FEVL and VELTI shall respectively procure that the directors
nominated by each of them shall meet with a view to resolving the Dead Lock;

 

(iii)                               If at the end of a period of
2 months after the giving of a Dead Lock Notice, FEVL and VELTI have not
reached any agreement to resolve the Dead Lock or have not found another agreed
solution, then thereafter each Party (the “offeror”) shall
have the right to offer its entire shareholding in the Company to the other
Party (the “offeree”). The offer must contain
a specific purchase price for the respective shareholding. The offeree shall
then have the right to either accept the offer and purchase the respective
shareholding from the offeror or to request the offeror to acquire the
offeree’s shareholding in the Company at the same terms and conditions as
contained in the offer. If the offeree does not elect one of these two options
within 4 weeks after receipt of the offer, such failure to act shall constitute
an acceptance of the offer to purchase the shareholding
from the offeror. In the event both Parties are offering their respective
shareholding, the Party stating a higher purchase price for the shareholding in
its offer shall be

 

 

considered
to be the offeror. Should no Party make an offer according to this clause, the
Company shall be liquidated.

 

(iv)                              The Shareholders shall in
good faith endeavor to avoid a Dead Lock situation.

 

7.                                      ACCOUNTING
AND AUDITING

 

7.1                               Books

 

Separate
books of accounts shall be kept by the Executive Officers of the Company as
required by law. Any Shareholder may inspect such books, directly or through
consultants, upon reasonable notice and at any reasonable time, at its own
expense.

 

7.2                               Audits

 

The
annual financial statements shall be audited by a leading international auditing
firm agreed by the Parties. Moreover, periodic audits upon the Company’s books
may additionally be made at such time as required by a Shareholder by persons
designated by the same and at its own expenses, and copies of said audit shall
be furnished to all Shareholders.

 

7.3                               Reporting

 

The
Shareholders agree that the management of the Company shall provide the
Shareholders with all information any Shareholder individually reasonably
determines to be necessary, in particular monthly profit and loss statements,
cash flow statements and quarterly balance sheets.

 

 

8.                                      RESOLUTION OF DISPUTES

 

8.1                               Rules

 

All
disputes arising out of this Agreement between the Shareholders that are not
resolvable by good faith negotiations, shall be settled by arbitration under
the rules of the International Chamber of Commerce of Paris (ICC) before 3
arbitrators, one selected by each Shareholder, and the third selected by mutual
agreement between the arbitrators so selected by each Shareholder.

 

8.2                               Forum

 

The
place of arbitration shall be in India and the arbitration proceedings shall be
conducted in English. In so agreeing the Parties expressly waive their right,
if any, to a trial by jury of these claims and further agree that the award of
the arbitrators shall be final and binding upon them as though rendered by a
court of law and enforceable in any court having jurisdiction over the same.

 

8.3                               Application
of governing law

 

The
Parties expressly agree that notwithstanding the provisions of clause 11.3,
this clause 8 shall not be governed by Indian law and the Parties hereby
irrevocably waive any right to injunctive relief that they may have under the
laws of India.

 

8.4                               Costs

 

Each
Shareholder shall bear its own costs and expenses incurred in connection with
the arbitration. The fees and expenses of the arbitration proceedings and other
related expenses shall be equally borne by both Shareholders.

 

 

9.                                      NON-COMPETITION

 

(a)     During the term of this Agreement, if one of the
Parties or any of its Affiliates intends, directly or indirectly, to engage in
similar and/or substantially similar activities of the Company in India, it
shall make an offer to the other Party to realize the activity inside the Company.
Failing an agreement within three months, the Party proposing to engage in such
competitive activity shall immediately terminate all efforts to engage in such
activities.

 

(b)    VELTI individually represents and warrants that in
case VELTI (either directly and/or through any of its affiliates), wants to
enter into any other business agreement with any third party in India, then
Company will have the right of first refusal to enter into such agreement for
36 months from the effective date of this agreement. Company shall communicate
the decision to VELTI on the proposal within 4 weeks from the date of receipt.

 

(c)     This non-competition is valid for 24 months from the
commencement of this agreement and will automatically extend for a further 12
months on the 2nd anniversary of this agreement on the basis that minimum
revenue and Earnings before interest & tax of 80% of the two years
cumulative aggregated target, as laid out in Business Plan of Exhibit A or
the Business Plan as revised as per clause 6.3 (e) (v), has been generated
by the Company, for the duration of the contract as stated in Clause 5. After
36 months the non-compete clause will get extended for a further period of 12
month on each anniversary date. The Parties agree hereby that there shall be a
period of ninety (90) calendar days, as of agreement’s
effective date, during which the Parties can amend and update the figures in
the Business Plan, attached hereto as Exhibit A. (or its revision in
accordance with clause 6.3(e) (v)). For the sake of clarity, the Parties
agree that the two year target of this clause 9 (c) will be valid and
binding after ninety (90) calendar days, as of agreement’s effective date. On

 

 

the
contrary, if the minimum revenue described above has not been achieved, then
both parties will have the right to terminate the agreement by providing 6
months notice to the other party, after 24 months (after the initial ninety
(90) day Business Plan amendment period).

 

(d)    FEVL and VELTI undertake that, for a 6
months period after this Agreement is terminated, each of them shall not
directly or indirectly through their respective affiliates engage in similar
activities or offer or provide employment to, offer to contract with or entice
to leave any person who is a director, officer or key employee of, or
contractor to the Company or the other Party engaged in the work pursuant to
this Agreement without prior written consent of the other Party which may be
withheld in its absolute discretion.

 

(e)     It is agreed between the parties that the above-said
sub-clauses shall not be applicable to B2C (Business to Consumer) mobile value
added services which are being either carried on whether by FEVL and/or by any
of its affiliates presently or before entering this Agreement.

 

(f)       It is agreed between the parties that whilst Ansible
will be using the services of the Company to facilitate a launch in India, of
its mobile value added services business, future Ansible business in India will
use the Company on a best business effort basis and existing Ansible
contractual commitments shall be upheld.

 

10.                               TERMINATION

 

10.1                        Each of the
Shareholders shall be entitled to terminate this Agreement immediately by
notice to the other Party (“Defaulting Party”)
if any of the events set out below (“Event of
Default”) occur:

 

 

(a)                                  the other Party commits a
material breach of any of its obligations under this Agreement and fails to
remedy such breach (if capable of remedy) within [30] days after being given
notice; or

 

“Material
Breach” means breach of any representation and warranties and essence of the
obligations as contemplated in this Agreement e.g. breach of management
obligation of Company, breach of obligation related to contribution, transfer
of shares of the Company in violation of provisions of this Agreement and any
other breach of similar nature.

 

(b)                                 the other Party compounds or
proposes or enters into any re-organisation or other special arrangement with
its creditors or is unable to pay its debts within the meaning of the relevant
and applicable law; or

 

(c)                                  an encumbrancer lawfully
takes possession (and does not relinquish possession within [120] days) or an
administrative receiver or receiver is validly appointed of the whole or a
substantial part of the undertaking, property or assets of the other Party or
an administration order is made in respect of the other Party.

 

10.2                        Upon the
occurrence of an Event of Default set out in clause 10.1(b) and clause
10.1(c) or upon expiry of the periods described in Clause 10.1(a), all
rights conferred upon the Defaulting Party under this Agreement shall be
suspended forthwith and remain suspended unless revoked by the other Party.

 

10.3                        Thereafter,
notwithstanding anything to the contrary contained in this Agreement, within
[60] days of the occurrence of an Event of Default described in clause
10.1(b) and clause 10.1(c) or upon the expiry of the period

 

 

set
out in clause 10.1(a), the other Party shall be entitled to issue a notice to
the Defaulting Party (“Buyout Notice”)
either to

 

(i)                                     put and sell all its shares
in the Company to the Defaulting Party; or

 

(ii)                                  call and purchase all the
shares of the Defaulting Party in the Company through itself or its
Affiliate(s), 

 

in
the same manner as provided in the event of a Dead Lock under clause
6.4(f)(iii).

 

If
a Buyout Notice is issued, the Defaulting Party shall be under an obligation to
sell to or purchase from, the other Party as the case may be, the shares in the
Company. Such purchase or sale shall be completed within [60] days of issue of
the Buyout Notice. This Agreement shall terminate on the date on which the
transfer of shares is accordance with this clause 10.3 is completed.

 

10.4                        This Agreement
shall automatically terminate if:

 

(a)                                  at any time as a result of a
transfer of shares in the Company made in accordance with this Agreement and/or
the Charter Documents, neither Shareholder holds any shares in the Company; or

 

(b)                                 a resolution is passed to
wind up the Company or if a liquidator is otherwise appointed; or

 

(c)                                  the Parties are unable to
procure the execution and delivery of the Deed of Adherence by the heir,
executor or administrator of a deceased shareholder in accordance with clause 5.5.

 

 

10.5                        Upon
termination of this Agreement, the Parties shall be relieved and discharged
from all liabilities, obligations or claims under this Agreement, except for:

 

(a)                             such rights, obligations and
liabilities of the Parties which have accrued under this Agreement prior to
termination; and

 

(b)                            such rights, obligations and
liabilities as are by their nature intended to survive termination.

 

11.                               OTHER PROVISIONS 

 

11.1                        Exclusivity

 

The
Shareholders are in agreement that this agreement shall be exclusive with
reference to the business as defined herein clause 1.1 (a) and as provided
for in Clause 9 of this agreement. All and any exclusivities under this
agreement shall be valid and binding for the Parties only within the territory
of the Republic of India.

 

11.2                        Entire agreement

 

This
Agreement constitutes the entire agreement of the Parties and may not be
altered, unless the same is agreed upon in writing signed and acknowledged by
the Parties. This Agreement is binding upon the heirs, court appointed
representatives, assigns, and successors of the parties.

 

11.3                        Governing
Law

 

Subject to clause 8.3, the
laws of India shall govern this Agreement.

 

 

11.4                        Official
Language and Notices.

 

(a)                                  The English language shall
be the official language of this Agreement. All notices, requests, demands and
other communications hereunder shall be in the English language and in writing,
to be delivered in person or by certified or registered mail or by fax
confirmed by certified or registered mail. They shall be deemed as duly given,
at the day of the delivery in person or by courier or at the date of the fax,
or seven days after being mailed by certified or registered mail, postage
prepaid.

 

(b)                                 Any notice shall be sent to
the following recipients:

 

A) if to VELTI:   VELTI PLC.

 

Attn:
Mr. Alexandros Moukas

 

2,
Paris Garden,

 

Bastille
Court, 4th floor, 

 

London,
SE1 8ND, UK 

 

Tel.
+442076335000 

 

Fax
+442076335001

 

B) if to FEVL:     Firefly
e-Ventures Limited 

 

Attn.:
Mr. Dinesh Mittal

 

Hindustan
Times House,

 

18-20,
Kasturba Gandhi Marg,

 

New
Delhi- 110 001 

 

Tel.
9111 66561651 

 

Fax:-
9111 66561445

 

 

(c)                                  Any Party may, by written
notice to the other, change the address to which notices to such party are to
be delivered or mailed.

 

11.5                        Severability

 

Should
any part of this Agreement be declared or held to be invalid for any reason,
the invalidity shall not affect the validity of the remainder of this Agreement
which shall continue in full force and effect and be construed as if this
Agreement had been executed without the invalid portion; and it is hereby
declared the intention of the Parties that this
Agreement would have been executed without reference to any portion that may,
for any reason, be hereafter declared or held invalid; provided that the
invalid part of the Agreement is material to the entire Agreement, i.e. the
Parties or one of the Parties would not have entered into the Agreement without
the interested part of the Agreement.

 

11.6                        Confidentiality

 

(a)                                  Each Party (the “Receiving Party”) to which Confidential Information and Trade
Secrets (each as defined below) is disclosed by the other Party (the “Disclosing Party”)  shall keep, and cause the
Company to keep, such Confidential Information and Trade Secrets strictly
secret and shall not disclose it to any unauthorized third party without the
prior written consent of the Disclosing Party. In particular, the Receiving
Party agrees:

 

·                  to use such
Confidential Information and Trade Secrets only for purposes of this Agreement
or the conduct of the Company’s Business;

 

 

·                  to ensure that
a standard of strict confidentiality is applied by the Receiving Party’s
employees so as to prevent disclosure to third parties; the Receiving Party
shall take all steps necessary to assure that its employees, subcontractors adhere
to the terms of this clause 11.6;

 

·                  to return all
Confidential Information to the Disclosing Party immediately upon the written
request of the Disclosing Party and to retain no copies or reproduction
thereof; and

 

·                  to certify in
writing to the Disclosing Party at its request, that the terms of this clause
11.6 have been complied with.

 

(b)                                 For purposes of
this clause 11.6, “Confidential Information”  shall mean any and all
technical and non-technical information relating to the establishment of the Company’s
Business, including but not limited to expertise, copyright, trade secret,
proprietary information, techniques, sketches, drawings, models, inventions,
know-how, processes, equipment, algorithms, software programs, software source
documents and formulae. “Trade Secrets”  means in relation to any Party, information
disclosed by that Party concerning its own or any of its Affiliates’
operations, business or financial condition. Confidential Information and Trade
Secrets may be communicated in writing, orally or electronically. If
communicated in writing, Confidential Information must be marked “Proprietary”
or “Confidential,” or the like. If communicated orally or electronically,
Confidential Information and Trade Secrets must be identified as proprietary or
confidential at the time of disclosure and then summarized in tangible form,
marked as above, and provided to the Receiving Party within 14 days of original
disclosure.

 

 

(c)                                  The stipulations on
Confidentiality do not apply to any Confidential Information or Trade Secrets
relating to the Disclosing Party that:

 

·                  either Party is
required to disclose by law or court order;

 

·                  is
independently developed by the Receiving Party without use of resort to such
Confidential Information or Trade Secrets and can be demonstrated by written
records;

 

·                  is already in
the lawful possession of the Receiving Party prior to its disclosure as
evidenced by appropriate documentation;

 

·                  is explicitly
approved for release by written authorization of the Disclosing Party;

 

·                  the Receiving
Party can establish such information was disclosed to it by a third party who
was legally entitled to possess and disclose such Confidential Information
and/or Trade Secrets; and

 

·                  the Receiving
Party can establish such information is in the public domain other than as a
result of breach of this Agreement.

 

(d)                                 Notwithstanding any other
provision in this Agreement,
if either Party is required to disclose any Confidential Information or Trade
Secrets relating to the Disclosing Party it may only disclose that part of the
Confidential Information and/or Trade Secrets required to be disclosed under
the applicable law or order, it must, as soon as possible after becoming aware
of the applicable law or order, advise the Disclosing Party of the requirement
to

 

 

disclose
so that the Disclosing Party may seek a protective order or other appropriate
remedy or, in the Disclosing Party’s sole discretion, waive compliance with the
terms of this Agreement. In the event no such protective order or other
appropriate remedy is obtained or that the Disclosing Party waives compliance
with the terms of this Agreement, the Party being required to disclose the
Confidential Information must comply with the Disclosing Party’s reasonable
requests in relation to the manner in which the disclosure is to be made and
the extent of such disclosure, and shall exercise all efforts to obtain
reliable assurance that confidential treatment shall be accorded the
Confidential Information and/or Trade Secrets.

 

(e)           Upon any Shareholder’s entering into discussions
with any person with a view to transferring any shares to such person, or the
Company’s entering into discussions with any person with a view towards selling
any or all of the Company, information in respect of the Company that is reasonably
necessary to permit such person to evaluate the business of the Company may be
provided to such Person, provided that: (a) such person has executed a
binding confidentiality letter in a form approved by the Board; (b) no
information specifically pertaining to any Shareholder shall be disclosed
without the prior written consent of such Shareholder; and (c) if such
person is involved in a competing company, the Board may prohibit the
disclosure of any such confidential information as the Board may determine.

 

11.7        Indemnity

 

Notwithstanding
any of the other provisions in this Agreement, each Party undertakes and agrees
to compensate, indemnify, defend and hold harmless the Company and the other
Party for all liability, losses, damages and claims, including, without
limitation, fines, penalties, interest, legal, engineering, or

 

 

consultants’
fees and other costs arising out of any liability of such Party and any
misrepresentation or breach of any warranty.

 

11.8        Covenants

 

(a)           Compliance with laws - Each Party
shall and shall cause Company to comply with all applicable laws and the laws
of any other jurisdiction that are or may be applicable to the Company’s
business and the Parties’ activities in connection with their investment in the
Company.

 

(b)           Governmental agencies - Each Party
acknowledges that certain matters on which they have agreed in this Agreement,
and various actions required or contemplated under this Agreement, may require
the consent or approval of a governmental agency, and agree to use reasonable
endeavors to obtain the approval of the relevant governmental agency to all
such matters or actions on the terms set out in this Agreement.

 

(c)           Compliance with Agreement
- Each Party agrees that the terms of this Agreement are bona fide and in
the interests of the Company, and that each such Party shall at all times
comply with the terms and conditions of this Agreement, and refrain from
undertaking any act, or omit to do any act, as a consequence of which the
Company acts in a manner which is contrary to this Agreement and the
undertakings recorded in this Agreement.

 

(d)           Acknowledgment of obligations
- The Parties agree and acknowledge that the obligations imposed upon
them in respect of transfers and options in relation to their shareholding in
the Company are necessary to secure the value of the business of the
Company and are inherently related to each Party’s contribution in the form of
land and machinery, as the case may be.

 

 

11.9        Restrictions on
Announcements

 

Each
of the Parties undertakes that it will not (save as required by applicable law
or any governmental agency) make any announcement in connection with this Agreement
unless the other Party shall have given their
respective consents as to the content, form and timing of such announcement
(which consents may not be unreasonably withheld and may be given either
generally or in a specific case or cases and may be subject to conditions).

 

11.10      No
Partnership

 

Nothing
in this Agreement (or any of the arrangements contemplated by it) shall be
deemed to constitute a partnership between the Parties, nor, constitute any
Party as the agent of another Party for any purpose, or entitled any Party to
commit or bind another Party in any manner.

 

11.11      Assignment

 

Save
as otherwise provided herein, the benefits and obligations conferred by this
Agreement upon each of the Parties are personal to that Party and shall not be,
and shall not be capable of being, assigned, delegated,
transferred or otherwise disposed of save with the written consent of each of
the other Parties.

 

However,
the change in ownership/shareholding of either of the party, amalgamation,
merger and takeover of either party shall not effect the rights &
obligations as stated herein of the either party.

 

 

11.12      Variation

 

No
variation or amendment to this Agreement shall be effective unless in writing
and executed as a deed by authorised representatives of each of the Parties.

 

11.13      Waiver

 

No
failure of any Party to exercise, and no delay in exercising, any right or
remedy in respect of any provision of this Agreement shall operate as a waiver
of such right or remedy.

 

11.14      Further Assurances

 

The
Parties shall execute all other documents and instruments and do all other
things necessary to implement and carry out the terms of this Agreement.

 

 

11.15      Costs

 

Each
Party shall bear all of the fees and expenses incurred by it in connection with
the preparation, execution and performance of this Agreement (including
ancillary documents) and the transactions contemplated hereby, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants.

 

IN
WITNESS WHEREOF, each party to this agreement has caused it to be
executed at Delhi on the date indicated below.

 

	
  November
  22, 2008

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  For
  Firefly e-Ventures Ltd.

  	
   

  	
  Witness:-

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Rajeev Verma

  	
   

  	
  1.

  	
  /s/
  Dinesh Mittal

  
	
  (Director)

  	
   

  	
  Name: Dinesh Mittal

  
	
  [SEAL]

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Rajeev
  Verma, Director

  	
   

  	
   

  
	
  Name &
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  For
  VELTI PLC

  	
   

  	
  2.

  	
  /s/
  Surash Patel

  
	
   

  	
   

  	
  Name:
  Surash Patel

  
	
  /s/
  Alexandros Moukas

  	
   

  	
  Address:
  Velti, London

  
	
  Authorized
  Signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Alexandros
  Moukas, CEO

  	
   

  	
   

  
	
  Name
  and Title

  	
   

  	
   

  

 

 

EXIBIT A

 

Business Plan & target revenue forecast

 

	
   

  	
   

  	
  Year 1

  	
   

  	
  Year 2

  	
   

  	
  Year 3

  	
   

  
	
  Revenue

  	
   

  	
  5.3

  	
   

  	
  10.2

  	
   

  	
  16.1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating Expense

  	
   

  	
  7.7

  	
   

  	
  10.3

  	
   

  	
  13.7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EBITDA

  	
   

  	
  (2.3

  	
  )

  	
  (0.1

  	
  )

  	
  2.3

  	
   

  

 

All Values in INR Crore

 

INVESTMENT PLAN

 

Unless
otherwise agreed between the parties in writing, an amount equal to 100% of the
investment as stipulated in Clause 4.1 (a) will be brought in by both the
parties on or before January 30, 2009
or within 15 days of incorporation of the Company, whichever, is later.

 

 

Date:-

 

Velti
Plc.,

2,
Paris Garden,

Bastille
Court,

4th floor, London,

SE1
8ND, UK

 

Kind Attention:- Mr. Alexandros Moukas

 

Dear
Sir,

 

This
is in furtherance of the Joint Venture & Shareholder Agreement dated
                  executed
between our company and your Company.

 

As
per Clause 9 (e) of the said agreement it was agreed that the restrictions
stipulated therein shall not be applicable to B2C (Business to Consumer) mobile
value added services being carried on by HT Media Ltd., one of its affiliates
Company, presently or before entering the Joint Venture & Shareholder
Agreement.

 

We
hereby confirm that we shall take up the matter with our holding/affiliate
Company i.e. HT Media Ltd. to move all its existing B2C Business technology
interfaces to JV Company from its current vendors and to provide all the mobile
marketing campaigns for the B2C business through JV Company (e.g. Text to win,
loyalty groups, competition management) within 6 months of the date of JVA.

 

On
such movement, all the revenue net of taxes and charges to be paid to content
developer/owner/aggregator or any other charges in relation thereto etc. from
said technology interfaces and from all mobile marketing campaigns for the B2C
business will be shared between HT Media Ltd. and JV Company in the ratio of
65:35 i.e. 65% of total revenue from such activities will be given to HT Media
Ltd. and 35% shall be retained by the JV Company.

 

 

This letter is issued in duplicate,             
requested to sign the duplicate copy as a token of acceptance.

 

 

	
  For Firefly e-Ventures
  Limited

  	
   

  
	
   

  	
   

  
	
  /s/
  Rajeev Verma

  	
   

  
	
  (Authorised
  Signatory)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}]]