Document:

Exhibit 4.25

Exhibit 4.25

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

SHANDA GAMES LIMITED

M ACQUISITION CORPORATION

MOCHI MEDIA, INC.

JAMESON HSU

BOB IPPOLITO

WITH RESPECT TO ARTICLES VIII, IX, and X ONLY

SHASTA VENTURES II, L.P. AS SHAREHOLDER REPRESENTATIVE

AND US BANK NATIONAL ASSOCIATION, AS ESCROW AGENT

Dated as of December 30, 2009

 

 

 

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of December
30, 2009 by and among Shanda Games Limited, a Cayman Islands company (“Parent”), M Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent (“Sub”), Mochi Media,
Inc., a Delaware corporation (the “Company”), Jameson Hsu and Bob Ippolito (each a “Founder,” and
collectively, the “Founders”), with respect to Article VIII, Article IX and Article X hereof only,
Shasta Ventures II, L.P. as shareholder representative (the “Shareholder Representative”) and, only
as to Article VIII, Article IX and Article X, US Bank National Association, as Escrow Agent (the
“Escrow Agent”).

RECITALS

A. The Boards of Directors of each of Parent, Sub and the Company believe it is advisable and
in the best interests of each company and its respective shareholders that Parent acquire the
Company through the statutory merger of Sub with and into the Company (the “Merger”), and, in
furtherance thereof, have approved this Agreement and the Merger.

B. Pursuant to the Merger, among other things, and subject to the terms and conditions of this
Agreement, all of the issued and outstanding shares of Company Common Stock (as defined below) and
all of the issued and outstanding shares of Company Preferred Stock shall be converted into the
right to receive, upon the terms set forth herein, an amount in cash.

C. The Company and the Founders, on the one hand, and Parent and Sub, on the other hand,
desire to make certain representations, warranties, covenants and other agreements in connection
with the Merger.

D. A portion of the consideration otherwise payable by Parent in connection with the Merger
shall be placed into escrow by Parent as partial security for the indemnification obligations set
forth in this Agreement.

E. Concurrently with the execution and delivery of this Agreement, each of the Founders is
entering into a Stock Consideration Agreement substantially in the form attached hereto as Exhibit
A (collectively, the “Stock Consideration Agreements”), pursuant to which each Founder is agreeing,
among other things, (i) to receive Parent Ordinary Shares in substitution for a portion of the
cash consideration they would otherwise receive pursuant to Section 2.6(a) under this Agreement
(such shares, the “Founder Stock Consideration”) and (ii) to certain terms relating to the vesting
schedule of a portion of the Founder Stock Consideration such Founder receives at Closing.

F. Immediately following the execution of this Agreement, the Company shall obtain the
irrevocable approval of the Merger, this Agreement and the transactions contemplated hereby by such
holders of the issued and outstanding shares of Company Capital Stock (as defined below),
including, without limitation, the individuals set forth on Schedule 6.6(a), sufficient to adopt
and approve this Agreement and approve the Merger as required under (1) Delaware Law (as defined
below) and (2) the Company’s certificate of incorporation and bylaws (the “Initial Shareholder
Approval”).

 

 

 

NOW, THEREFORE, in consideration of the mutual agreements, covenants and other premises set
forth herein, the mutual benefits to be gained by the performance thereof, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted,
the parties hereby agree as follows:

ARTICLE I

1.1 Certain Defined Terms. For all purposes of and under this Agreement, the following capitalized terms shall have the
following respective meanings:

(a) “Action or Proceeding” shall mean any action, suit, complaint, petition, investigation,
proceeding, arbitration, litigation or investigation, audit or other proceeding, whether civil or
criminal, in law or in equity, or before any arbitrator or Governmental Entity.

(b) “ADSs” shall mean the American Depositary Shares of Parent tradable upon the Nasdaq Global
Select Market (“Nasdaq”).

(c) “Affiliate” shall mean, as applied to any Person, (i) any other Person directly or
indirectly controlling, controlled by or under common control with, that Person, (ii) any other
Person that owns or controls ten percent (10%) or more of the equity securities (including any
equity securities issuable upon the exercise of any option or convertible security) of that Person
or any of its Affiliates, and (iii) as to a corporation, each director and officer thereof, and as
to a partnership, each general partner thereof, and as to a limited liability company, each
managing member or similarly authorized person thereof (including officers), and as to any other
entity, each Person exercising similar authority to those of a director or officer of a
corporation. For the purposes of this definition, “control” (including with correlative meanings,
the terms “controlling”, “controlled by”, and “under common control with”) as applied to any
Person, means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of that Person, whether through ownership of voting securities or by
contract or otherwise.

(d) “Aggregate Consideration Amount” shall mean an amount equal to (i) Eighty Million United
States Dollars ($80,000,000) minus (ii) the amount of the Excess Third Party Expenses identified as
of the time of the Closing and minus (iii) the Restricted Stock Unit Value.

(e) “Approval” shall mean any approval, authorization, consent, permit, qualification or
registration, or any waiver of any of the foregoing, required to be obtained from or made with, or
any notice, statement or other communication required to be filed with or delivered to, any
Governmental Entity or any other Person.

(f) “Assets and Properties” shall mean, with respect to any Person, all assets and properties
of every kind, nature, character and description (whether real, personal or mixed, whether tangible
or intangible, whether absolute, accrued, contingent, fixed or otherwise and wherever situated),
including the goodwill related thereto, operated, owned, licensed or leased by such Person,
including cash, cash equivalents, investment assets, accounts and notes receivable, chattel paper,
documents, instruments, general intangibles, real estate, equipment, inventory, goods and
Intellectual Property.

(g) “Associate” shall mean, with respect to any Person, any corporation or other business
organization of which such Person is an officer or partner or is the beneficial owner, directly or
indirectly, of ten percent (10%) or more of the equity securities, any trust or estate in which
such Person has a substantial beneficial interest or as to which such Person serves as a trustee or
in a similar capacity and any relative or spouse of such Person, or any relative of such spouse,
who has the same home as such Person.

(h) “Business Day” shall mean each day that is not a Saturday, Sunday or other day on which
Parent is closed for business or banking institutions located in either of (i) San Francisco,
California, United States or (ii) Shanghai, People’s Republic of China are authorized or obligated
by Law or Order to close.

 

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(i) “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(j) “Company Capital Stock” shall mean the Company Common Stock, the Company Preferred Stock
and all other shares of capital stock, if any, of the Company, taken together.

(k) “Company Common Stock” shall mean shares of common stock, par value $0.00001 per share, of
the Company.

(l) “Company Employee Plan” shall mean any plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance, termination pay, deferred
compensation, performance awards, stock or stock-related awards, welfare benefits, fringe benefits
or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise,
funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of
ERISA which is maintained, contributed to, or required to be contributed to, by the Company or any
ERISA Affiliate for the benefit of any Employee, or with respect to which the Company or any ERISA
Affiliate has or may have any liability or obligation and any International Employee Plan but
excluding any Employee Agreements.

(m) “Company Financials” shall mean the Unaudited Financial Statements and the Interim
Financial Statements.

(n) “Company Intellectual Property” shall mean any Intellectual Property owned by the Company.

(o) “Company Material Adverse Effect” shall mean any change, event, effect, occurrence or
circumstance that is materially adverse to the business, assets, financial condition or results of
operations of the Company taken as a whole, except for any such changes, events, effects,
occurrences or circumstances primarily resulting from (i) changes affecting the United States or
world economy generally that do not disproportionately impact the Company, (ii) changes or events
affecting the industry in which the Company operates generally that do not disproportionately
impact the Company relative to other participants in the Company’s industry, (iii) changes in U.S.
GAAP or international accounting standards, (iv) changes caused by hostilities, acts of terrorism
or war, or any material escalation of any such hostilities, acts of terrorism or war existing on
the date hereof that do not disproportionately impact the Company or (vi) the announcement or
pendency of the Merger.

(p) “Company Options” shall mean all issued and outstanding options to purchase or otherwise
acquire Company Capital Stock listed on Section 3.3(c) of the Disclosure Schedule held by any
employee, consultant or director of the Company.

(q) “Company Preferred Stock” shall mean shares of preferred stock, par value $0.00001 per
share, of the Company.

(r) “Contract” shall mean any binding written or oral mortgage, indenture, lease, contract,
covenant, plan, insurance policy or other agreement, instrument, arrangement, understanding or
commitment, permit, concession, franchise or license.

(s) “DOL” shall mean the United States Department of Labor.

 

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(t) “Eligible Stock” shall mean each outstanding share of Company Common Stock and Company
Preferred Stock issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares).

(u) “Employee” shall mean any current or former employee, consultant, independent contractor
or director of the Company or any ERISA Affiliate.

(v) “Employee Agreement” shall mean each management, employment, severance, separation,
consulting, contractor, relocation, repatriation, expatriation, loan, visa, work permit or other
agreement, or contract (including, any offer letter or any agreement providing for acceleration of
Company Options) between the Company or any ERISA Affiliate and any Employee, and which the Company
or any ERISA Affiliate has or may have any liability or obligation.

(w) “Environment” shall mean air, surface water, ground water, or land, including land surface
or subsurface, and any receptors such as persons, wildlife, fish, biota or other natural resources.

(x) “Environmental Law” shall mean any federal, state, local or foreign environmental, health
and safety or other Law relating to of Hazardous Materials, including the Comprehensive,
Environmental Response Compensation and Liability Act, the Clean Air Act, the Federal Water
Pollution Control Act, the Solid Waste Disposal Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the California Safe Drinking Water and Toxic Enforcement Act.

(y) “Equity Equivalents” shall mean any securities that, by its terms, is or may be
exercisable, convertible or exchangeable for or into Company Common Stock, Company Preferred Stock
or any other security of the Company.

(z) “ERISA Affiliate” shall mean any other current or former Person or entity under common
control with the Company within the meaning of Section 414(b), (c), (m) or (o) of the Internal
Revenue Code, and the regulations issued thereunder.

(aa) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and
the rules and regulations promulgated thereunder.

(bb) “Escrow Amount” shall mean, with respect to each share of Eligible Stock held by a
Shareholder, an amount equal to the quotient obtained by dividing (i) the Total Escrow Amount, by
(ii) the number of shares of Eligible Stock issued and outstanding immediately prior to the
Effective Time.

(cc) “Exchange Act” shall mean the United States Securities Exchange Act of 1933, as amended

(dd) “FMLA” shall mean the Family Medical Leave Act of 1993, as amended.

(ee) “GAAP” shall mean generally accepted accounting principles in the United States, as in
effect from time to time.

(ff) “Governmental Entity” shall mean any court, tribunal, arbitrator, authority, agency,
bureau, board, commission, department, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other political subdivision.

 

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(gg) “Hazardous Material” shall mean: (i) any chemical, material, substance or waste
including, containing or constituting petroleum or petroleum products, solvents (including
chlorinated solvents), nuclear or radioactive materials, asbestos in any form that is or could
become friable, radon, lead-based paint, urea formaldehyde foam insulation or polychlorinated
biphenyls; (ii) any chemicals, materials, substances or wastes which are now defined as or included
in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely
hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or words
of similar import under any Environmental Law; or (iii) any other chemical, material, substance or
waste which is regulated by any Governmental Entity or which could constitute a nuisance.

(hh) “HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as
amended.

(ii) “Holdback Shares” shall have the meaning set forth in the Stock Consideration Agreements.

(jj) “Income Tax” shall mean: (i) any income, alternative or add-on minimum tax, gross income,
gross receipts, franchise, profits, including estimated taxes relating to any of the foregoing, or
other similar tax or other like assessment or charge of similar kind whatsoever, excluding any
Other Tax, together with any interest and any penalty, addition to tax or additional amount imposed
by any Taxing Authority responsible for the imposition of any such tax (domestic or foreign); (ii)
any Liability of a Person for the payment of any taxes, interest, penalty, addition to tax or like
additional amount resulting from the application of Treas. Reg. §1.1502-6 or comparable provisions
of any Taxing Authority in respect of a Tax Return or any Contract; or (iii) any Liability to any
Person for any amount described in the immediately preceding clause (i) or (ii) as a result of an
express or implied obligation to indemnify such Person, including pursuant to a tax sharing or
allocation agreement.

(kk) “Indebtedness” shall mean, with respect to any Person, all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for
the deferred purchase price of goods or services (other than trade payables or accruals incurred in
the ordinary course of business), (iv) under capital leases, and (v) in the nature of a guarantee
of any of the obligations described in clauses (i) through (iv) above of any other Person.

(ll) “Intellectual Property” shall mean all trademarks and trademark rights, trade names and
trade name rights, service marks and service mark rights, service names and service name rights,
patents and patent rights, utility models and utility model rights, copyrights, mask work rights,
brand names, trade dress, product designs, product packaging, business and product names, logos,
slogans, rights of publicity, trade secrets, inventions (whether patentable or not), invention
disclosures, improvements, processes, formulae, industrial models, processes, designs,
specifications, technology, methodologies, computer software (including all source code and object
code), firmware, development tools, flow charts, annotations, all web addresses, sites and domain
names, all data bases and data collections and all rights therein, any other confidential and
proprietary right or information, whether or not subject to statutory registration, and all related
technical information, manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of (and all rights to apply for and register) patents, utility
models, trademarks, service marks and copyrights, and the right to sue for past infringement, if
any, in connection with any of the foregoing, and all documents, disks, records, files and other
media on which any of the foregoing is stored.

(mm) “Interim Financial Statement Date” shall mean November 30, 2009.

 

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(nn) “Interim Financial Statements” shall mean the unaudited balance sheet of the Company as
of the Interim Financial Statement Date, and the related unaudited statements of operations and
cash flows for the eleven-month period ended on such date.

(oo) “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

(pp) “Internal Revenue Service” shall mean the United States Internal Revenue Service.

(qq) “International Employee Plan” shall mean each Company Employee Plan or Employee Agreement
that has been adopted or maintained by the Company or any ERISA Affiliate, whether formally or
informally, or with respect to which the Company or any ERISA Affiliate will or may have any
liability, for the benefit of Employees who perform services outside the United States.

(rr) “Investment Assets” shall mean all debentures, notes and other evidences of Indebtedness,
stocks, securities (including rights to purchase and securities convertible into or exchangeable
for other securities), interests in joint ventures and general and limited partnerships, mortgage
loans and other investment or portfolio assets owned of record or beneficially by the Company.

(ss) “knowledge” or “known” shall mean, with respect to the Company, the actual knowledge of
Jameson Hsu, Bob Ippolito, Justin Wong and Josh Larson after reasonable inquiry of those persons
employed by the Company with administrative or operational responsibility for such matter.

(tt) “Law” or “Laws” shall mean any law, statute, Order, decree, consent decree, judgment,
rule, regulation, ordinance or other pronouncement having the effect of law whether in the United
States, any foreign country, or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Entity.

(uu) “Liability” shall mean all Indebtedness, obligations and other liabilities of a Person of
any kind, character or description, whether know or unknown, absolute or contingent, accrued or
unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or
several, due or to become due, vested or unvested, executory, determined, determinable or
otherwise, and whether or not the same is required to be accrued on the financial statements of
such Person.

(vv) “License” shall mean any contract, commitment, agreement or other arrangement that grants
a Person the right to use or otherwise enjoy the benefits of any Intellectual Property (including
any covenants not to sue with respect to any Intellectual Property).

(ww) “Lien” shall mean any lien, pledge, charge, claim, mortgage, security interest or other
encumbrance of any sort.

(xx) “Open Source Software” shall mean any software, program, module, code, library, database,
driver or similar component (or portion thereof) (“Software”) that meets one or more of the
following criteria: (i) has been distributed, contributed or otherwise transferred into the public
domain, either voluntarily, involuntarily, by the operation of Law or otherwise; (ii) was formerly
governed by intellectual property rights, all or some of which have been invalidated, terminated,
expired, waived or otherwise lapsed; (iii) is subject to, distributed, transmitted, licensed or
otherwise made available under any so-called “public license,” “open source license,” “free
license,” “industry standard license,” intellectual property pool license” or similar license, the
intention of which is to permit the public use, modification, distribution, incorporation and/or
exploitation of the Software without conveying an exclusive or proprietary interest in such
licensed
Software (although certain other conditions may be imposed by such license); or (iv) subject
to, distributed, transmitted, licensed or otherwise made available under any of the following
licenses: GNU General Public License, GNU Library or “Lesser” Public License, BSD license, MIT
license, Mozilla Public License, IBM Public License, Apache Software License, Sun Industry
Standards Source License, Intel Open Source License, Apple Public Source License, or any
substantially similar license, or any license that has been approved by the Open Source Initiative.

 

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(yy) “Option Exchange Ratio” shall mean the quotient (rounded to the fourth decimal point)
obtained by dividing (A) the Per Share Amount by (B) the Trading Price.

(zz) “Option Plan” shall mean the Company’s 2007 Stock Plan, as amended to date.

(aaa) “Order” shall mean any writ, judgment, decree, injunction or similar order of any
Governmental Entity (in each such case whether preliminary or final).

(bbb) “Other Tax” shall mean (i) any sales, use, ad valorem, business license, withholding,
payroll, employment, excise, stamp, transfer, recording, occupation, premium, property, value
added, custom duty, severance, windfall profit or license tax, governmental fee or other similar
assessment or charge, together with any interest and any penalty, addition to tax or additional
amount imposed by any Taxing Authority responsible for the imposition of any such tax (domestic or
foreign), or (ii) any Liability to any Person for amounts described in clause (i) above as a result
of an express or implied obligation to indemnify such Person, including pursuant to a tax sharing
or allocation agreement.

(ccc) “Parent Material Adverse Effect” shall mean any change, event, effect, occurrence or
circumstance that is materially adverse to the business, assets, financial condition or results of
operations of Parent taken as a whole, except for any such changes, events, effects, occurrences or
circumstances resulting primarily from (i) changes affecting the United States or world economy
generally that do not disproportionately impact Parent, (ii) changes or events affecting the
industry in which Parent operates generally that do not disproportionately impact Parent relative
to other participants in Parent’s industry, (iii) changes in U.S. GAAP or international accounting
standards, (iv) changes caused by hostilities, acts of terrorism or war, or any material escalation
of any such hostilities, acts of terrorism or war existing on the date hereof that do not
disproportionately impact Parent or (vi) the announcement or pendency of the Merger.

(ddd) “Parent Ordinary Shares” shall mean the Class A ordinary shares, par value $0.01 per
share, of Parent.

(eee) “PBGC” shall mean the United States Pension Benefit Guaranty Corporation.

(fff) “Pension Plan” shall mean each Company Employee Plan that is an “employee pension
benefit plan,” within the meaning of Section 3(2) of ERISA.

(ggg) “Per Share Amount” shall mean an amount equal to the Aggregate Consideration Amount
divided by the Total Outstanding Shares.

(hhh) “Permitted Liens” shall mean (i) statutory liens for taxes that are not yet due and
payable, (ii) statutory liens to secure obligations to landlords, lessors or renters under leases
or rental agreements, (iii) deposits or pledges made in connection with, or to secure payment of,
workers’ compensation, unemployment insurance or similar programs mandated by applicable Law, (iv)
statutory liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for
labor, materials or
supplies and other like liens, and (v) liens in favor of customs and revenue authorities
arising as a matter of applicable Law to secure payments of customs duties in connection with the
importation of goods.

 

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(iii) “Person” shall mean an individual or entity, including a partnership, a limited
liability company, a corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization, or a Governmental Entity (or any department, agency, or political
subdivision thereof).

(jjj) “Pro Rata Portion” shall mean, with respect to each Shareholder (other than a
Shareholder holding Dissenting Shares who does not effectively withdraw or lose such Shareholder’s
dissenter’s rights as contemplated by Section 2.7 hereof), an amount equal to the quotient of (i)
the portion of the Aggregate Consideration Amount payable to such Shareholders in respect of
Eligible Stock pursuant to Section 2.6(a) (including, for the avoidance of doubt, for each Founder,
the portion of the Aggregate Consideration Amount payable to such Founder that will be settled
pursuant to the grant of Parent Ordinary Shares and restricted stock units covering Parent Ordinary
Shares (the “Equity Awards”) as provided in the Stock Consideration Agreements) divided by the
portion of the Aggregate Consideration Amount payable to all Shareholders in respect of Eligible
Stock pursuant to Section 2.6(a) (including, for the avoidance of doubt, the portion of the
Aggregate Consideration Amount payable to the Founders that will be settled pursuant to the grant
of Parent Ordinary Shares and restricted stock units covering Parent Ordinary Shares as provided in
the Stock Consideration Agreements), in each case excluding such portion of the Aggregate
Consideration Amount that would otherwise be delivered to Shareholders if they had not effectively
withdrawn or lost their dissenters’ rights as contemplated by Section 2.7 hereof.

(kkk) “PTO” shall mean the United States Patent and Trademark Office.

(lll) “Registered Intellectual Property” shall mean all United States, international, foreign
and other non-United States: (i) patents and patent applications (including provisional
applications); (ii) registered trademarks and service marks, applications to register trademarks
and service marks, intent-to-use applications, other registrations or applications to trademarks or
service marks, or trademarks or service marks in which common law rights are owned or otherwise
controlled; (iii) registered copyrights and applications for copyright registration; (iv) mask work
registrations and applications to register mask works; and (v) other Intellectual Property that is
the subject of an application, certificate, filing, registration or other document issued by, filed
with, or recorded by, any Governmental Entity.

(mmm) “Release” shall mean any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing of a Hazardous Material into the
Environment.

(nnn) “Restricted Stock Unit Value” shall mean $3,800,000.

(ooo) “SEC” shall mean the United States Securities and Exchange Commission.

(ppp) “Securities Act” shall mean the United States Securities Act of 1933, as amended.

(qqq) “Shareholder” shall mean any holder of any Eligible Stock immediately prior to the
Effective Time.

(rrr) “Shareholder Representative Escrow Amount” shall mean an amount in cash equal to One
Hundred Thousand United States Dollars ($100,000).

 

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(sss) “Site” shall mean any of the real properties currently or previously owned, leased,
occupied, used or operated by the Company, any predecessors of the Company, or any entities
previously owned by the Company, including all soil, subsoil, surface waters and groundwater.

(ttt) “Subsidiary” shall mean any Person, whether or not existing on the date hereof, in which
the Company or Parent, as the context requires, directly or indirectly through subsidiaries or
otherwise, beneficially owns at least fifty percent (50%) of either the equity interest, or voting
power of or in such Person.

(uuu) “Tax Laws” shall mean the Internal Revenue Code, federal, state, county, local or
foreign laws relating to Taxes and any regulations or official administrative pronouncements
released thereunder.

(vvv) “Tax Return” shall mean any return, report, information return, schedule, certificate,
statement or other document (including any related or supporting information) filed or required to
be filed with, or, where none is required to be filed with a Taxing Authority, the statement or
other document issued by, a Taxing Authority in connection with any Tax.

(www) “Tax” or “Taxes” shall mean Income Taxes and/or Other Taxes, as the context requires.

(xxx) “Taxing Authority” shall mean any governmental agency, board, bureau, body, department
or authority of any United States federal, state or local jurisdiction or any foreign jurisdiction,
having or purporting to exercise jurisdiction with respect to any Tax.

(yyy) “Total Escrow Amount” shall mean an amount in cash equal to Eight Million United States
Dollars ($8,000,000).

(zzz) “Total Outstanding Shares” shall mean the aggregate number of shares of Company Capital
Stock plus the maximum aggregate number of such shares issuable upon full exercise, exchange or
conversion of all options, warrants and any other rights, whether vested or unvested, convertible
into, exercisable for or exchangeable for, shares of Company Capital Stock, issued and outstanding
immediately prior to the Effective Time, on an as converted to Company Common Stock basis.

(aaaa) “Trading Price” shall mean an amount equal to one-half (1/2) of the average closing
sale price of one ADS as reported on Nasdaq for the fifteen (15) consecutive trading days ending on
the last trading day prior to the Closing Date (as adjusted as appropriate to reflect any stock
splits, stock dividends, combinations, reorganizations, reclassifications or similar events).

(bbbb) “Unaudited Financial Statements” shall mean the unaudited consolidated balance sheets
of the Company for each of the fiscal years ended December 31, 2007 and December 31, 2008,
respectively, and the related statements of operations, cash flow and stockholders’ equity for each
of the fiscal years then ended.

(cccc)“WARN” shall mean the Worker Adjustment and Retraining Notification Act.

 

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1.2 Interpretations.

(a) When a reference is made in this Agreement to an Exhibit or a Schedule, such reference
shall be to an Exhibit or a Schedule to this Agreement unless otherwise indicated.

(b) When a reference is made in this Agreement to an Article or a Section, such reference
shall be to an Article or a Section of this Agreement unless otherwise indicated.

(c) The words “include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation.”

(d) The headings set forth in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.

(e) Unless otherwise specifically provided or the context otherwise requires, all references
in this Agreement to the Company shall mean and refer to the Company and its direct and indirect
Subsidiaries, if any.

(f) All references in this Agreement to the Subsidiaries of a Person shall be deemed to
include all direct and indirect Subsidiaries of such Person.

(g) Unless otherwise specifically provided, all references in this Agreement to monetary
amounts or dollars shall mean and refer to United States denominated dollars.

ARTICLE II

THE MERGER

2.1 The Merger. At the Effective Time, and subject to and upon the terms and conditions of
this Agreement and the applicable provisions of the General Corporation Law of the State of
Delaware (“Delaware Law”), Sub shall be merged with and into the Company, the separate corporate
existence of Sub shall cease, and the Company shall continue as the surviving corporation and as a
wholly-owned subsidiary of Parent. The surviving corporation after the Merger is sometimes
referred to hereinafter as the “Surviving Corporation.”

2.2 Effective Time. Unless this Agreement is earlier terminated pursuant to Section 9.1
hereof, the closing of the Merger (the “Closing”) will take place as soon as practicable following
the date upon which all of the conditions set forth in Article VII hereof, other than those that by
their nature may only be satisfied or waived at the Closing, have been satisfied or waived, at the
offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, at 650 Page Mill Road, Palo
Alto, California 94304, U.S.A., unless another time or place is mutually agreed upon in writing by
Parent and the Company. The date upon which the Closing actually occurs shall be referred to
herein as the “Closing Date.” On the Closing Date, the parties hereto shall cause the Merger to be
consummated by the filing of a certificate of merger with the Secretary of State of the State of
Delaware (the “Certificate of Merger”), in accordance with the applicable provisions under Delaware
Law (the time of the acceptance of such filing by the Secretary of State of the State of Delaware
shall be referred to herein as the “Effective Time”).

 

10

 

2.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as set forth in this Agreement and
as provided in the applicable provisions of Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all of the property, rights, privileges,
powers and franchises of the Company and Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and duties
of the Surviving Corporation.

2.4 Certificate of Incorporation and Bylaws.

(a) Unless otherwise determined by Parent prior to the Effective Time, the certificate of
incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time
to be identical to the certificate of incorporation of Sub as in effect immediately prior to the
Effective Time, until thereafter amended in accordance with Delaware Law and as provided in such
certificate of incorporation; provided, however, that at the Effective Time, Article I of the
certificate of incorporation of the Surviving Corporation shall be amended and restated in its
entirety to read as follows: “The name of the corporation is Mochi Media, Inc.”

(b) Unless otherwise determined by Parent prior to the Effective Time, the bylaws of the
Surviving Corporation shall be amended and restated as of the Effective Time to be identical to the
bylaws of Sub as in effect immediately prior to the Effective Time, until thereafter amended in
accordance with Delaware Law, and as provided in the certificate of incorporation of the Surviving
Corporation and such bylaws; provided, however, that any express references to the name of Sub in
such bylaws shall be amended to refer to “Mochi Media, Inc.”

2.5 Directors and Officers.

(a) Directors of Surviving Corporation. Unless otherwise determined by Parent prior to the
Effective Time, the directors of Sub immediately prior to the Effective Time shall be the directors
of the Surviving Corporation immediately after the Effective Time, except that Parent shall remove
one such director and shall appoint, effective as of the Effective Time, Jameson Hsu to serve in
his place, each to hold the office of director of the Surviving Corporation in accordance with the
provisions of Delaware Law and the certificate of incorporation and bylaws of the Surviving
Corporation until his or her successor has been duly elected and qualified.

(b) Officers of Surviving Corporation. Unless otherwise determined by Parent prior to the
Effective Time, the officers of Sub immediately prior to the Effective Time shall be the officers
of the Surviving Corporation immediately after the Effective Time, each to hold office in
accordance with the provisions of the bylaws of the Surviving Corporation.

2.6 Effect of Merger on the Capital Stock of the Constituent Corporations.

(a) Effect on Company Capital Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of Sub, the Company or the Shareholders, the following shall occur:

(i) Merger Consideration Available at Closing. Subject to the terms set forth in Sections
2.6(a)(ii) and 2.8 hereof and, with respect to the Founders, the terms of the Stock Consideration
Agreements, at the Closing each share of Company Common Stock and each share of Company Preferred
Stock that constitutes, in each case, Eligible Stock will be cancelled and extinguished and will be
converted automatically into the right to receive, upon surrender of the certificate representing
such share of Company Common Stock that is Eligible Stock or Company Preferred Stock that is
Eligible Stock, an amount of cash equal to the Per Share Amount.

 

11

 

(ii) Escrow Amount. At Closing, notwithstanding anything to the contrary set forth in this
Agreement, Parent will (A) withhold from the cash portion of the Aggregate Consideration Amount
otherwise payable to each Shareholder such Shareholder’s Pro Rata Portion of the Total Escrow
Amount and the Shareholder Representative Escrow Amount, other than the Founders, who, with respect
to their Pro Rata Portion of the Total Escrow Amount (but not with respect to their Pro Rata
Portion of the Shareholder Representative Escrow Amount which they will deliver in accordance with
the following clause (C)) will contribute their Holdback Shares (as defined in the Stock
Consideration Agreement) to be held by the Secretary of Parent as security for the indemnification
obligations set forth in Article VIII (such cash amount, with respect to the Total Escrow Amount,
the “Cash Escrow Amount”) and (B) will deliver such Cash Escrow Amount to the Escrow Agent to be
held by the Escrow Agent as security for the indemnification obligations under Article VIII and (C)
will deliver their respective Pro Rata Portions of the Shareholder Representative Escrow Amount to
the Shareholder Representative who agrees to use such funds solely to pay Shareholder
Representative Expenses and further agrees to return any portion of the Shareholder Representative
Escrow Amount not used to pay Shareholder Representative Expenses to the Shareholders, pro rata
based upon their contributions thereto upon the payment of all amounts from the Escrow Fund. Prior
to the Effective Time, the Shareholder Representative may arrange for a third party financial
institution (including an escrow agent) to hold the Shareholder Representative Escrow Amount in
accordance with the preceding sentences and, upon doing so, may (i) direct that the Shareholder
Representative Escrow Amount be delivered to such financial institution rather than the Shareholder
Representative as well as (ii) pay any expenses incurred in arranging for such third party
financial institution to hold and disburse the Shareholder Representative Escrow Amount from the
Shareholder Representative Escrow Amount. Any cash and all interest and other amounts earned on
the Cash Escrow Amount are referred to herein as the “Escrow Fund.” Distributions of any cash from
the Escrow Fund shall be governed by the terms set forth in Article VIII. The adoption of this
Agreement and the approval of the Merger by the Shareholders shall constitute approval of all the
arrangements relating to the Escrow Fund and the Shareholder Representative Escrow Amount,
including, without limitation, the appointment of the Shareholder Representative.

(iii) Limitation. Notwithstanding anything set forth in this Section 2.6(a), any unexpired
and unexercised Company Options shall be treated as provided for in Section 2.6(b) hereof, any
Company Capital Stock held by the Company shall be treated as provided for in Section 2.6(c)
hereof, and any Dissenting Shares will be treated as set forth in Section 2.7 hereof.

(b) Treatment of Company Options and Company Restricted Stock.

(i) Substitution of Company Options.

(1) As soon as practicable following the Closing, but effective as of the Effective Time, and
without any action on the part of the holders of any shares of Company Options, each Company Option
that is issued and outstanding immediately prior to the Effective Time, other than the Terminated
Company Options, whether or not then exercisable (the “Substituted Options”) shall be replaced by
Parent with a substitute option to purchase Parent Ordinary Shares (a “Parent Option”) as set forth
below. Each holder of a Substituted Option shall receive a substitution agreement from Parent
within 20 Business Days following the Effective Time, which substitutes a Parent Option for the
Substituted Option. Each Substituted Option which is substituted for shall be canceled with no
further force or effect.

(2) Notwithstanding the foregoing, each Company Option that is held by a person who will not
be an employee of, or a consultant to, Parent or any Subsidiary of the Parent as of the Effective
Time (such Company Options, the “Terminated Company Options”) shall not be substituted for by
Parent pursuant to this Section 2.6(b) but shall, effective as of the Effective Time, be cancelled
and terminate and be without further force and effect.

 

12

 

(3) After substitution of a Parent Option for a Substituted Option, (a) each Parent Option
substituted for a Substituted Option shall be exercisable for that whole number of Parent Ordinary
Shares (rounded down to the nearest whole number of Parent Ordinary Shares) equal to the product of
(x) the number of shares of Company Common Stock that were issuable upon exercise of such
Substituted Option immediately prior to the Effective Time, multiplied by (y) the Option Exchange
Ratio, (b) the per share exercise price for the Parent Ordinary Shares issuable upon exercise of
such Substituted Option shall be equal to the quotient obtained by dividing (x) the exercise price
per share of Company Common Stock at which such Substituted Option was exercisable immediately
prior to the Effective Time, by (y) the Option Exchange Ratio (the price per share, as so
determined, being rounded upward to the nearest full cent), and (c) for each Substituted Option,
the term, post-termination exercise period and vesting schedule of each Parent Option shall be
substantially similar to that of the corresponding Substituted Option provided, however, that the
exercise price of the option, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in order to comply with Section
409A of the Code. It is the intention of the parties that each Parent Option substituted for a
Substituted Option shall qualify following the Effective Time as an incentive stock option as
defined in Section 422 of the Code to the extent such Substituted Option qualified as an incentive
stock option prior to the Effective Time.

(4) Except as provided in Section 2.6(b)(i)(3) above, each Substituted Option substituted for
by Parent shall be exercisable and administered upon the same terms and conditions as a standard
Parent Option; provided, however, that if the substitution of a Substituted Option (whether an
incentive stock option or a nonstatutory stock option) would constitute a modification, extension
or renewal, as defined in Section 424 of the Code and related Treasury Regulations, if such
Substituted Option were an incentive stock option as defined in Section 422 of the Code, then the
term or condition of each Parent Option (whether an incentive stock option or a nonstatutory stock
option) that would constitute such a modification, extension or renewal if the Parent Option was an
incentive stock option shall not apply; provided, further, that no “claw back” or forfeiture
provision shall apply to the Parent Options substituted for the Substituted Options other than the
vesting terms thereof.

(5) Parent has filed a registration statement on Form S-8 registering a number of Parent
Ordinary Shares sufficient to cover the Parent Ordinary Shares issuable upon the exercise of all
Parent Options substituted for the Substituted Options and shall use commercially reasonable
efforts to maintain the effectiveness of such registration statement for so long as such options
remain outstanding.

(6) Parent has filed a registration statement on Form F-6 registering a number of ADSs
sufficient to cover the conversion of all Parent Ordinary Shares issuable upon the exercise of all
Parent Options into ADSs and shall use commercially reasonable efforts to maintain the
effectiveness of such registration statement for so long as such options remain outstanding.

(ii) Company Notice. Prior to the Effective Time, and subject to the review and approval of
Parent (not to be unreasonably withheld), the Company shall take all actions necessary to effect
the transactions anticipated by this Section 2.6(b)(ii) under the Option Plan and all Company
Option agreements and any other plan or arrangement of the Company (whether written or oral, formal
or informal), including delivering all notices required thereby. Materials to be submitted to the
holders of Company Options in connection with the notice required under this Section 2.6(b)(ii)
shall be subject to review and approval by Parent, which approval shall not be unreasonably
withheld, delayed or conditioned.

(c) Cancellation of Company Owned Stock. Each share of Company Capital Stock held by the
Company immediately prior to the Effective Time, if any, shall be cancelled and extinguished as of
the Effective Time.

 

13

 

(d) Withholding Taxes. The Company, or on its behalf Parent and the Surviving Corporation,
shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable
pursuant to this Agreement to any Person such amounts as may be required to be deducted or withheld
therefrom under any provision of federal, state, local or foreign tax Law or under any applicable
legal requirement. Any such amounts shall be withheld or deducted from that portion of the
Aggregate Consideration Amount payable to the Shareholder. To the extent such amounts are so
deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having
been paid to the Person to whom such amounts would otherwise have been paid.

(e) Capital Stock of Sub. Each share of capital stock of Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of capital stock of the Surviving Corporation. Each
stock certificate of Sub evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.

2.7 Dissenting Shares.

(a) Notwithstanding any other provisions of this Agreement to the contrary, any shares of
Company Capital Stock held by a holder who has demanded and perfected appraisal or dissenters’
rights for such shares in accordance with Delaware Law (or, if the Company is subject to Section
2115 of the California Corporations Code, such rights as may be granted to such persons in Chapter
13 of the California Corporations Code (“California Law”)), and who, as of the Effective Time, has
not effectively withdrawn or lost such holder’s dissenters’ rights (the “Dissenting Shares”), shall
not be converted into or represent a right to receive the applicable consideration set forth in
Section 2.6 hereof, but the holder thereof shall only be entitled to such rights as are provided by
Delaware Law and, if applicable, California Law.

(b) Notwithstanding the provisions of Section 2.7(a) hereof, if any holder of Dissenting
Shares who is otherwise entitled to exercise dissenters’ rights under Delaware Law and/or
California Law shall effectively withdraw or lose (through failure to perfect or otherwise) such
holder’s dissenters’ rights under Delaware Law and California Law then, as of the later of the
Effective Time and the occurrence of such event, such holder’s shares shall automatically be
converted into and represent only the right to receive the consideration for Company Capital Stock,
as applicable, set forth in Section 2.6 hereof, without interest thereon, upon surrender of the
certificate representing such shares in accordance with the terms of Section 2.8 hereof.

(c) The Company shall give Parent (i) prompt notice of any written demand for the exercise of
dissenters’ rights, withdrawals of such demands, and any other instruments served to or received by
the Company pursuant to the applicable provisions of Delaware Law or California Law, and (ii) the
opportunity to participate in all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make any payment with respect
to any such demands or offer to settle or settle any such demands. Any communication to be made by
the Company to any Shareholder with respect to such demands shall be submitted to Parent in advance
and shall not be presented to any Shareholder prior to the Company receiving Parent’s consent.
Notwithstanding the foregoing, to the extent that Parent, the Surviving Corporation or the Company
(1) makes any payment or payments in respect of any Dissenting Shares in excess of the
consideration that otherwise would have been payable in respect of such shares in accordance with
this Agreement, or (2) incurs any Losses (including attorneys’ and consultants’ fees, costs and
expenses and including any such fees, costs and expenses incurred in connection with investigating,
defending against or settling any action or proceeding) in respect of any Dissenting Shares ((1)
and (2) together “Dissenting Share Payments”), Parent shall be entitled to recover under the terms
of Article VIII hereof the amount of such Dissenting Share Payments to the extent that such
Dissenting Share Payments
exceed the consideration that such dissenting Shareholders would have received in the Merger
had no Dissenting Share Payments been made.

 

14

 

2.8 Surrender of Certificates.

(a) Payment Agent. The Secretary of Parent, or a Person selected by Parent, shall serve as
the exchange agent (the “Payment Agent”) for the Merger.

(b) Parent to Provide Cash. At the Closing Date, Parent shall make available to the Payment
Agent for exchange in accordance with this Article II, an amount of cash equal to the amount of the
Aggregate Consideration Amount payable at the time of Closing pursuant to Section 2.6 hereof in
exchange for outstanding shares of Eligible Stock.

(c) Exchange Procedures. Following the Effective Time, Parent or the Payment Agent shall mail
a letter of transmittal to each Shareholder at the address set forth opposite each such person’s
name on the Spreadsheet (as defined below). After receipt of such letter of transmittal and any
other customary documents that Parent or the Payment Agent may reasonably require in order to
effect the exchange (the “Exchange Documents”), the Shareholders will surrender the certificates
representing their shares of Eligible Stock (the “Company Certificates”) to the Payment Agent for
cancellation together with duly completed and validly executed Exchange Documents. Until so
surrendered, each Company Certificate outstanding after the Effective Time will be deemed, for all
corporate purposes thereafter, to evidence only the right to receive the portion of the Aggregate
Consideration Amount provided for in Section 2.6(a). No portion of the Aggregate Consideration
Amount owed hereunder will be paid to the holder of any unsurrendered Company Certificate with
respect to shares of Eligible Stock formerly represented thereby until the holder of record of such
Company Certificate shall surrender such Company Certificate and the Exchange Documents pursuant
hereto. Upon surrender of a Company Certificate for cancellation to the Payment Agent, or such
other agent or agents as may be appointed by Parent, together with such Exchange Documents, duly
completed and validly executed in accordance with the instructions thereto, subject to the terms
hereof, the holder of such Company Certificate shall be entitled to receive from the Payment Agent
in exchange therefor the cash payment to which such holder is entitled pursuant to Section 2.6(a)
hereof (less such holder’s respective portion of the Total Escrow Amount to be placed in escrow
pursuant to Section 2.6(a)(ii) hereof).

(d) No Liability. Notwithstanding anything to the contrary in this Section 2.8, neither the
Payment Agent, the Surviving Corporation, nor any party hereto shall be liable to a holder of
shares of Company Capital Stock for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar Law.

2.9 No Further Ownership Rights in Company Capital Stock. The cash paid in respect of the surrender for exchange of shares of Eligible Stock in accordance
with the terms hereof shall be deemed to be full satisfaction of all rights pertaining to such
shares of Eligible Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Eligible Stock which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Company Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this
Article II.

2.10 Lost, Stolen or Destroyed Certificates. In the event any Company Certificates with
respect to Eligible Stock shall have been lost, stolen or destroyed, the Payment Agent shall issue
in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of
that fact by the holder thereof, such amount, if any, as may be required pursuant to Section 2.6
hereof; provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance thereof, require the Shareholder who
is the owner of such lost, stolen or destroyed certificates to either (a) deliver a bond in such
amount as it may direct, or (b) provide an indemnification agreement in form and substance
acceptable to Parent, against any claim that may be made against Parent or the Payment Agent with
respect to the certificates alleged to have been lost, stolen or destroyed.

 

15

 

2.11 Taking of Necessary Action; Further Action. If at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of the Company, Parent and the Surviving Corporation and the
officers and directors of Parent and the Surviving Corporation are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such lawful and necessary
action.

2.12 Adjustments to Merger Consideration. The amounts payable to the shareholders of the
Company pursuant to Section 2.6(a), and any other applicable numbers or amounts, shall be adjusted
to reflect appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Company Capital Stock),
reorganization, recapitalization, reclassification or other like change with respect to Company
Capital Stock occurring or having a record date on or after the date hereof and prior to the
Effective Time.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS

The Company and, severally and not jointly, each of the Founders hereby represent and warrant
(it being understood, without limiting the rights of the Indemnified Parties set forth in Article
VIII hereof, that solely with respect to the Founders, such representations and warranties are
given by the Founders only to such Founder’s knowledge) to Parent and Sub as of the date hereof and
as of the Effective Time as though made at the Effective Time (except for any representation or
warranty that is made as of a specific earlier date, which representation or warranty shall be true
as of such date), subject to such exceptions as are specifically disclosed in the Disclosure
Schedule (each of which disclosures, in order to be effective, shall clearly reference the
appropriate section and, if applicable, subsection, of this Article III to which it relates and
each of which disclosures shall be deemed to be incorporated by reference into the representations
and warranties made in this Article III; provided, however, that each disclosure shall also provide
exceptions to any other section hereof where it is reasonably apparent, upon a reading of such
disclosure without any independent knowledge on the part of the reader regarding the matter
disclosed, that the disclosure is intended to apply to such other section) delivered by the
Company to Parent concurrently with the execution of this Agreement and dated as of the date hereof
(the “Disclosure Schedule”) as follows:

3.1 Organization and Standing. The Company is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware. The Company has full corporate power
and authority to conduct its business as presently conducted and as presently proposed to be
conducted, and to own, use, license and lease its Assets and Properties. The Company is duly
qualified or licensed to do business, and is in good standing as a foreign corporation, in each
jurisdiction in which the ownership, use, licensing or leasing of its Assets and Properties, or the
conduct or nature of its business as presently conducted, makes such qualification or licensing or
good standing necessary. Section 3.1 of the Disclosure Schedule sets forth each jurisdiction where
the Company is so qualified or licensed, and separately lists each other state or country in which
the Company owns, uses, licenses or leases its Assets and Properties, or conducts business or has
employees or engages independent contractors.

 

16

 

3.2 Authority. The Company has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution and delivery by
the Company of this Agreement, and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of the Company, and no further
corporate action is required on the part of the Company to authorize the execution and delivery of
the Agreement (other than the Initial Shareholder Approval and the filing and recordation of the
Certificate of Merger with the Secretary of State of the State of Delaware). This Agreement has
been duly executed and delivered by the Company and, assuming due authorization, execution and
delivery by the other parties thereto, constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to the enforcement of creditors’ rights generally and by general
principles of equity.

3.3 Capital Stock.

(a) The authorized capital stock of the Company consists only of 24,000,000 shares of Company
Common Stock, of which 10,092,206 shares are issued and outstanding as of the date hereof, and
9,597,561 shares of Company Preferred Stock. Of the Company Preferred Stock: (i) 4,097,561 shares
are designated as Series A Preferred Stock (“Series A Preferred Stock”), all of which are issued
and outstanding as of the date hereof; and (ii) 5,500,000 shares are designated as Series B
Preferred Stock (“Series B Preferred Stock”), 5,222,841 of which are issued and outstanding as of
the date hereof. As of the date hereof, the Company has reserved 4,097,561 shares of Company
Common Stock for issuance upon conversion of outstanding shares of Series A Preferred Stock and
5,222,841 shares of Company Common Stock for issuance upon conversion of outstanding shares of
Series B Preferred Stock. As of the date hereof, the Company has reserved 3,521,409 shares of
Company Common Stock for issuance under the Option Plan, 92,206 of which have been issued pursuant
to the exercise of options granted under the Option Plan, 2,342,512 of which are subject to
outstanding options granted under the Option Plan and 1,086,691 of which remain available for
issuance under the Option Plan. All of the issued and outstanding shares of Company Common Stock
and Company Preferred Stock are validly issued, fully paid and nonassessable, and have been issued
in compliance with all applicable federal, state and foreign securities laws. Except as set forth
above or in Section 3.3(a) of the Disclosure Schedule, no shares of Company Capital Stock are
authorized or reserved for issuance.

(b) With respect to any share of Company Capital Stock that has been issued subject to a
repurchase option on the part of the Company, risk of forfeiture or other similar condition (the
“Restricted Company Stock”), Section 3.3(b) of the Disclosure Schedule sets forth the holder
thereof, the number and type of securities covered thereby as of the date hereof. As of the
Closing, the Company shall not have any outstanding shares of Restricted Company Stock, other than
those that will accelerate in full at the Effective Time pursuant to their terms (including as such
terms may be amended by the Company in connection with the Merger).

(c) Section 3.3(c) of the Disclosure Schedule sets forth a list of all outstanding Company
Options and any other Equity Equivalents, and all agreements, arrangements or understandings
(written or oral) relating thereto. All Company Options and any other Equity Equivalents were
issued in compliance with all applicable federal, state and foreign securities laws.

 

17

 

(d) Except for the capital stock described in Section 3.3(a) and the Company Options and
Equity Equivalents set forth in Section 3.3(c) of the Disclosure Schedule, there are no shares of
Company Capital Stock or other securities of the Company issued or outstanding and there are no
options, warrants, calls, rights, convertible securities, commitments or agreements of any
character, written or oral, to which the
Company is a party or by which the Company is bound obligating the Company to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock or other securities of the Company or obligating the Company to grant,
extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such
option, warrant, call, right, commitment or agreement. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or other similar rights with respect to
the Company. There are no preemptive rights or agreements, arrangements or understandings (written
or oral) to issue preemptive rights with respect to the issuance or sale of Company Capital Stock
created by statute, the certificate of incorporation or bylaws of the Company, or any agreement or
other arrangement (written or oral) to which the Company is a party or by which it is bound and
there are no agreements, arrangements or understandings (written or oral) to which the Company is a
party pursuant to which the Company has the right to elect to satisfy any Liability by issuing
Company Capital Stock or Equity Equivalents.

(e) True and complete copies of the forms of all agreements and instruments relating to or
issued under the Option Plan have been made available to Parent and all grants or issuances as set
forth in Section 3.3(e) of the Disclosure Schedule and made under or pursuant to the Option Plan
have been made pursuant to such forms. None of the foregoing agreements and instruments have been
amended, modified or supplemented, and there is no agreement, arrangement or understanding (written
or oral) to amend, modify or supplement such agreements or instruments in any case from the form
made available to Parent. Except as set forth in Section 3.3(e) of the Disclosure Schedule, the
Company is not a party or subject to any agreement, arrangement or understanding (written or oral),
and, to the Company’s knowledge, there is no agreement, arrangement or understanding (written or
oral) between or among any Persons which affects, restricts or relates to voting, giving of any
written consent, or dividend right with respect to or the transferability of any shares of Company
Capital Stock, including any voting trust agreement or proxy. The Company does not have any debt
securities issued and outstanding.

(f) The information contained in the Spreadsheet will be complete and correct as of the
Closing Date.

3.4 No Subsidiaries. The Company has and has had (and prior to the Closing will have) no
Subsidiaries and does not (and prior to the Closing will not) otherwise hold any equity,
membership, partnership, joint venture or other ownership interest in any Person.

3.5 Directors and Officers. The names of each director and officer of the Company on the date
hereof, and his or her position with the Company as of the date hereof, are listed in Section 3.5
of the Disclosure Schedule.

3.6 No Conflicts. The execution and delivery by the Company of this Agreement do not, and the
performance by the Company of its obligations under this Agreement and the consummation of the
transactions contemplated hereby, do not and will not:

(a) conflict with or result in a violation or breach of any of the terms, conditions or
provisions of the certificate of incorporation or bylaws of the Company;

(b) subject to obtaining the consents, approvals and actions, making the filings and giving
the notices disclosed in Section 3.6(b) of the Disclosure Schedule, if any, conflict with, or
result in a violation or breach of, any Law or Order applicable to the Company or any of its Assets
and Properties; or

 

18

 

(c) subject to obtaining the consents, approvals and actions, making the filings and giving
the notices disclosed in Section 3.6(c) of the Disclosure Schedule, if any, (i) conflict with in
any material
respect, or result in a material violation or material breach of, (ii) constitute a material
default (or an event that, with or without notice or lapse of time or both, would constitute a
default) under, (iii) require the Company to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of, (iv) result in or
give to any Person any right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional right or entitlement to any material
increased, additional, accelerated or guaranteed payment or performance under, (vi) result in the
creation or imposition of (or the obligation to create or impose) any Lien upon the Company or any
of its Assets and Properties under, or (vii) result in the loss of any material benefit under, any
of the terms, conditions or provisions of any Contract or License to which the Company is a party
or by which any of the Company’s Assets and Properties is bound.

3.7 Books and Records; Organizational Documents. The minute books and stock record books and
other similar records of the Company have been made available to Parent prior to the execution of
this Agreement and are complete and correct in all respects. Such minute books contain a true and
complete record of all actions taken at all meetings and by all written consents in lieu of
meetings of the shareholders, directors, and committees of the Board of Directors of the Company
from the date of the Company’s incorporation through the date hereof. The Company has, prior to
the execution of this Agreement, made available to Parent true and complete copies of its
certificate of incorporation and bylaws, both as amended through the date hereof. The Company is
not in violation of any provision of its certificate of incorporation or bylaws, both as amended
through the date hereof.

3.8 Company Financial Statements.

(a) Attached to Section 3.8(a) of the Disclosure Schedule is a true, correct and complete copy
of the Company Financials. The Company Financials are accurate and complete in all material
respects, and fairly present in all material respects the financial position of the Company as of
the respective dates thereof and the results of operations and cash flows of the Company for the
periods covered thereby. The Company Financials have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered, except that the Company Financials do not
contain footnotes. Since January 1, 2009, there has been no change in any accounting policies,
principles, methods or practices, including any change with respect to reserves (whether for bad
debts, contingent liabilities or otherwise), of the Company.

(b) The Company has at all times made and kept accurate books and records.

3.9 Absence of Changes. Since the Interim Financial Statement Date to the date hereof, there
has not been any Company Material Adverse Effect or any occurrence or event that, individually or
in the aggregate would be reasonably expected to have any Company Material Adverse Effect. In
addition, without limiting the generality of the foregoing, except as expressly required by this
Agreement since the Interim Financial Statement Date:

(a) except as set forth in Section 3.9(a) of the Disclosure Schedule, the Company has not
entered into any Contract, commitment or transaction or incurred any Liability outside of the
ordinary course of business consistent with past practice;

(b) the Company has not entered into, approved or resolved to enter into any agreement
relating to the acquisition by the Company of, or agreement by the Company to acquire by merging or
consolidating with, or by purchasing any assets or equity securities of, or by any other manner,
any business or corporation, partnership, association or other business organization or division
thereof, or other acquisition or agreement to acquire any assets or any equity securities that are
material, individually or in the aggregate, to the business of the Company;

 

19

 

(c) the Company has not altered or entered into any Contract or other commitment to alter, its
debt or equity interest in any corporation, association, joint venture, partnership or business
entity in which the Company directly or indirectly holds any interest (or any right to acquire any
interest) on the date hereof;

(d) the Company has not entered into any strategic alliance, joint development or joint
marketing Contract;

(e) there has not been any amendment or other modification (or agreement to do so), or any
violation by the Company or (to the knowledge of the Company) by any other party thereto of any of
the Material Contracts set forth or described in the Disclosure Schedule in any material respect;

(f) the Company has not entered into any transaction with any officer, director, shareholder,
Affiliate or Associate of the Company, other than in the case of officers, expense reimbursements
in the ordinary course of business consistent with past practice;

(g) the Company has not made or entered into any agreement to make any loan to any employee,
consultant, director, officer of any other Person;

(h) no Action or Proceeding has been commenced or threatened by or, to the knowledge of the
Company, against the Company;

(i) the Company has not declared or set aside or paid any dividend on or made any other
distribution (whether in cash, stock or property) in respect of any Company Capital Stock or Equity
Equivalent, or effected or approved any split, combination or reclassification of any Company
Capital Stock or Equity Equivalent, or issued or authorized the issuance of any other securities in
respect of, in lieu of or in substitution for any Company Capital Stock or Equity Equivalent, or
repurchased, redeemed or otherwise acquired, directly or indirectly, any Company Capital Stock or
Equity Equivalent, except repurchases of Company Capital Stock pursuant to agreements with
employees of the Company, officers, directors and consultants relating to repurchases at cost upon
termination of service with the Company;

(j) there has not been any amendment to the Company’s certificate of incorporation or bylaws;

(k) there has not been any transfer (by way of a License or otherwise) to any Person of any
right to any Company Intellectual Property;

(l) the Company has not made or agreed to make any disposition or sale of, waiver of any right
to, license or lease of, or incurrence of any Lien on, any Asset and Property of the Company, other
than dispositions of inventory or non-exclusive licenses of products to Persons in the ordinary
course of business of the Company consistent with past practice;

(m) the Company has not made or agreed to make any purchase of any Asset and Property of any
Person other than (i) acquisitions of inventory, or licenses of products, in the ordinary course of
business of the Company consistent with past practice, and (ii) other acquisitions in an amount not
exceeding ($10,000) in the case of any individual item or ($50,000) in the aggregate;

(n) the Company has not made or agreed to make any capital expenditure or commitment for
additions to property, plant or equipment constituting capital assets in an amount exceeding
($10,000) in the case of any individual item or ($50,000) in the aggregate;

 

20

 

(o) the Company has not made or agreed to make any write-off or write-down, any determination
to write off or write-down, or revalue, any of its Assets and Properties, or change any reserves or
liabilities associated therewith in an amount exceeding ($10,000) in the case of any individual
item or ($50,000) in the aggregate;

(p) the Company has not made or agreed to make payment, discharge or satisfaction, in an
amount exceeding ($10,000) in any one case or ($50,000) in the aggregate, of any claim or Liability
(whether absolute, accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business of Liabilities reflected or
reserved against in the Company Financials;

(q) the Company has not failed to pay or otherwise satisfy any Liability of the Company
presently due and payable, except such Liabilities which are being contested in good faith by
appropriate means or procedures and which, both individually and in the aggregate, are immaterial
in amount;

(r) the Company has not incurred any Indebtedness or guaranteed any Indebtedness, or sold any
debt securities of the Company or guaranteed any debt securities of any other Person;

(s) the Company has not granted or paid or made any commitment to pay any severance or
termination payment to any director, officer employee or consultant, except payments made pursuant
to written Contracts outstanding on the date hereof, copies of which have been made available to
Parent or its counsel and the terms of which are disclosed in Section 3.9(s) of the Disclosure
Schedule;

(t) the Company has not granted or approved any increase of greater than five percent (5%) in
salary, rate of commissions, rate of consulting fees or any other compensation of any current or
former officer, director, shareholder, employee, independent contractor or consultant of the
Company;

(u) the Company has not paid or approved the payment of any consideration of any nature
whatsoever (other than salary, commissions or consulting fees and customary benefits paid to any
current or former officer, director, shareholder, employee or consultant of the Company, in each
case in amounts, on terms, and of a type consistent with the Company’s past practices) to any
current or former officer, director, shareholder, employee, independent contractor or consultant of
the Company;

(v) the Company has not established or modified any target, goal, pool or similar provision
under, or any salary range, increased guideline or similar provision in respect of, any Company
Employee Plan, Employee Agreement or other employee compensation arrangement or independent
contractor Contract or other compensation arrangement;

(w) the Company has not adopted, entered into, amended, modified or terminated (partially or
completely) any Company Employee Plan or Employee Agreement;

(x) the Company has not paid or agreed or made any commitment to pay any discretionary or stay
bonus;

(y) the Company has not (i) made, changed or rescinded any material election in respect of any
Tax, adopted or changed any accounting method in respect of any Tax, (ii) entered into any Tax
allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement,
settlement or compromise of any claim or assessment in respect of any Tax, or (iii) consented to
any extension or waiver of the limitation period applicable to any claim or assessment in respect
of any Tax with any Taxing Authority or otherwise;

 

21

 

(z) the Company has not made any change in accounting policies, principles, methods, practices
or procedures (including for bad debts, contingent liabilities or otherwise, respecting
capitalization or expense of research and development expenditures, depreciation or amortization
rates or timing of recognition of income and expense);

(aa) other than in the ordinary course of business, the Company has not made any
representation or proposal to, or engaged in any substantive discussion with, any holder (or any
representative of any holder) of any Indebtedness, or to or with any Person which has issued a
letter of credit which benefits the Company;

(bb) the Company has not commenced or terminated, or made any change in, any line of business;

(cc) the Company has not failed to renew any insurance policy; no insurance policy of the
Company has been cancelled or materially amended; and the Company has given all notices and
presented all claims (if any) under all such policies in a timely fashion;

(dd) the Company has taken all action required (i) to procure, maintain, renew, extend or
enforce any of its Registered Intellectual Property (such Registered Intellectual Property, the
“Company Registered Intellectual Property”), including submission of required documents or fees
during the prosecution of patent, trademark or other applications for such Company Registered
Intellectual Property right, and (ii) to protect, maintain or enforce all other Company
Intellectual Property owned by or exclusively licensed to the Company;

(ee) there has been no physical damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any of the real or personal property or equipment of the Company in
an amount exceeding ($10,000) in the case of any individual item or ($50,000) in the aggregate; and

(ff) the Company has not repurchased, cancelled, accelerated or modified the terms of any
share of Company Capital Stock, any Company Option, any Equity Equivalent or other financial
instrument that derives value from its convertibility into Company Capital Stock or any Equity
Equivalent.

3.10 No Undisclosed Liabilities. The Company has no Liabilities which would be required to be
reflected or reserved on a balance sheet prepared in accordance with U.S. GAAP, or reflected or
reserved in any footnotes thereto, except for Liabilities reflected or reserved against in the
Company Financials, liabilities incurred in the ordinary course of business consistent with past
practice since the Interim Financial Statement Date or Liabilities incurred in connection with the
transactions contemplated hereby that are Third Party Expenses.

3.11 Taxes.

(a) All Tax Returns required to have been filed by or with respect to the Company have been
duly and timely filed (including any extensions), and each such Tax Return is true, complete and
correct and correctly and completely reflects Tax Liability and all other information required to
be reported thereon. All Taxes due and payable by the Company, whether or not shown on any Tax
Return, or claimed to be due by any Tax Authority, have been timely paid in full or fully accrued
on the balance sheet included in the Company Financials and are otherwise appropriately and fully
reflected in the Company Financials to the extent applicable to the periods covered thereby, and to
the extent applicable to periods after those covered by the Company Financials, have been fully
accrued and adequately and fully reflected in the books and records of the Company in the ordinary
course of business consistent with past practice. The Company has disclosed
on its Tax Returns all positions (if any) that could give rise to a substantial understatement
penalty under Section 6662 of the Internal Revenue Code.

 

22

 

(b) The Company has incurred no Liability for Taxes other than in the ordinary course of
business. The unpaid Taxes of the Company (i) did not, as of the most recent fiscal month end,
exceed by any material amount the reserve for Liability for Income Tax (other than the reserve for
deferred taxes established to reflect timing differences between book and tax income) or Other Tax
set forth on the face of the balance sheet included in the Interim Financial Statements, and (ii)
will not exceed such reserve as adjusted for operations and transactions in the ordinary course of
business through the Closing Date.

(c) The Company is not a party to any agreement extending the time within which to file any
Tax Return. No claim has ever been made by a Taxing Authority of any jurisdiction in which the
Company does not file Tax Returns that the Company is or may be subject to taxation by that
jurisdiction.

(d) The Company has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor, independent contractor,
shareholder or third party.

(e) The Company has not received any demand for payment or notice of assessment of, and does
not have knowledge of any action by any Taxing Authority in connection with assessing, additional
Taxes against or in respect of it for any past period. There is no dispute or claim concerning any
Tax Liability of the Company (i) threatened, claimed, raised or assessed by any Taxing Authority
and (ii) to the Company’s knowledge, no basis exists for any such claim or dispute. There are no
Liens for Taxes upon the Assets and Properties of the Company other than Liens for Taxes not yet
due and payable. Section 3.11(e) of the Disclosure Schedule lists those Tax Returns, if any, of
the Company that have been audited or examined by Taxing Authorities, and indicates those Tax
Returns of the Company that currently are the subject of audit or examination. The Company has
made available to Parent complete and correct copies of all federal, state, local and foreign
income Tax Returns filed by, and all Tax examination reports and statements of deficiencies
assessed against or agreed to by, the Company since the inception of the Company.

(f) There are no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Return required to be filed by, or which includes or is treated as
including, the Company or with respect to any Tax assessment or deficiency affecting the Company.

(g) The Company has not received any written ruling related to Taxes or entered into any
agreement with a Taxing Authority relating to Taxes.

(h) The Company has no liability for any Tax of any Person other than the Company (i) under
Section 1.1502-6 of the Treasury regulations (or any similar provision of state, local or foreign
Law), (ii) as a transferee or successor, (iii) by Contract or (iv) otherwise.

(i) The Company has neither agreed to make nor is required to make any adjustment under
Section 481 of the Internal Revenue Code by reason of a change in accounting method.

(j) The Company is not a party to or bound by any obligations under any Tax sharing, Tax
allocation, Tax indemnity or similar agreement or arrangement.

(k) The Company is not involved in, subject to, or a party to any joint venture, partnership,
Contract or other arrangement that could be treated as a partnership for federal, state, local or
foreign Income Tax purposes.

 

23

 

(l) There is no Contract, agreement or arrangement to which the Company is a party, including
the provisions of this Agreement, covering any current or former employee of the Company which,
individually or collectively, could give rise to the payment of any amount that would not be
deductible under Section 280G and Section 404 of the Internal Revenue Code or that would require
payment of an excise tax under Section 4999 of the Internal Revenue Code.

(m) The Company is not and has never been a United States real property holding corporation
within the meaning of Section 897(c)(1)(A)(ii) of the Internal Revenue Code.

(n) The Company has not constituted either a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(a)(1)(A) of the Internal Revenue Code) in a
distribution of stock intended to qualify for tax-free treatment under Section 355 of the Internal
Revenue Code (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution
which could otherwise constitute part of a “plan” or “series of related transactions” (within the
meaning of Section 355(e) of the Internal Revenue Code) in conjunction with the transactions
contemplated by this Agreement.

(o) Except as set forth in Section 3.11(n) of the Disclosure Schedule, the Company does not
have, nor has ever had, a permanent establishment in any country other than the United States, and
has not engaged in a trade or business in any country other than the United States that subjected
the Company to any Taxes in such country.

(p) The Company has not participated in or cooperated with any international boycott and has
not been requested to do so in connection with any transaction or proposed transaction.

(q) The Company has not engaged in a transaction that is the same as or substantially similar
to one of the types of transactions that the Internal Revenue Service has determined to be a tax
avoidance transaction and identified by notice, regulation or other form of published guidance as a
listed transaction as set forth in Treas. Reg. § 1.6011-4(b)(2).

(r) Each “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the
Internal Revenue Code) has been operated since January 1, 2005 in good faith compliance with
Section 409A of the Internal Revenue Code and Internal Revenue Service Notice 2005-1. No
nonqualified deferred compensation plan has been “materially modified” (within the meaning of
Internal Revenue Service Notice 2005-1) at any time after October 3, 2004. Each Company Option was
originally granted with an exercise price that the Board of Directors of the Company, in good
faith, determined to be equal to the fair market value of a share of Company Common Stock on the
date of grant.

 

24

 

3.12 Legal Proceedings. There is no Action or Proceeding pending or, to the knowledge of the
Company, threatened against, relating to or affecting the Company or any of its Assets and
Properties. There is no fact or circumstance known to the Company that, either alone or together
with other facts and circumstances, could reasonably be expected to give rise to any Action or
Proceeding against, relating to or affecting the Company or any of its Assets and Properties. The
Company has not received notice, and does not otherwise have knowledge of, any Order outstanding
against the Company.

3.13 Compliance with Laws and Orders. Neither the Company nor, to the Company’s knowledge,
any of its directors, officers, Affiliates, agents or employees in his, her or its capacity as such
has violated in any material respect since the incorporation of the Company, or is currently in
default or violation in any material respect under, any Law or Order applicable to the Company or
any of its Assets and Properties, and the Company is not aware of any such claim of violation, or
of any such actual violation, of any such Law or Order by the Company since the incorporation of
the Company.

3.14 Employee Benefit Plans and Compensation.

(a) Company Employee Plans and Employee Agreements. Section 3.14(a) of the Disclosure
Schedule contains an accurate and complete list of each Company Employee Plan and each Employee
Agreement. The Company has not made any plan or commitment to establish any new Company Employee
Plan or Employee Agreement, to modify any Company Employee Plan or Employee Agreement (except to
the extent required by Law or to conform any such Company Employee Plan or Employee Agreement to
the requirements of any applicable Law, in each case as previously disclosed to Parent in writing,
or as required by this Agreement), or to enter into any Company Employee Plan or Employee
Agreement.

(b) Documents. The Company has made available to Parent (i) correct and complete copies of
all documents embodying each Company Employee Plan and each Employee Agreement including all
amendments thereto and all related trust documents, (ii) the three (3) most recent annual reports
(Form Series 5500 and all schedules and financial statements attached thereto), if any, required
under ERISA or the Internal Revenue Code or by any other applicable Law in connection with each
Company Employee Plan, (iii) if the Company Employee Plan is funded, the most recent annual and
periodic accounting of Company Employee Plan assets, (iv) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any, required under ERISA or
by any other applicable Law with respect to each Company Employee Plan, (v) all material written
agreements and contracts relating to each Company Employee Plan, including administrative service
agreements and group insurance contracts, (vi) all material Employee communications relating to any
Company Employee Plan and any proposed Company Employee Plan, in each case, relating to any
amendments, terminations, establishments, increases or decreases in benefits, acceleration of
payments or vesting schedules or other events which would result in any liability to the Company,
(vii) all correspondence to or from any governmental agency relating to any Company Employee Plan,
(viii) all COBRA forms and related notices, (ix) all policies pertaining to fiduciary liability
insurance covering the fiduciaries for each Company Employee Plan, (x) all discrimination tests for
each Company Employee Plan for the three (3) most recent plan years, and (xi) the most recent
Internal Revenue Service (or any other applicable tax authority) determination or opinion letter
issued with respect to each Company Employee Plan.

 

25

 

(c) Company Employee Plan Compliance. The Company has performed all material obligations
required to be performed by it under, is not in default or violation of, and the Company does not
have knowledge of any default or violation by any other party to, any Company Employee Plan, and
each Company Employee Plan has been established and maintained in accordance with its terms and in
material compliance with all applicable Laws, statutes, orders, rules and regulations, including
ERISA or the Internal
Revenue Code. Any Company Employee Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code has obtained a favorable determination letter (or opinion letter, if
applicable) as to its qualified status under the Internal Revenue Code. No “prohibited
transaction,” within the meaning of Section 4975 of the Internal Revenue Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any
Company Employee Plan. There are no actions, suits or claims pending or, to the knowledge of the
Company, threatened or reasonably anticipated (other than routine claims for benefits) against any
Company Employee Plan or against the assets of any Company Employee Plan. Each Company Employee
Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance
with its terms, without liability to Parent, the Company or any ERISA Affiliate (other than
ordinary administration expenses). There are no audits, inquiries or proceedings pending or to the
knowledge of the Company or any ERISA Affiliates, threatened by the Internal Revenue Service, DOL,
or any other Governmental Entity with respect to any Company Employee Plan. Neither the Company
nor any ERISA Affiliate is subject to any penalty or Tax with respect to any Company Employee Plan
under Section 502(i) of ERISA or Sections 4975 through 4980 of the Internal Revenue Code. The
Company has timely made all contributions and other payments required by and due under the terms of
each Company Employee Plan.

(d) No Pension Plan. Neither the Company nor any ERISA Affiliate has ever maintained,
established, sponsored, participated in, or contributed to, any Pension Plan subject to Part 3 of
Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Internal Revenue Code

(e) No Self Insured Plan. Neither the Company nor any ERISA Affiliate has ever maintained,
established, sponsored, participated in or contributed to any self insured plan that provides
benefits to Employees (including any such plan pursuant to which a stop loss policy or contract
applies).

(f) Collectively Bargained, Multiemployer and Multiple Employer Plan. At no time has the
Company or any ERISA Affiliate contributed to or been obligated to contribute to any multiemployer
plan (as defined in Section 3(37) of ERISA). Neither the Company nor any ERISA Affiliate has at
any time ever maintained, established, sponsored, participated in or contributed to any multiple
employer plan or to any plan described in Section 413 of the Internal Revenue Code.

(g) No Post Employment Obligations. No Company Employee Plan or Employee Agreement provides,
or reflects or represents any liability to provide, post termination or retiree life insurance,
health or other employee welfare benefits to any Person for any reason, except as may be required
by COBRA or other applicable statute, and the Company has never represented, promised or contracted
(whether in oral or written form) to any Employee (either individually or to Employees as a group)
or any other Person that such Employee(s) or other Person would be provided with life insurance,
health or other employee welfare benefits, except to the extent required by statute.

(h) COBRA; FMLA; HIPAA. The Company and each ERISA Affiliate has, prior to the Effective
Time, complied with COBRA, FMLA, HIPAA, the Women’s Health and Cancer Rights Act of 1998, the
Newborns’ and Mothers’ Health Protection Act of 1996, and any similar provisions of foreign or
state Law applicable to its Employees. The Company does not have any unsatisfied obligations to
any Employees or qualified beneficiaries pursuant to COBRA, HIPAA or any state Law governing health
care coverage or extension.

 

26

 

(i) Effect of Transaction. Except as set forth in Section 3.14(i) of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the transactions
contemplated hereby or any termination of employment or service in connection therewith will (i)
result in any payment (including severance, bonus or otherwise), becoming due to any Employee, (ii)
result in any
forgiveness of indebtedness, (iii) materially increase any benefits otherwise payable by the
Company, or (iv) result in the acceleration of the time of payment or vesting of any such benefits
except as required under Section 411(d)(3) of the Internal Revenue Code.

(j) Parachute Payments. Except as set forth in Section 3.14(j) of the Disclosure Schedule,
there is no agreement, plan, arrangement or other contract covering any Employee that, considered
individually or considered collectively with any other such agreements, plans, arrangements or
other contracts, will, or could reasonably be expected to, give rise directly or indirectly to the
payment of any amount that would be characterized as a “parachute payment” within the meaning of
Section 280G(b)(2) of the Internal Revenue Code. There is no agreement, plan, arrangement or other
contract by which the Company is bound to compensate any Employee for excise taxes paid pursuant to
Section 4999 of the Internal Revenue Code. Section 3.14(j) of the Disclosure Schedule lists all
persons who are “disqualified individuals” (within the meaning of Section 280G of the Internal
Revenue Code and the regulations promulgated thereunder) as determined as of the date hereof.

(k) Employment Matters. The Company is in material compliance with all applicable foreign,
federal, state and local Laws, rules and regulations, collective bargaining agreements and
arrangements, extension orders and binding customs respecting employment, employment practices,
terms and conditions of employment, employee safety and health and wages and hours, and in each
case, with respect to Employees: (i) has withheld and reported all amounts required by Law or by
agreement to be withheld and reported with respect to wages, salaries and other payments to
Employees; (ii) is not liable for any arrears of wages, severance pay or any Taxes or any penalty
for failure to comply with any of the foregoing; and (iii) is not liable for any payment to any
trust or other fund governed by or maintained by or on behalf of any governmental authority, with
respect to unemployment compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of business and consistent
with past practice). There are no actions, suits, claims or administrative matters pending,
threatened or reasonably anticipated against the Company or any of its Employees relating to any
Employee, Employee Agreement or Company Employee Plan. There are no pending or threatened or
reasonably anticipated claims or actions against Company or any Company trustee under any worker’s
compensation policy or long term disability policy. The services provided by each of the Company’s
and any ERISA Affiliates’ Employees is terminable at the will of the Company and its ERISA
Affiliates and any such termination would result in no liability to the Company or any ERISA
Affiliate. Section 3.14(k) of the Disclosure Schedule lists all liabilities of the Company to any
Employee that result from the termination by the Company or Parent of such Employee’s employment or
provision of services, a change of control of the Company, or a combination thereof. To the
knowledge of the Company, neither the Company nor any ERISA Affiliate has direct or indirect
liability with respect to any misclassification of any person as an independent contractor rather
than as an “employee”, or with respect to any Employee leased from another employer.

(l) Labor. No work stoppage or labor strike against the Company is pending, or to the
knowledge of the Company, threatened, or reasonably anticipated. The Company does not have
knowledge of any activities or proceedings of any labor union to organize any current Employees.
There are no actions, suits, claims, labor disputes or grievances pending or threatened or
reasonably anticipated relating to any labor matters involving any current employee, including
charges of unfair labor practices. The Company has not engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. The Company is not presently, nor has it
been in the past, a party to, or bound by, any collective bargaining agreement or arrangement or
union contract with respect to Employees, and no collective bargaining agreement is being
negotiated by the Company. Within the past year, the Company or has not incurred any liability or
obligation under WARN or any similar state or local Law that remains unsatisfied, and no
terminations prior to the Closing Date shall result in unsatisfied liability or obligation
under WARN or any similar state or local Law.

 

27

 

(m) No Interference or Conflict. To the knowledge of the Company, no shareholder, director,
officer, employee or consultant of the Company is obligated under any contract or agreement,
subject to any judgment, decree, or order of any court or administrative agency that would
interfere with such Person’s efforts to promote the interests of the Company or that would
interfere with the Company’s business. Neither the execution nor delivery of this Agreement, nor
the carrying on of the Company’s business as presently conducted or proposed to be conducted nor
any activity of such officers, directors, employees or consultants in connection with the carrying
on of the Company’s business as presently conducted or currently proposed to be conducted will, to
the knowledge of the Company, conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract or agreement under which any of such
officers, directors, employees, or consultants is now bound.

(n) No International Employee Plan. Neither the Company nor any ERISA Affiliate has ever
maintained, established, sponsored, participated in, or contributed to, any International Employee
Plan.

(o) Certain Employee Matters. Section 3.14(o) of the Disclosure Schedule contains a complete
and accurate list of the current employees of the Company as of the date hereof and shows with
respect to each such employee (i) the employee’s name, position held, base salary and target bonus,
(ii) the date of hire, (iii) accrued vacation days, (iv) leave status (including type of leave,
expected return date for non disability related leaves and expiration dates for disability leaves),
(v) visa status, (vi) the name of any union, collective bargaining agreement or other similar labor
agreement covering such employee, (vii) any known performance issues, improvement or disciplinary
actions contemplated or pending against such employee, (viii) accrued sick days for current
calendar year, (ix) relevant prior notice period required, and (x) eligibility to company car. To
the knowledge of the Company, no employee listed in Section 3.14(o) of the Disclosure Schedule
intends to terminate his or her employment for any reason, other than in accordance with the
employment arrangements provided for in this Agreement.

(p) Consultants and Advisors. Section 3.14(p) of the Disclosure Schedule contains an accurate
and complete list of all Persons that have a consulting or advisory relationship with the Company.

3.15 Real Property.

(a) Section 3.15(a) of the Disclosure Schedule contains a true and correct list of (i) each
parcel of real property leased, occupied and/or operated by the Company (as lessor or lessee or
otherwise) (the “Leased Real Property”), and (ii) all Liens relating to or affecting any parcel of
real property referred to in clause (i) to which the Company is a party. The Company owns no real
property other than Company-owned leasehold improvements, if any, on the Leased Real Property.

(b) Subject to the terms of its respective leases, the Company has a valid and subsisting
leasehold estate in and the right to quiet enjoyment of each of the Leased Real Properties for the
full term of the leases (including renewal periods) relating thereto. Each Lease Document referred
to in Section 3.15(d) below is a legal, valid and binding agreement, enforceable in accordance with
its terms, of the Company, and to the Company’s knowledge, of each other Person that is a party
thereto, and there is no, and the Company has not received notice of any, default by the Company
(or any condition or event which, after notice or lapse of time or both, would constitute a default
by the Company) under any Lease Document and, to the Company’s knowledge, there is no default under
any Lease Document (or any condition or event which, after notice or lapse of time or both, would
constitute a default) by any other Person that is a party thereto. The Company does not owe
brokerage commissions or finder’s fees with respect to any such Leased Real
Property, except to the extent that the Company may renew the term of any such lease, in which
case, any such commissions and fees would be in amounts that are reasonable and customary for the
spaces so leased, given their intended use and terms.

 

28

 

(c) All improvements on the Leased Real Property (i) comply with and are operated in all
material respects in accordance with applicable Laws (including Environmental Laws) and all
applicable Liens, Approvals, Contracts, covenants and restrictions and (ii) are in all material
respects in good operating condition and in a state of good maintenance and repair, ordinary wear
and tear excepted, and such improvements are in all material respects adequate and suitable for the
purposes for which they are presently being used and there is no condemnation or appropriation
proceeding, pending or, to the knowledge of the Company, threatened against any of such real
property or any of the improvements thereon.

(d) True and correct copies of the documents under which the Leased Real Property is leased,
subleased (to or by the Company or otherwise), utilized, and/or operated (the “Lease Documents”)
have been made available to Parent. The Lease Documents are unmodified and in full force and
effect, and there are no other Contracts between the Company and any other Person or to the
Company’s knowledge, by and among any other Persons, claiming an interest in the interest of the
Company in the Leased Real Property or otherwise relating to the use and occupancy of the Leased
Real Property.

3.16 Tangible Personal Property. The Company is in possession of and has good and marketable
title to, or has valid leasehold interests in or valid rights under Contract to use, all tangible
personal property used in the conduct of its business, including all tangible personal property
reflected on the Company Financials, other than property disposed of since such date in the
ordinary course of business consistent with past practice which is not material in nature or
amount. All such tangible personal property (including plant, property and equipment) is free and
clear of all Liens, other than Permitted Liens and except as set forth in Section 3.16 of the
Disclosure Schedule, and is adequate and suitable in all material respects for the conduct by the
Company of its business as presently conducted, and is in good working order and condition in all
material respects, ordinary wear and tear excepted, and its use complies in all material respects
with all applicable Laws.

3.17 Intellectual Property.

(a) Section 3.17(a) of the Disclosure Schedule lists all Company Registered Intellectual
Property and lists any proceedings or actions pending as of the date hereof before any court or
tribunal (including the PTO or equivalent authority anywhere in the world) related to any of the
Company Registered Intellectual Property.

(b) Except as set forth in Section 3.17(b) of the Disclosure Schedule, to its knowledge, the
Company has all requisite right, title and interest in, to and under (or valid and enforceable
rights under Contracts or Licenses to use) all Intellectual Property necessary to the conduct of
its business as presently conducted. To the Company’s knowledge, each item of Company Intellectual
Property, including all Company Registered Intellectual Property listed in Section 3.17(a) of the
Disclosure Schedule, is owned exclusively by the Company (excluding Intellectual Property licensed
to the Company under any License, which licensed Intellectual Property is so identified in Section
3.17(b) of the Disclosure Schedule or constitutes standard off-the-shelf shrink-wrap or
click-through licensed software) and, except as otherwise disclosed in Section 3.17(b) of the
Disclosure Schedule, is free and clear of all Liens (with the exception of any Permitted Liens or
Liens on Intellectual Property licensed by Company from third parties). Except as set forth in
Section 3.17(b) of the Disclosure Schedule, to its knowledge, the Company: (i) owns exclusively all
trademarks, service marks and trade names used by the Company in connection with the operation or
conduct of the business of the Company, including the sale of any products or technology or the
provision of any
services by the Company; provided, however, that the Company may use trademarks, service marks
and trade names of third parties which are licensed to the Company or are in the public domain; and
(ii) owns exclusively, and has good title to, each copyrighted work that is incorporated in any
Company product (other than copyrighted works licensed to the Company by third parties, which works
are so identified in Section 3.17(b) of the Disclosure Schedule or constitute standard
off-the-shelf shrink-wrap or click-through licensed software) and each other work of authorship
that the Company otherwise purports to own.

 

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(c) To the extent that any Company Intellectual Property has been developed or created by any
Person other than the Company, the Company has a legal, valid and binding written (or electronic)
agreement with such Person with respect thereto, enforceable in accordance with its terms, and the
Company either (i) has obtained ownership of, and to its knowledge, is the exclusive owner of, all
such Intellectual Property by operation of Law or by valid assignment of any such rights (other
than moral rights and other inalienable rights inherent in such Intellectual Property that are
incapable of being assigned to the Company under Laws of certain foreign jurisdictions) or (ii) has
obtained a License under or to such Intellectual Property. Each such agreement, assignment and
License is listed in Section 3.17(c) of the Disclosure Schedule.

(d) Except pursuant to agreements listed in Section 3.17(d)(i) of the Disclosure Schedule, the
Company has not transferred ownership of or granted (and is not obligated to grant) any License of
or other right to use any Intellectual Property that is or was Company Intellectual Property, to
any other Person. None of the Company Intellectual Property is required to be licensed under any
forum, consortium or other standards body agreement. Section 3.17(d)(ii) of the Disclosure
Schedule lists all forums, consortiums, standards bodies or similar organizations in which the
Company currently, or has in the past participated, or been a member or to which the Company has
made any disclosure or contribution of any Intellectual Property.

(e) Except as set forth in Section 3.17(e) of the Disclosure Schedule, the Company
Intellectual Property includes all the Intellectual Property used in and/or necessary for the
conduct of the Company’s business as it presently is conducted, including for the design,
development, distribution, marketing, manufacture, use, import, license, and sale of the products,
technologies and services of the Company (including products, technologies, and services currently
under development), a true, correct and complete list of which is set forth in Section 3.17(e) of
the Disclosure Schedule.

(f) Section 3.17(f) of the Disclosure Schedule lists all Contracts and Licenses (including all
inbound Licenses other than standard off-the-shelf shrink-wrap or click-through licensed software)
to which the Company is a party with respect to any Intellectual Property (other than standard
agreements with developers, distributors or customers of Mochi entered into in the ordinary course
of business). The Company is not party to any agreement that includes an express grant back of
rights by Company to improvements created by the Company with respect to technology licensed to
Company under such agreement.

(g) Section 3.17(g) of the Disclosure Schedule lists all Contracts and Licenses between the
Company and any other Person wherein or whereby the Company has agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
incur any obligation or Liability or provide a right of rescission with respect to the infringement
or misappropriation by the Company or such other Person of the Intellectual Property of any Person
other than the Company, except for obligations in Licenses entered into in the ordinary course of
business.

 

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(h) Except as set forth in Section 3.17(h) of the Disclosure Schedule, to the Company’s
knowledge, the operation of the business of the Company as heretofore conducted, as presently
conducted and
as presently proposed to be conducted, including the Company’s design, development,
distribution, marketing, manufacture, use, import, license, and sale of products, technologies and
services (including products, technologies and services currently under development by the Company)
does not (and did not at any time) (i) infringe or misappropriate the Intellectual Property of any
Person, (ii) violate any term or provision of any License or Contract concerning such Intellectual
Property, including any provision required by or imposed pursuant to 35 U.S.C. §§200-212 in any
License or Contract to which the Company is a party requiring that products be manufactured
substantially in the United States (“Made-in-America Requirements”), (iii) violate any right of any
Person (including any right to privacy or publicity), (iv) disclose any confidential information of
the Company that is not pursuant to a confidentiality agreement or any third-party confidential
information that is protected by a confidentiality agreement, or (v) constitute unfair competition
or an unfair trade practice under any Law. Except as set forth in Section 3.17(h) of the
Disclosure Schedule, neither the Company nor any of its representatives has received from any
Person any (x) notice claiming that such operation or any act, product, technology or service of
the Company (including products, technologies and services currently under development) infringes
or misappropriates the Intellectual Property of any Person or constitutes unfair competition or
trade practices under any Law or (y) notice of third-party patent or other Intellectual Property
rights from a putative or potential licensor of such rights. Without limiting the generality of
the foregoing, the Company has not made any shipment of source code in violation of the terms of
any agreement between the Company and any Person pursuant to which the Company has licensed
technology or Intellectual Property from any Person. The Company has not brought any Action or
Proceeding for infringement of Intellectual Property or breach of any License or Contract involving
Intellectual Property against any Person.

(i) Each item of Company Registered Intellectual Property is valid and subsisting, and all
necessary registration, maintenance, renewal fees, annuity fees and taxes in connection with such
Company Registered Intellectual Property have been paid and all necessary documents and
certificates in connection with such Company Registered Intellectual Property have been filed with
the relevant patent, copyright, trademark or other authorities in the United States or the relevant
foreign jurisdictions, as the case may be, for the purposes of maintaining such Registered
Intellectual Property. Section 3.17(i) of the Disclosure Schedule lists all actions that must be
taken by the Company within one hundred eighty (180) days from the date hereof, including the
payment of any registration, maintenance, renewal fee, annuity fee and Tax or the filing of any
document, application or certificate for the purposes of maintaining, perfecting or preserving or
renewing any Company Registered Intellectual Property. In each case in which the Company has
acquired ownership of any Intellectual Property right from any Person, the Company has obtained a
valid and enforceable assignment sufficient to irrevocably transfer all rights in such Intellectual
Property to the Company (other than moral rights and other inalienable rights inherent in such
Intellectual Property that are incapable of being assigned to the Company under Laws of certain
foreign jurisdictions) and, to the maximum extent provided for by and required to protect the
Company’s ownership rights in and to any such Intellectual Property that is Company Registered
Intellectual Property in accordance with all applicable Laws, the Company has recorded each such
assignment of Registered Intellectual Property with the relevant Governmental or Regulatory
Authority, including the PTO, the U.S. Copyright Office, or their respective equivalents in all
relevant foreign jurisdictions, as the case may be.

(j) There is no Contract or License between the Company and any other Person with respect to
Company Intellectual Property under which there is any dispute (and there are no facts or
circumstances that may reasonably be expected to lead to a dispute) regarding the scope of such
Contract or License, or performance under such Contract or License, including with respect to any
payment to be made or received by the Company thereunder.

(k) To the knowledge of the Company, no Person is infringing or misappropriating any Company
Intellectual Property.

 

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(l) The Company has taken commercially reasonable steps to protect the Company’s rights in
confidential information and trade secrets of the Company or provided by any other Person to the
Company subject to a duty of confidentiality or a limitation on use. Without limiting the
generality of the foregoing, the Company has, and enforces, a policy requiring each employee,
consultant and independent contractor to execute proprietary information, confidentiality and
invention and copyright assignment agreements substantially in the forms set forth in or attached
to Section 3.17(l) of the Disclosure Schedule, and all current and former employees, consultants
and independent contractors of the Company have executed such an agreement and copies of all such
agreements have been made available to Parent or made available to Parent for review.

(m) No Company Intellectual Property or product, technology or service of the Company is
subject to any Order, Action or Proceeding, settlement, or “march in” right that materially
restricts, or that could reasonably be expected to materially restrict, in any manner the use,
transfer or licensing of any Company Intellectual Property by the Company or that may materially
affect the validity, use or enforceability of such Company Intellectual Property. The Company has
not developed or created any technology or Intellectual Property by or for any Governmental Entity,
university, academic institution or other similar non-commercial enterprise and has not received
any funding from such enterprise or otherwise have any obligation to such enterprise with respect
to any Company Intellectual Property. There are no restrictions either pursuant to any private
Contract or under any Law on the transferability or ownership of the Company Intellectual Property.
Except as set forth in Section 3.17(m) of the Disclosure Schedule, no Company Intellectual
Property is held or owned outside of the United States of America other than patents issued to the
Company in a foreign jurisdiction.

(n) To the Company’s knowledge, no (i) product, technology, service or publication of the
Company, (ii) material published or distributed by the Company or (iii) conduct or statement of the
Company constitutes obscene material, a defamatory statement or material, false advertising or
otherwise violates any Law.

(o) Except as set forth in Section 3.17(o) of the Disclosure Schedule, neither this Agreement
nor any of the transactions contemplated hereby, including the Merger or the transfer of assets
from the Company to Parent or a subsidiary of Parent, will result in the grant of any right or
license with respect to the Intellectual Property of Parent, the Company or the Surviving
Corporation to any Person pursuant to any Contract to which the Company is a party or by which any
of its Assets and Properties are bound, or subject any of them to any non-compete or other
restriction with respect to their respective businesses (other than rights, licenses or
restrictions with respect to Company or the Surviving Corporation that would have existed absent
the transactions contemplated by this Agreement).

(p) Section 3.17(p) of the Disclosure Schedule sets forth a list of (i) all software which the
Company has licensed from any third party which is used by the Company in its products or otherwise
in its business (other than standard off-the-shelf shrink-wrap or click-through licensed software)
and (ii) a list of all “freeware” and “shareware” incorporated into any product now or heretofore
shipped by the Company. The Company has all rights necessary for its current use (and had all
rights necessary for the Company’s past use) of such software, “freeware” and “shareware”.

(q) The Company’s products comply in all material respects with the feature specifications and
performance standards set forth in the Company’s product data sheets, if any. There are no
outstanding claims (or facts that may reasonably lead to a claim) for breach of warranty by the
Company in connection with such specifications. All product performance comparisons heretofore
furnished by the Company to customers or Parent are accurate in all material respects as of the
dates so furnished (except that, in the case of product performance comparisons made as of a
specified earlier date, such comparisons shall be accurate in
all material respects as of such specified earlier date, and, in the case of product
performance comparisons superseded by a subsequent product performance comparison furnished to the
customer before the customer’s acquisition of a license on the product covered by the superseded
comparison, the superseding comparison shall be accurate in all material respects and the
superseded comparison shall be disregarded).

 

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(r) The Company has taken all necessary steps to protect and preserve ownership of Company
Intellectual Property (excluding Intellectual Property licensed to the Company under any License;
provided, however that such exclusion shall not apply where the failure to take such steps would
constitute a breach of any agreement between the Company and any third party(ies)). The Company
has secured valid written assignments from all consultants and employees who contributed to the
creation or development of the Company Intellectual Property. In the event that such a consultant
is concurrently employed by the Company and another Person, the Company has taken additional steps
to confirm that any Company Intellectual Property developed by such a consultant does not belong to
such other Person or conflict with such consultant’s employment agreement with such other Person.
Except as set forth in Section 3.17(r) of the Disclosure Schedule, such steps include requiring
that all research and development work performed by such a consultant are performed only on the
Company’s facilities or, if outside of the facilities, only using the Company’s resources.

(s) Except as set forth in Section 3.17(s) of the Disclosure Schedule, (i) no Open Source
Software is incorporated (either directly by the Company, or indirectly, by the incorporation of
third party software that itself incorporates Open Source Software) into any of the Company’s
products or services, (ii) no product or service of the Company is intermingled or bundled with or
otherwise derived from or contains part of any Open Source Software or uses or links to any
libraries or routines that constitute Open Source Software, (iii) no Open Source Software is
otherwise used by the Company, whether or not incorporated with the Company’s products or services,
and (iv) the Company has not developed, acquired, licensed, used or otherwise obtained any Software
that is now, or is intended by the Company in the future to be Open Source Software. To the
knowledge of the Company, no third party has (i) combined, bundled, or merged Open Source Software
with Company’s products or services; or (ii) used Company’s products or services to link to, shared
data structures with, or make function calls to Open Source Software.

(t) Except as set forth in Section 3.17(t) of the Disclosure Schedule, to the knowledge of
Company neither the product, technology or service of the Company, nor any third party product,
technology or service incorporated in or otherwise distributed with a product, technology or
services of the Company, contains any error, flaw, virus or other fault that would materially
impair or delay the Company’s ability to distribute Company’s products, technology or services in
conformance with the specifications for such products, technology or services.

(u) The Company has taken all reasonable measures and opportunities available to it to assure
that, to the maximum extent permissible under safe harbors and other similar provisions of
applicable law, it has no liability (including any liability for infringement of Intellectual
Property rights of a third party) with respect to, or arising from, any software, technology,
content, or materials distributed, licensed, or otherwise made available by the Company.

 

33

 

3.18 Contracts.

(a) Section 3.18(a) of the Disclosure Schedule sets forth a complete and accurate list of each
of the following Contracts to which the Company is a party or otherwise bound (any Contract of a
nature described below (whether or not set forth on the Disclosure Schedule) to which the Company
is a party or otherwise bound, being referred to herein as a “Material Contract” and, collectively,
as the “Material Contracts”):

(i) any employment, contractor or consulting agreement, Contract with an employee or
individual consultant, contractor, or salesperson, any agreement, Contract or commitment to grant
any bonus, severance or termination pay (in cash or otherwise) to any employee, or any contractor,
consulting or sales agreement, Contract, or commitment with a firm or other organization, in each
case, in an amount exceeding annual payments, or exceeding an amount for any shorter period, of
$50,000;

(ii) any agreement or plan, including any stock option plan, stock appreciation rights plan or
stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement;

(iii) any fidelity or surety bond or completion bond;

(iv) any lease of personal property having a value in excess of $10,000 individually or
$50,000 in the aggregate;

(v) any agreement of indemnification or guaranty;

(vi) any Contract or commitment relating to capital expenditures and involving future payments
in excess of $10,000 individually or $50,000 in the aggregate;

(vii) any Contract or commitment relating to the disposition or acquisition of assets or any
interest in any business enterprise outside the ordinary course of the Company’s business;

(viii) any mortgages, indentures, guarantees, loans or credit agreements, security agreements
or other agreements or instruments relating to the borrowing of money or extension of credit;

(ix) any purchase order or Contract for the purchase of materials involving in excess of
$10,000 individually or $50,000 in the aggregate;

(x) any Contracts that contain “most favored nation” or preferred pricing provisions;

(xi) any dealer, distribution, joint marketing, strategic alliance, affiliate or development
agreement;

(xii) any Contract or commitment to alter the Company’s interest in any Subsidiary,
corporation, association, joint venture, partnership or business entity in which the Company
directly or indirectly holds any interest;

(xiii) any sales representative, original equipment manufacturer, manufacturing, value added,
remarketer, reseller, or independent software vendor, or other agreement for use or distribution of
the products, technology or services of the Company; or

(xiv) any other Contract or commitment that involves $10,000 individually or $50,000 in the
aggregate or more and is not cancelable without penalty within thirty (30) days.

 

34

 

(b) Each Material Contract to which the Company is a party or any of its Assets and
Properties, is subject is a valid and binding agreement of the Company, enforceable against each of
the parties thereto in accordance with its terms, and is in full force and effect with respect to
the Company and, to the knowledge of the Company, any other party thereto. The Company is in
compliance with and has not breached, violated or defaulted under, or received notice that they
have breached, violated or defaulted under, any of the terms or conditions of any Contract to which
it is or was bound, nor to the knowledge of the Company is any party obligated to the Company
pursuant to any Material Contract subject to any breach, violation or default thereunder, nor does
the Company have knowledge of any event that with the lapse of time, giving of notice or both would
constitute such a breach, violation or default by the Company or any such other party. True and
complete copies of each Material Contract (whether or not disclosed in the Disclosure Schedule)
have been made available to Parent.

(c) The Company has fulfilled all material obligations required to have been performed by the
Company prior to the date hereof pursuant to each Material Contract to which the Company is a party
or any of its Assets and Properties is bound, and to the knowledge of the Company, without giving
effect to the Merger, the Company will fulfill, when due, all of its obligations under such
Material Contract that remain to be performed after the date hereof.

(d) There are no, and the Company has no knowledge of any, threatened disputes or
disagreements with respect to any Material Contract to which the Company is a party or any of its
Assets and Properties subject.

(e) The Material Contracts to which the Company is a party or any of its Assets and Properties
is subject that constitute licenses of goods, services or rights from third parties that are
incorporated in any products, services or rights which the Company sublicense to their customers
are fully sublicensable without any further payment to any Person, except as identified in Section
3.18(e) of the Disclosure Schedule. Except as identified in Section 3.18(e) of the Disclosure
Schedule, no royalties, fees, honoraria, volume-based, milestone or other payments are payable by
the Company to any Person by reason of the ownership, use, sale, licensing, distribution or other
exploitation of any Company Intellectual Property relating to the conduct or operation of the
business of the Company or the delivery or provision of any products, services or rights delivered
or provided thereby or thereunder, except for obligations relating solely to end-user operating
systems and application software, the license of which is obtained with the acquisition or license
thereof.

3.19 Insurance.

(a) Section 3.19(a) of the Disclosure Schedule contains a true and complete list (including
the names and addresses of the insurers, the expiration dates of the policies, the annual premiums
thereof, frequency of payment thereof, the due date of the next payment thereof, the period of time
covered thereby and a brief description of the interests insured thereby) of all liability,
property, workers’ compensation, directors’ and officers’ liability and other insurance policies
currently in effect that insure any of the business, operations, directors, officers or employees
of the Company or affect or relate to the ownership, use or operation of any of the Assets and
Properties of the Company and that (i) have been issued to the Company or (ii) to the knowledge of
the Company, have been issued to any other Person for the benefit of the Company. The insurance
coverage provided by the policies set forth in Section 3.19(a) of the Disclosure Schedule will not
terminate or lapse by reason of any of the transactions contemplated by this Agreement. Each
policy listed in Section 3.19(a) of the Disclosure Schedule is, to the Company’s knowledge, valid
and binding and, further, is in full force and effect, all premiums due thereunder have been paid
when due and neither the Company nor the Person to whom such policy has been issued has received
any notice of cancellation or termination in respect of any such policy or is in default
thereunder, and the Company has no knowledge of
any reason or state of facts that could reasonably be expected to lead to the cancellation of
such policies or of any threatened termination of, or material premium increase with respect to,
any of such policies. The insurance policies listed in Section 3.19(a) of the Disclosure Schedule,
(i) in light of the business, operations and Assets and Properties of the Company, are in amounts
and have coverages that are reasonable and customary for Persons engaged in similar businesses and
operations and having similar Assets and Properties and (ii) are in amounts and have coverages
required by any Contract to which the Company is a party or by which any of its Assets and
Properties is bound.

 

35

 

(b) Section 3.19(b) of the Disclosure Schedule contains a list of all claims made under any
insurance policies covering the Company in the two (2) years immediately preceding the date of this
Agreement. The Company has not received notice that any insurer under any policy listed (or
required to be listed) in Section 3.19(b) of the Disclosure Schedule is denying, disputing or
questioning liability with respect to a claim thereunder or defending under a reservation of rights
clause. The Company has, in its reasonable judgment, in light of its business, location,
operations and Assets and Properties, maintained, at all times, without interruption, appropriate
insurance, both in scope and amount of coverages.

3.20 Affiliate Transactions.

(a) Except as set forth in Section 3.20(a) of the Disclosure Schedule: (i) there is no
Contract or Liability between the Company, on the one hand, and (A) any current or former officer,
director, shareholder, or to the Company’s knowledge, any Affiliate or Associate of the Company or
(B) any Person who, to the Company’s knowledge, is an Associate of any such officer, director,
shareholder or Affiliate, on the other hand; (ii) the Company does not provide or cause to be
provided any asset, service or facility to any such current or former officer, director, employee,
security holder, Affiliate or Associate, including loans relating to the purchase of any security;
(iii) no such current or former officer, director, shareholder, Affiliate or Associate provides or
causes to be provided any assets, services or facilities to the Company; and (iv) the Company does
not beneficially own, directly or indirectly, any Investment Assets of any such current or former
officer, director, shareholder, Affiliate or Associate.

(b) Each of the Contracts and Liabilities listed in Section 3.20(a) of the Disclosure Schedule
was entered into or incurred, as the case may be, on terms no less favorable to the Company (in the
reasonable judgment of the Company) than if such Contract or Liability was entered into or incurred
on an arm’s- length basis on competitive terms. Any Contract to which the Company is a party and
in which any director of the Company has a financial interest was approved by a majority of the
disinterested members of the Board of Directors of the Company and/or shareholders of the Company,
as the case may be, in accordance with applicable Law.

3.21 Accounts Receivable. The accounts and notes receivable of the Company reflected on the
Company Financials, and all accounts and notes receivable arising subsequent to the Interim
Financial Statement Date, (a) arose from bona fide sales transactions in the ordinary course of
business, consistent with past practice, and are payable on ordinary trade terms, (b) to the
Company’s knowledge, are legal, valid and binding obligations of the respective debtors enforceable
in accordance with their respective terms, (c) to the Company’s knowledge, are not subject to any
valid set-off or counterclaim and (d) do not represent obligations for goods sold on consignment,
on approval or on a sale-or-return basis or subject to any other repurchase or return arrangement.

 

36

 

3.22 Other Negotiations; Brokers; Third Party Expenses. Neither the Company nor any of its
officers, directors, employees, agents, or, to the knowledge of the Company, any of its
shareholders or Affiliates (nor any investment banker, financial advisor, attorney, accountant or
other Person retained by or acting for or on behalf of the Company or any such Affiliate) has
entered into (a) any Contract that conflicts
with any of the transactions contemplated by this Agreement, or (b) any Contract or had any
discussions with any Person regarding any transaction involving the Company which could reasonably
be expected to result in Parent, the Company or any officer, director, employee, agent or Affiliate
of any of them being subject to any claim for liability to such Person as a result of entering into
this Agreement or consummating the transactions contemplated hereby or thereby. Without limiting
the generality of the foregoing, the Company has not signed, entered into or otherwise become or
agreed to become bound by any engagement letter or similar agreement or ever signed by or on behalf
of the Company with any investment bank, business broker or financial advisor other than the
agreement entered into with China e-Capital set forth in Section 3.22(a) of the Disclosure Schedule. No broker, investment banker, financial advisor or other Person is entitled to any broker’s,
finder’s, financial advisor’s or similar fee or commission in connection with this Agreement or any
of the transactions contemplated hereby based on arrangements made by or on behalf of the Company
other than the amounts to be owed to China e-Capital as set forth in Section 3.22(a) of the
Disclosure Schedule. Section 3.22(a) of the Disclosure Schedule sets forth all Contracts with
respect to, and the Company’s best estimate of, all third party expenses expected to be incurred by
the Company in connection with the negotiation and effectuation of the terms and conditions of this
Agreement and the transactions contemplated hereby (such expenses, whether or not set forth in
Section 3.22(a) of the Disclosure Schedule, the “Third Party Expenses”). As used herein, “Excess
Third Party Expenses” shall mean the amount by which the Third Party Expenses exceed $2,500,000.

3.23 Restrictions on Business Activities. There is no agreement (non-competition or
otherwise), commitment, judgment, injunction, order or decree to which the Company is a party or
otherwise binding upon the Company which has or would reasonably be expected to have the effect of
prohibiting or impairing in any material respect any business practice of the Company, any
acquisition of Assets and Properties by the Company, the conduct of business by the Company, or
otherwise limiting the freedom of the Company to engage in any line of business or to compete with
any person. Without limiting the generality of the foregoing, the Company has not entered into any
agreement under which the Company is restricted from selling, licensing, manufacturing or otherwise
distributing any of its technology or products or from providing services to customers or potential
customers or any class of customers, in any geographic area, during any period of time, or in any
segment of the market.

3.24 Environmental Matters. (a) There are no Hazardous Materials in, on, or under any
properties currently owned or leased by the Company or its Subsidiaries, and (b) the Company and
its Subsidiaries have not disposed of, emitted, discharged, handled, stored, transported, used or
released any Hazardous Materials, or arranged for the disposal, discharge, storage or release of
any Hazardous Materials. The Company and each of its Subsidiaries have not received any written
notice of any alleged claim, violation of or liability under any Environmental Law. The Company
and its Subsidiaries have made available for inspection by Parent all environmental audits and
environmental assessments of any facility owned, leased or used at any time by the Company or each
of its Subsidiaries in the possession or control of the Company or any of its Subsidiaries. Each of
the Company and its Subsidiaries has been and currently is in compliance in all material respects
with all applicable Environmental Laws.

3.25 Approvals.

(a) Section 3.25(a) of the Disclosure Schedule sets forth a list of all material Approvals of
Governmental Entities relating to the business conducted by the Company which are required to be
given by the Company to or obtained by the Company from any and all Governmental Entities in
connection with the consummation of the transactions contemplated by this Agreement (other than the
filing of the Certificate of Merger, and such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under state or federal securities laws).

 

37

 

(b) Section 3.25(b) of the Disclosure Schedule sets forth a list of all material Approvals
which are required to be given by the Company to or obtained by the Company from any and all
Persons other than Governmental Entities in connection with the consummation of the transactions
contemplated by this Agreement.

(c) The Company has obtained all material Approvals from Governmental Entities necessary to
the conduct of the business of the Company as heretofore and presently conducted; there has been no
written notice received by the Company of any material violation or material non-compliance with
any such Approvals; and each such Approval required for the conduct of the business of the Company
as presently conducted is in full force and effect. All material Approvals from Governmental
Entities necessary to the conduct of the business of the Company as presently conducted are listed
in Section 3.25(c) of the Disclosure Schedule.

(d) Other than the Initial Shareholder Approval, no other votes of the holders of any shares
of the Company Capital Stock are required to adopt and approve this Agreement and approve the
Merger. The Company will obtain the Initial Shareholder Approval, and deliver true and correct
copies thereof to Parent, immediately following the execution of this Agreement.

3.26 Takeover Statutes. No “fair price,” “moratorium,” “control share acquisition” or other
similar anti-takeover statute or regulation enacted under state or federal laws in the United
States, including, without limitation, Section 203 of Delaware Law, is applicable to the Merger or
any of the transactions contemplated by this Agreement.

3.27 Consent Solicitation. All information furnished on or in any document mailed, delivered
or otherwise furnished or to the be mailed, delivered or otherwise furnished to shareholders by the
Company in connection with the solicitation of their consent to this Agreement and the Merger and
the other matters contemplated by Section 6.6 hereof, did not and will not, as the case may be,
contain any untrue statement of a material fact and did not and will not omit to state any material
fact necessary in order to make the statements made therein, in light of the circumstances under
which made, not misleading.

3.28 Hart-Scott-Rodino. The Company (a) is its own “ultimate parent entity” as defined under
16 C.F.R. 801.1 and the Hart-Scott-Rodino Act, (b) had less than $12,000,000 of revenue in its last
completed fiscal year, and (c) has total assets less than $12,000,000 as shown on its most recent
regularly-prepared balance sheet (including unaudited statements).

3.29 Disclosure. To the knowledge of the Company, no representation or warranty made by the Company contained
in this Agreement, and no statement contained in the Disclosure Schedule or in any certificate,
list or other writing furnished to Parent pursuant to any provision of this Agreement (including
the Company Financials and the notes thereto) contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein or therein, in the
light of the circumstances under which they were made, not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

Each of Parent and Sub hereby represents and warrants to the Company, on the date hereof and
as of the Effective Time, as though made at the Effective Time, as follows:

4.1 Organization and Standing. Parent is company limited by shares duly organized, validly
existing and in good standing under the Laws of the Cayman Islands. Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the State of Delaware. Each of
Parent and Sub is duly qualified or licensed to do business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified or licensed or in good
standing would have a Parent Material Adverse Effect.

 

38

 

4.2 Authority. Each of Parent and Sub has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by each of Parent and Sub of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action on the part of
Parent and Sub, and no further corporate action is required on the part of Parent and Sub to
authorize the execution of delivery of the Agreement. This Agreement has been duly executed and
delivered by Parent and Sub and, assuming due authorization, execution and delivery by the other
parties thereto, constitutes the valid and binding obligation of Parent and Sub, enforceable
against each in accordance with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws
relating to the enforcement of creditors’ rights generally and by general principles of equity.

4.3 Consents. No Approval of any Governmental Entity or any other Person is required by or
with respect to Parent or Sub in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for (a) such Approvals as may be
required under applicable securities laws, (b) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, and (c) such Approvals that, if not obtained or made,
would not have a Parent Material Adverse Effect or prevent or delay the consummation of the
transactions contemplated hereby.

4.4 Capital Resources. Parent has and, at the Effective Time, will have, sufficient cash
resources to pay the Per Share Amounts payable pursuant to Section 2.6(a)(i) hereof.

4.5 No Conflict. The execution and delivery by Parent and Sub of this Agreement and the
consummation of the transactions contemplated hereby do not and will not conflict with or result in
a conflict under (a) any provision of the organizational documents of Parent or Sub, or (b) any Law
or Order applicable to Parent or Sub or any of their Assets and Properties.

ARTICLE V

CONDUCT PRIOR TO THE EFFECTIVE TIME

5.1 Conduct of Business of the Company. During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to Section 9.1 hereof or
the Effective Time (the “Pre-Closing Period”), the Company agrees to conduct the business of the
Company, except to the extent that Parent shall otherwise consent in writing in accordance with
Section 5.3 hereof, in the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay the
debts and Taxes of the Company when due, to pay or perform other obligations when due, and to
preserve intact the present business organization of the Company, keep available the services of
the present officers and employees of the Company and preserve the relationships of the Company
with customers, suppliers, distributors, licensors, licensees, and others having business dealings
with them, all with the goal of preserving substantially unimpaired the goodwill and ongoing
businesses of the Company at the Effective Time. The Company shall promptly notify Parent of any
material event or occurrence involving the Company that arises during the period from the date of
this Agreement and continuing until the earlier of the termination date of this Agreement or the
Effective Time. The Company shall not, without the prior written consent of Parent (which consent,
with respect to clauses (b), (c), (d), (e), (f), (l), (r), (aa) and, solely with respect to the
foregoing, (bb) of this Section 5.1, shall not be unreasonably withheld), which consent is to be
requested in accordance with Section 5.3 hereof:

(a) cause or permit any modifications, amendments or changes to its certificate of
incorporation or bylaws;

 

39

 

(b) undertake any expenditure, transaction or commitment not in the ordinary course of
business consistent with past practice and exceeding $10,000 individually or $50,000 in the
aggregate;

(c) pay, discharge, waive or satisfy, in an amount in excess of $10,000 in any one case, or
$50,000 in the aggregate, any claim, liability, right or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of (i) liabilities reflected or reserved against in the Interim
Financial Statements, (ii) claims, liabilities, rights or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise) incurred or to be incurred in the ordinary course of
business or (iii) liabilities incurred in connection with the transactions contemplated hereby,
which amounts shall be deemed Third Party Expenses;

(d) adopt or change accounting methods or practices (including any change in depreciation or
amortization policies or rates) other than as required by GAAP;

(e) make or change any material election in respect of Taxes, adopt or change any accounting
method in respect of Taxes, enter into any agreement, settle any claim or assessment in respect of
Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes or file any Return unless a copy of such Return has been delivered
to Parent for review a reasonable time prior to filing and Parent has approved such Return;

(f) revalue any of its assets (whether tangible or intangible), including writing down the
value of inventory or writing off notes or accounts receivable;

(g) declare, set aside, or pay any dividends on or make any other distributions (whether in
cash, stock or property) in respect of any Company Capital Stock, or split, combine or reclassify
any Company Capital Stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of Company Capital Stock, or directly or indirectly
repurchase, redeem or otherwise acquire any shares of Company Capital Stock (or options, warrants
or other rights convertible into, exercisable or exchangeable for Company Common Stock) except in
accordance with the agreements evidencing Company Options or Company Common Stock or pursuant to
the conversion rights of the Company Preferred Stock;

(h) increase or otherwise change the salary or other compensation payable or to become payable
to any officer, director, employee, consultant or advisor, or make any declaration, payment or
commitment or obligation of any kind for the payment (whether in cash or equity) of a
severance payment, termination payment, bonus or other additional salary or compensation to any
such person;

(i) sell, lease or otherwise dispose of any of the assets or properties of the Company or
grant any security interest in any of its properties or assets;

(j) make any loan to any Person or purchase debt securities of any Person or amend the terms
of any outstanding loan agreement;

(k) incur any indebtedness for borrowed money, amend the terms of any outstanding loan
agreement, guarantee any indebtedness for borrowed money of any Person, issue or sell any debt
securities or guarantee any debt securities of any Person;

 

40

 

(l) waive or release any material right or claim of the Company, including any write-off or
other compromise of any account receivable of the Company;

(m) commence or settle any lawsuit, threat of any lawsuit or proceeding or other investigation
by or against the Company or relating to any of their businesses, properties or assets;

(n) issue, grant, deliver or sell or authorize or propose or contract for the issuance, grant,
delivery or sale of, or purchase or propose or contract for the purchase of, any Company Capital
Stock or any securities convertible into, exercisable or exchangeable for, or subscriptions,
rights, warrants or options to acquire, or other agreements or commitments of any character
obligating any of them to issue or purchase any such shares or other convertible securities, except
for the issuance of Company Capital Stock pursuant to the exercise of outstanding Company Options
or conversion of outstanding Company Preferred Stock;

(o) (i) sell, lease, license or transfer to any Person any rights to any Company Intellectual
Property or enter into any agreement or modify or amend any existing agreement with respect to any
Company Intellectual Property with any Person or with respect to any Intellectual Property of any
Person except in the ordinary course of business consistent with past practice, (ii) license any
material Intellectual Property, license any Intellectual Property to be incorporated into any
product of the Company, or purchase any Intellectual Property, or enter into any agreement or
modify or amend any existing agreement with respect to the Intellectual Property of any Person,
except, in each case, in the ordinary course of business consistent with past practice (iii) enter
into any agreement or modify or amend any existing agreement with respect to the development of any
Intellectual Property with a third party, or (iv) propose or consent to any change to pricing or
royalties set or charged by the Company to its customers or licensees, or the pricing or royalties
set or charged by Persons who have licensed Intellectual Property to the Company;

(p) enter into or amend any Contract pursuant to which any other party is granted marketing,
distribution, development, manufacturing or similar rights of any type or scope with respect to any
products or technology of the Company, except, in each case, in the ordinary course of business
consistent with past practice on the Company’s standard terms and conditions as disclosed to Parent
prior to the date hereof;

(q) enter into any agreement to purchase or sell any interest in real property, grant any
security interest in any real property, enter into any lease, sublease, license or other occupancy
agreement with respect to any real property or alter, amend, modify or terminate any of the terms
of any Lease Agreements;

(r) terminate, amend or otherwise modify (or agree to do so), or violate the terms of, any of
the Contracts set forth or described in the Disclosure Schedule;

(s) acquire or agree to acquire by merging or consolidating with, or by purchasing any assets
or equity securities of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material or any equity securities, individually or in the aggregate,
to the business of the Company;

(t) grant any severance or termination pay (in cash or otherwise) to any employee, including
any officer, except payments made pursuant to written agreements existing on the date hereof and
disclosed in the Disclosure Schedule;

(u) adopt or amend the Option Plan, enter into or amend any employee agreement, enter into any
employment contract, pay or agree to pay any bonus or special remuneration to any director or
employee, or increase or modify the salaries, wage rates, or other compensation (including any
equity-based compensation) of its employees except payments made pursuant to written agreements
outstanding on the date hereof and disclosed in Section 5.1(u) of the Disclosure Schedule or to
meet the requirements of applicable Law or as required by this Agreement;

 

41

 

(v) enter into any strategic alliance, affiliate agreement or joint marketing arrangement or
agreement, outside the ordinary course of business consistent with past practice;

(w) take any action to accelerate the vesting schedule of any of the outstanding Company
Options or Company Common Stock;

(x) hire, offer to hire or terminate any employees, or encourage or otherwise cause any
employees to resign from the Company;

(y) promote, demote, terminate or otherwise change the employment status or titles of any
employee;

(z) alter, or enter into any commitment to alter, its interest in any corporation,
association, joint venture, partnership or business entity in which the Company directly or
indirectly holds any interest;

(aa) cancel, amend or renew any insurance policy; or

(bb) take, commit, or agree in writing or otherwise to take, any of the actions described in
Sections 5.1(a) through 5.1(aa) hereof, or any other action that would (i) prevent the Company from
performing, or cause the Company not to perform, its covenants or agreements hereunder or (ii)
cause or result in any of its respective representations and warranties contained herein being
untrue or incorrect.

5.2 No Solicitation.

(a) During the Pre-Closing Period, the Company shall not (nor shall the Company permit, as
applicable, any of its officers, directors, employees, shareholders, agents, representatives or
Affiliates to), directly or indirectly, take any of the following actions with any Person other
than Parent and its designees: (i) solicit, encourage, seek, entertain, support, assist, initiate
or participate in any inquiry, negotiations or discussions, or enter into any agreement, with
respect to any offer or proposal to acquire all or any part of the business, properties, assets or
technologies of the Company (other than inventory or licenses in the ordinary course of business of
the Company), or any amount of the Company Capital Stock (whether or not outstanding), whether by
merger, purchase of assets, tender offer, license or otherwise, or effect any such transaction (any
such offer or proposal, an “Acquisition Proposal”); (ii) disclose any confidential information
concerning the business, technologies or properties of the Company, or afford to any Person access
to its or
their respective properties, technologies, books or records, in either case in furtherance of
an Acquisition Proposal; (iii) assist or cooperate with any Person in connection with an
Acquisition Proposal; or (iv) enter into any agreement with any Person relating to an Acquisition
Proposal, and shall provide copies of all writings provided by such Person in connection with such
Acquisition Proposal. The Company shall immediately cease and cause to be terminated any such
negotiations, discussion or agreements (other than with Parent) that are the subject matter of
clause (i), (ii), (iii) or (iv) above.

 

42

 

(b) The Company shall notify Parent as promptly as practicable (but in no event later than
twenty-four (24) hours) after receipt of any Acquisition Proposal, or modification of or amendment
to any Acquisition Proposal, or request for nonpublic information relating to the Company or for
access to the properties, books or records of the Company, or notice by any Person that it is
considering making, or has made, an Acquisition Proposal. Such notice to Parent shall be made
orally and in writing and shall indicate the identity of the Person making the Acquisition Proposal
or intending to make or considering making an Acquisition Proposal or requesting non-public
information or access to the books and records of the Company and the terms of any such Acquisition
Proposal or modification or amendment to the Acquisition Proposal. The Company shall keep Parent
informed, on a current basis, of any material changes in the status and any material changes or
modifications in the terms of any such Acquisition Proposal, indication or request.

(c) The parties hereto agree that irreparable damage would occur in the event that the
provisions of this Section 5.2 were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed by the parties hereto that Parent shall be entitled
to an immediate injunction or injunctions, without the necessity of proving the inadequacy of money
damages as a remedy and without the necessity of posting any bond or other security, to prevent
breaches of the provisions of this Section 5.2 and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this being in addition
to any other remedy to which Parent may be entitled at law or in equity. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth above by any officer,
director, agent, representative or Affiliate of Company shall be deemed to be a breach of this
Agreement by Company.

5.3 Procedures for Requesting Parent Consent. If the Company desires to take an action which
would be prohibited pursuant to Section 5.1 hereof without the written consent of Parent, prior to
taking such action the Company may request such written consent by sending an e-mail to each of the
following individuals:

Diana Li

Telephone: +86 (21) 5050-4740

E-mail address: diana@shandagames.com

Thomas Yih

Telephone: +86 (21) 5050-4740, extension 8709

Email address: thomas@shandagames.com

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1 Access to Information. Until the earlier of the termination of this Agreement or the
Effective Time, the Company shall afford Parent and its accountants, counsel and other
representatives, reasonable access at reasonable times to (a) all of the properties (including for
the performance of environmental tests or
investigations as Parent may desire), books, contracts, commitments and records of the
Company, including all Company Intellectual Property, (b) all other information concerning the
business, properties and personnel (subject to restrictions imposed by applicable Law) of the
Company as Parent may reasonably request, and (c) all employees of the Company as identified by
Parent. Any access to the Company’s offices will be subject to the Company’s reasonable security
measures and insurance requirements. The Company agrees to provide to Parent and its accountants,
counsel and other representatives copies of internal financial statements (including Tax Returns
and supporting documentation) promptly upon request. No information or knowledge obtained in any
investigation pursuant to this Section 6.1 or otherwise shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations of the parties to
consummate the Merger in accordance with the terms and provisions hereof.

 

43

 

6.2 Confidentiality. Each of the parties hereto hereby agrees that the information obtained
in any investigation pursuant to Section 6.1 hereof, pursuant to the negotiation and execution of
this Agreement or the effectuation of the transactions contemplated hereby, shall be governed by
the terms of Confidentiality and Non-Disclosure Agreement between Parent and the Company dated as
of December 10, 2009 (the “Confidentiality Agreement”). Parent and the Company agree that such
information will constitute “Confidential Information” as contemplated by the Confidentiality
Agreement. The Company further acknowledges that the ADSs are publicly traded and that any
information obtained during the course of its due diligence could be considered to be material
non-public information within the meaning of federal and state securities laws. Accordingly, the
Company acknowledges and agrees not to engage in any discussions or correspondence regarding or
transactions in the ADSs or the Parent Ordinary Shares in violation of applicable securities laws.

6.3 Public Disclosure. Neither Parent nor the Company (nor any of their respective
representatives) shall issue any statement or communication to any third party (other than their
agents that are bound by confidentiality restrictions) regarding the subject matter of this
Agreement or the transactions contemplated hereby, including, if applicable, the termination of
this Agreement and the reasons therefor, without the consent of the other, except that this
restriction shall be subject to Parent’s obligation to comply with applicable securities laws and
Nasdaq rules.

6.4 Reasonable Efforts. Subject to the terms and conditions provided in this Agreement, each
of the parties hereto shall use its reasonable efforts to take promptly, or cause to be taken
promptly, all actions, and to do promptly, or cause to be done promptly, all things necessary,
proper or advisable under applicable Laws and regulations to consummate and make effective the
transactions contemplated hereby, to cause all conditions to the obligations of the other parties
hereto to effect the Merger to occur, to obtain all necessary Approvals and other documents
required to be delivered hereunder and to effect all necessary registrations and filings and to
remove any injunctions or other impediments or delays, legal or otherwise, in order to consummate
and make effective the transactions contemplated by this Agreement; provided, however, that Parent
shall not be required to agree to (i) any license, sale or other disposition or holding separate
(through establishment of a trust or otherwise) of any shares of capital stock, any business, or
any Assets and Properties of Parent, its Subsidiaries or Affiliates, or of the Company, (ii) the
imposition of any limitation on the ability of Parent, its Subsidiaries or Affiliates, or the
Company, to conduct their respective businesses or own any capital stock or Assets and Properties
or to acquire, hold or exercise full rights of ownership of their respective businesses and, in the
case of Parent, the businesses of the Company, or (iii) the imposition of any impediment on Parent,
its Subsidiaries or Affiliates, or the Company, under any Law or order other legal restraint
governing competition, monopolies or restrictive trade practices (any such action described in (i),
(ii) or (iii), an “Action of Divestiture”). Nothing herein shall require Parent to litigate with
any Governmental Entity.

6.5 Notification of Certain Matters. The Company shall give prompt notice to Parent of: (a)
the occurrence or non-occurrence of any event, which occurrence or non-occurrence is reasonably
likely to cause any representation or warranty of the Company contained in this Agreement to be
untrue or inaccurate at or prior to the Effective Time; and (b) any failure of the Company to
comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.5 shall
not (i) limit or otherwise affect any remedies available to the party receiving such notice, or
(ii) constitute an acknowledgment or admission of a breach of this Agreement. No disclosure by the
Company pursuant to this Section 6.5 shall be deemed to amend or supplement the Disclosure Schedule
or prevent or cure any misrepresentations, breach of warranty or breach of covenant.

 

44

 

6.6 Shareholder Approval.

(a) Immediately following the execution of this Agreement, the Company shall deliver to Parent
an action by written consent, in a form reasonably acceptable to Parent, executed by each of the
persons listed on Schedule 6.6(a) representing the Initial Shareholder Approval.

(b) Following the execution of this Agreement, the Company shall solicit the written consent
of the remaining shareholders of the Company to approve and adopt the Agreement and approve the
Merger (the “Final Shareholder Approval”). In connection with such shareholder approval and as
soon as practicable after the execution of this Agreement, the Company shall prepare, with the
cooperation of Parent, an information statement (the “Information Statement”) for the purpose of
soliciting the written consent of the shareholders of the Company. Each of Parent and the
Company agrees to provide promptly to the other such information concerning its business and
financial statements and affairs as, in the reasonable judgment of the providing party or its
counsel, may be required or appropriate for inclusion in the Information Statement or in any
amendments or supplements to the Information Statement. Each of the parties hereto will promptly
advise the other parties in writing if at any time prior to the Effective Time either the Company
or Parent shall obtain knowledge of any facts that might make it necessary or appropriate to amend
or supplement the Information Statement in order to make the statements contained or incorporated
by reference therein not misleading or to comply with applicable Law. The Board of Directors of
the Company shall recommend to the shareholders of the Company that such shareholders approve and
adopt the Agreement and approve the Merger and the transactions contemplated hereby, and the
Information Statement shall contain
such recommendation, as well as the conclusion of the Board of Directors of the Company that
the terms and conditions of the Merger are in the best interests of the shareholders in the opinion
of the Board of Directors. Notwithstanding anything to the contrary contained herein, the Company
shall not include in the Information Statement any information with respect to Parent or its
Affiliates or Associates, the form and content of which information shall not have been approved by
Parent prior to such inclusion.

6.7 Board and Shareholder Approval. The Board of Directors of the Company shall not alter,
modify, change or revoke its unanimous approval of this Agreement, the Merger and the transactions
contemplated hereby, nor shall the Board of Directors of the Company encourage or solicit the
shareholders of the Company to alter, modify, change or revoke their approval of this Agreement,
the Merger and the transactions contemplated hereby.

6.8 Merger Notification.

(a) To the extent applicable, as soon as may be reasonably practicable, the Company and Parent
(and any applicable shareholder of the Company) shall make all filings, notices, petitions,
statements, registrations and submissions of information, application or submission of other
documents required by any Governmental Entity in connection with the Merger and the transactions
contemplated hereby. Each of Parent and the Company shall cause all documents that it is
responsible for filing with any Governmental Entity under this Section 6.8 to comply in all
material respects with applicable Law.

(b) The Company and Parent (and/or any applicable shareholder of the Company) each shall
promptly (i) supply the others with any information which reasonably may be required in order to
effectuate the filings contemplated by Section 6.8(a), and (ii) supply any additional information
which reasonably may be required by the competition or merger control authorities of any
jurisdiction and which the parties may reasonably deem appropriate. Except where prohibited by
applicable Law, the Company shall consult with Parent prior to taking a position with respect to
any such filings, shall permit Parent to review and discuss in advance, and consider in good faith
the views of Parent in connection with, any analyses, appearances, presentations, memoranda,
briefs, white papers, other materials, arguments, opinions and proposals before making or
submitting any of the foregoing to any Governmental Entity in connection with any investigations or
proceedings in connection with this Agreement or the transactions contemplated hereby, coordinate
with Parent in preparing and providing such information and promptly provide Parent (and its
counsel) copies of all filings, presentations and submissions (and a summary of oral presentations)
made by the Company with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby. Parent shall have principal control over the strategy for
interacting with such Governmental Entities in connection with the matters contained in this
Section 6.8.

 

45

 

(c) Each of Parent and the Company shall notify the other promptly upon the receipt of (i) any
comments from any officials of any Governmental Entity in connection with any filings made pursuant
hereto, and (ii) any request by any officials of any Governmental Entity for amendments or
supplements to any filings made pursuant to, or information provided to comply in all materials
respect with, applicable Law. Whenever any event occurs that is required to be set forth in an
amendment or supplement to any filing made pursuant to Section 6.8(a), Parent or the Company, as
the case may be, will promptly inform the other of such occurrence and cooperate in filing with the
applicable Governmental Entity such amendment or supplement.

6.9 Consents. The Company shall use commercially reasonable best efforts to obtain all
Approvals of any parties to any Contract as are required thereunder in connection with the Merger
or for any such Contracts to remain in full force and effect so as to preserve all rights of, and
benefits to, the Company under such Contract from and after the Effective Time. Such Approvals
shall be in a form reasonably acceptable to Parent. In the event that the other parties to any
such Contract, including any lessor or licensor
of any Leased Real Property, conditions its grant of a consent, waiver or approval (including
by threatening to exercise a “recapture” or other termination right) upon the payment of a consent
fee, “profit sharing” payment or other consideration, including increased rent payments or other
payments under the Contract, the Company shall be responsible for making all payments required to
obtain such consent, waiver or approval, and Parent shall be entitled to indemnification for all
losses, costs, claims, liabilities and damages arising from the same to the extent they are Excess
Third Party Expenses.

6.10 Section 280G. The Company shall promptly submit to the shareholders of the Company for
approval (in a manner reasonably satisfactory to Parent), by such number of Company shareholders as
is required by the terms of Section 280G(b)(5)(B) of the Internal Revenue Code, any payments and/or
benefits that may separately or in the aggregate constitute “parachute payments” pursuant to
Section 280G of the Internal Revenue Code (“Section 280G Payments”) (which determination shall be
made by the Company and shall be subject to reasonable review and approval by Parent), such that
payments and benefits shall not be deemed to be Section 280G Payments, and prior to the Effective
Time the Company shall deliver to Parent evidence satisfactory to Parent that (A) a vote of the
shareholders of the Company was solicited in conformance with Section 280G of the Internal Revenue
Code and the regulations thereunder and the requisite shareholder approval was obtained with
respect to any payments and/or benefits that were subject to the shareholder vote (the “280G
Shareholder Approval”), or (B) that the 280G Shareholder Approval was not obtained and as a
consequence, that such payments and/or benefits shall not be made or provided to the extent they
would cause any amounts to constitute Section 280G Payments, pursuant to the waivers of those
payments and/or benefits, which were executed by the affected individuals prior to the shareholder
vote.

6.11 Spreadsheet. The Company shall deliver to Parent and the Payment Agent three (3)
Business Days prior to the Closing Date a spreadsheet (the “Spreadsheet”) in form and substance as
reasonably agreed upon by Parent and Shareholder Representative, which spreadsheet shall be
certified as complete and correct by the Chief Executive Officer of the Company as of the Closing.
The Spreadsheet shall include, among other things, the following information: all Shareholders and
their respective addresses, the number of shares of Company Capital Stock held by such persons, the
respective certificate numbers, the date of acquisition of such shares, the Escrow Amount to be
placed in escrow pursuant to Section 2.6(a)(ii) or, with respect to the Founders, pursuant to the
Stock Consideration Agreements, the Pro Rata Portion, the amount of Merger Cash to be paid to each
holder at Closing, and such other information relevant thereto which Parent or the Payment Agent
may reasonably request, as well as all information reasonably requested by Parent relating to all
outstanding Company Options. The Spreadsheet shall be reasonably satisfactory to Parent.

 

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6.12 RSU Grants. As soon as reasonably practicable following the Closing, Parent shall grant
restricted stock units (“RSUs”) with an aggregate value equal to the Restricted Stock Unit Value at
the time of grant based on the Trading Price, to certain employees of the Company, such employees
to be determined by the Company prior to the Closing in consultation with the Parent. The terms of
the RSUs shall provide for, among other things, that 1/4 of the RSUs shall vest on the first four
anniversaries of the Closing Date, subject to the grantee’s continued employment with the Sub or
Parent.

6.13 Indemnification of Officers and Directors.

(a) For a period of six (6) years from and after the Closing Date, Parent and the Surviving
Corporation agree to indemnify (including advancement of expenses) and hold harmless all past and
present officers and directors of the Company to the same extent such persons are indemnified by
the Company as of the date of this Agreement pursuant to the Company’s certificate of incorporation
or bylaws, indemnification agreements or under applicable Law for acts or omissions which occurred
at or prior to the Effective Time. The certificate of incorporation and bylaws of the Surviving
Corporation shall contain provisions with respect to indemnification and exculpation that are at
least as favorable to the past and present officers and directors
of the Company as those provisions contained in the Company’s certificate of incorporation and
bylaws in effect on the date hereof, and such provisions shall not be amended, repealed or
otherwise modified for a period of six (6) years in any manner that would adversely affect the
rights of the past and present officers and directors of the Company (unless such modification is
required by applicable Law. This indemnification shall not apply to any claim or action by any
such officer or director brought against the Company or any of its predecessors, successors,
assigns, officers, directors, stockholders, employees or agents in response to or in connection
with any claim brought by a Parent Indemnified Party (as defined below) pursuant to Article VIII of
this Agreement. The Company hereby represents to Parent that no claim for indemnification has been
made by any director or officer of the Company and, to the knowledge of the Company, no basis
exists for any such claim for indemnification.

(b) The provisions of this Section 6.13 are intended for the benefit of, and shall be
enforceable by, all past and present officers and directors of the Company and his or her heirs and
representatives. The rights of all past and present officers and directors of the Company under
this Section 6.13 are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract, applicable Law or
otherwise.

(c) Prior to the Closing, the Company shall purchase a six year “tail” policy to maintain
directors’ and officers’ liability insurance, covering those Persons who are covered by the
Company’s directors’ and officers’ liability insurance policy as of the date hereof in an amount
and on terms as favorable as to coverage and amount in the aggregate, as under those policies in
effect on the date of this Agreement and applicable to the current directors and officers of the
Company. The cost of such “tail” policy shall be deemed Third Party Expenses.

 

47

 

ARTICLE VII

CONDITIONS TO THE MERGER

7.1 Conditions to Obligations of Each Party to Effect the Merger. The respective obligations
of the Company, Parent and Sub to effect the Merger shall be subject to the satisfaction, at or
prior to the Effective Time, of each of the following conditions:

(a) No Order; Injunctions; Restraints; Illegality. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law or Order which is in effect and which has the
effect of making the Merger illegal or otherwise prohibiting or preventing consummation of the
Merger.

(b) Governmental Approval. All Approvals from any Governmental Entity relating to the
transactions contemplated by this Agreement shall have been obtained.

7.2 Conditions to the Obligations of Parent and Sub. The obligations of Parent and Sub to
effect the Merger shall be subject to the satisfaction, at or prior to the Effective Time, of each
of the following conditions, any of which may be waived, in writing, exclusively by Parent:

(a) Representations, Warranties and Covenants. (i) Each of the representations and warranties
of the Company and the Founders in this Agreement (other than the representations and warranties as
of a specified date, each of which shall be true and correct as of such date), (A) shall have been
true and correct on the date they were made in all material respects (without giving effect to any
limitation as to “materiality” or “Company Material Adverse Effect” set forth therein), and (B)
shall be true and correct on and as of the Closing Date as though such representations and
warranties were made on and as of such date
except to the extent the failure of such representations and warranties to be so true and
correct has not had, and would not be reasonably expected to have a Company Material Adverse Effect
and (ii) the Company shall have performed and complied in all material respects with each of the
covenants and obligations under this Agreement required to be performed and complied with by it as
of the Closing.

(b) No Material Adverse Effect. Since the Interim Financial Statement Date, there shall not
have occurred any event or condition of any character that has had or is reasonably likely to have,
either individually or in the aggregate with all such other events or conditions, a Company
Material Adverse Effect, determined without regard to whether such change constitutes a breach of a
representation or warranty.

(c) Shareholder Approval. The Initial Shareholder Approval and the Final Shareholder Approval
remain valid and in effect such that no votes of the holders of any shares of the Company Capital
Stock are required to adopt and approve this Agreement and approve the Merger.

(d) 280G Payments. With respect to any payments and/or benefits that Parent reasonably
determines may constitute a Section 280G Payment, the shareholders of the Company shall have (i)
approved, pursuant to the method provided for in the regulations promulgated under Section 280G of
the Internal Revenue Code, any such Section 280G Payments, or (ii) shall have voted upon and
disapproved such payments and/or benefits and, as a consequence, no Section 280G Payments shall be
paid or provided for in any manner and Parent shall not have any liabilities with respect to any
Section 280G Payments.

(e) Dissenters’ Rights. No more than ninety five percent (95)% of the outstanding shares of
Company Capital Stock shall be held by shareholders of the Company that have a right to exercise
appraisal, dissenters’ or similar rights under applicable Law with respect to their Company Capital
Stock by virtue of the Merger.

 

48

 

(f) Litigation. There shall be no Action or Proceeding of any nature pending, or overtly
threatened, against Parent, the Company, their respective Assets and Properties or any of their
respective officers or directors arising out of, or in any way connected with, the Merger or the
other transactions contemplated by the terms of this Agreement or otherwise seeking any of the
results set forth in Section 7.1(a) hereof, that is reasonably likely to materially and adversely
affect the consummation of the Merger.

(g) Resignation of Officers and Directors. Parent shall have received a written resignation
letter from each of the directors of the Company effective as of the Effective Time in a form
acceptable to Parent.

(h) Legal Opinion. Parent shall have received a legal opinion from legal counsel to the
Company in the form attached hereto as Exhibit B.

(i) Spreadsheet. Parent and the Payment Agent shall have received from the Company three (3)
Business Days prior to the Closing Date the Spreadsheet pursuant to Section 6.11, which shall have
been certified as of the Closing Date as complete and correct by the Chief Executive Officer of the
Company.

(j) Certificate of the Company. Parent shall have received a certificate from the Company,
validly executed by the Chief Executive Officer of the Company for and on the Company’s behalf, to
the effect that, as of the Closing:

(i) the condition set forth in Section 7.2(a) has been satisfied; and

(ii) the Company has performed and complied in all material respects with each of the
covenants and obligations under this Agreement required to be performed and complied with by it as
of the Closing.

(k) Certificate of Secretary of Company. Parent shall have received a certificate, validly
executed by the Secretary of the Company, certifying as to (i) the terms and effectiveness of the
Company’s current certificate of incorporation and bylaws, (ii) the valid adoption of resolutions
of the Board of Directors of the Company (whereby the Merger and the transactions contemplated
hereunder, were unanimously approved by the Board of Directors) and (iii) that the shareholders of
the Company constituting the Final Shareholder Approval have adopted and approved the Merger, this
Agreement and the consummation of the transactions contemplated hereby.

(l) Certificate of Good Standing. Parent shall have received a certificate of good standing
from the Secretary of State of the State of Delaware which is dated within two (2) Business Days
prior to Closing with respect to the Company.

(m) FIRPTA Certificate. Parent shall have received a copy of a customary FIRPTA compliance
certificate for purposes of satisfying Parent’s obligations under Treasury Regulation Section
1.1445-2(c)(3), in form and substance satisfactory to Parent, validly executed by a duly authorized
officer of the Company.

(n) Founder Stock Consideration Agreements. Each Founder shall have executed and delivered to
Parent a Stock Consideration Agreement in the form attached hereto as Exhibit A.

 

49

 

(o) No Action of Divestiture. There shall not have been any action taken, or any Law or Order
enacted, promulgated or issued or deemed applicable to the Merger by any Governmental Entity which
would constitute an Action of Divestiture.

7.3 Conditions to Obligations of the Company. The obligations of the Company to effect the
Merger shall be subject to the satisfaction, at or prior to the Effective Time, of each of the
following conditions, any of which may be waived, in writing, exclusively by the Company:

(a) Representations, Warranties and Covenants. (i) Each of the representations and warranties
of Parent and Sub in this Agreement (other than the representations and warranties of Parent and
Sub as of a specified date, each of which shall be true and correct as of such date) shall have
been true and correct when made and shall be true and correct on and as of the Closing Date as
though such representations and warranties were made on and as of such date, in each case in all
material respects (without giving effect to any limitation as to “materiality” or “Parent Material
Adverse Effect” set forth therein), and (ii) each of Parent and Sub shall have performed and
complied in all material respects with each of the covenants and obligations under this Agreement
required to be performed and complied with by it as of the Closing Date.

(b) Certificate of Parent. The Company shall have received a certificate from Parent, validly
executed by an officer of Parent for and on Parent’s behalf, to the effect that, as of the Closing:

(i) the condition set forth in Section 7.3(a) has been satisfied; and

(ii) Parent and Sub have performed and complied in all material respects with each of the
covenants and obligations under this Agreement required to be performed or complied with by Parent
and Sub as of the Closing.

ARTICLE VIII

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW

8.1 Survival of Representations and Warranties.

(a) The representations and warranties of the Company and the Founders set forth in this
Agreement, or in the certificate delivered pursuant to Sections 7.2(j) or 7.2(k) of this Agreement,
shall survive the Closing and the Effective Time for a period of twelve (12) calendar months
following the Closing Date (the “Survival Date”), except with respect to claims based on fraud, for
which such period shall only terminate upon expiration of the applicable statute of limitations.
If written notice of a claim has been given prior to the Survival Date, then the relevant
representations and warranties shall survive as to such claim until such claim has been finally
resolved.

(b) The representations and warranties of Parent and Sub set forth in this Agreement, or in
any certificate or other instrument delivered pursuant to this Agreement, shall expire at the
Effective Time.

(c) The agreements, covenants and other obligations of the parties hereto shall survive the
Closing and the Effective Time in accordance with their respective terms.

 

50

 

8.2 Indemnification.

(a) By virtue of the consummation of the Merger, the Shareholders agree to severally (and not
jointly) indemnify and hold harmless Parent and its officers, directors, Affiliates, employees,
agents and representatives, including the Surviving Corporation (the “Indemnified Parties”),
against all claims, losses, liabilities, damages, deficiencies, diminution in value, costs,
interest, awards, judgments, penalties and expenses, including reasonable attorneys’ and
consultants’ fees and expenses and including any such reasonable expenses incurred in connection
with investigating, defending against or settling any of the foregoing (hereinafter individually a
“Loss” and collectively “Losses”) incurred or sustained by the Indemnified Parties, or any of them
(including the Surviving Corporation), directly or indirectly, as a result of: (i) any breach or
inaccuracy of a representation or warranty by the Company or the Founders contained in this
Agreement or the certificates delivered by or on behalf of the Company pursuant to Sections 7.2(j)
or 7.2(k) of this Agreement (provided that, in the event of any such breach or inaccuracy, for
purposes of determining the amount of any Loss no effect will be given to any qualification as to
“materiality”, a “Company Material Adverse Effect” or “knowledge” contained therein); (ii) any
failure by the Company to perform or comply with any covenant applicable to it contained in this
Agreement or any certificates or other instruments delivered pursuant to this Agreement; (iii) any
fraud in connection with this Agreement or the certificates delivered by or on behalf of the
Company pursuant to Sections 7.2(j) or 7.2(k) of this Agreement; (iv) any payment or consideration
arising under any Approvals of any party under any agreement as are required in connection with the
Merger or for any such agreement to remain in full force or effect following the Effective Time;
(v) any failure of the Spreadsheet to be true and correct in all respects; (vi) any Dissenting
Share Payments, to the extent that such Dissenting Share Payments exceed the consideration that
such dissenting Shareholders would have received in the Merger had no Dissenting Share Payments
been made; and (vii) any Excess Third Party Expenses which were not included in the calculation of
the Aggregate Consideration Amount at the time of Closing. The Shareholders (including any officer
or director of the Company) shall not have any right of contribution, indemnification or right of
advancement from the Surviving Corporation or Parent with respect to any Loss claimed by an
Indemnified Party.

(b) Any Person committing fraud in connection with this Agreement or any certificate delivered
pursuant to this Agreement, or who has knowledge of such fraud being committed, shall be
severally, and not jointly, liable for, and shall indemnify and hold the Indemnified Parties
harmless for, any Losses incurred or sustained by the Indemnified Parties, or any of them
(including the Surviving Corporation), directly or indirectly, as a result of such fraud committed
by such Person (or who has actual knowledge of such fraud being committed).

(c) Subject to Section 8.2(b) and Section 8.3(b), the Shareholders shall be severally and not
jointly liable for, and shall indemnify and hold the Indemnified Parties harmless for, any Losses
incurred or sustained by the Indemnified Parties, or any of them (including the Surviving
Corporation), directly or indirectly, arising out of any fraud in connection with this Agreement or
the certificates delivered by or on behalf of the Company pursuant to Sections 7.2(j) or 7.2(k) of
this Agreement.

8.3 Maximum Payments; Remedy.

(a) Except as set forth in Sections 8.3(b) and 9.2 hereof, following the Closing:

(i) recovery from the Escrow Fund (and in the case of the Founders, the forfeiture of the
Holdback Shares) shall be the sole and exclusive right and remedy for any Losses arising out of any
and all claims relating to the subject matter of this Agreement;

 

51

 

(ii) the maximum amount an Indemnified Party may recover from a Shareholder individually
pursuant to the indemnity set forth in Section 8.2(a) hereof for Losses shall be limited to such
Shareholder’s Pro Rata Portion of the amounts held in the Escrow Fund (and, in the case of the
Founders, the forfeiture of the Holdback Shares);

(iii) no indemnification payment by the Shareholders with respect to any indemnifiable Losses
otherwise payable under Section 8.2(a) and arising out of or resulting from the causes enumerated
in Section 8.2(a) shall be payable until such time as all such indemnifiable Losses shall aggregate
to more than $100,000, after which time the Shareholders shall be liable in full for all
indemnifiable Losses (excluding the first $100,000).

(b) Notwithstanding anything to the contrary set forth in this Agreement, in the event of
Losses arising out of any fraud by or on behalf of the Company or any Shareholder in connection
with this Agreement or the certificates delivered pursuant to Sections 7.2(j) or 7.2(k) of this
Agreement, each Shareholder shall be liable for all such Losses up to the full amount of the
Aggregate Consideration Amount payable to such Shareholder, provided that nothing in this Agreement
shall limit the liability of any Person (including any Shareholder) for any such Losses if such
Person perpetrated such fraud or had actual knowledge of such fraud being committed, and nothing in
this Agreement shall prevent or limit any right of other Shareholders for contribution from any
other Shareholder who perpetrated such fraud.

(c) Notwithstanding anything to the contrary herein, the parties hereto agree and acknowledge
that any Indemnified Party may bring a claim for indemnification for any Loss under this Article
VIII notwithstanding the fact that such Indemnified Party had knowledge of the breach, event or
circumstance giving rise to such Loss prior to the Closing or waived any condition to the Closing
related thereto.

(d) Notwithstanding anything to the contrary herein, nothing shall prohibit Parent from
seeking and obtaining recourse against any Shareholder in the event that Parent pays more
consideration to any Shareholder than such Shareholder is entitled pursuant to Article II of this
Agreement.

(e) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this
Agreement shall limit the rights of any party hereto to apply for equitable remedies to enforce the
other party or parties’ obligations hereunder.

8.4 Means of Indemnification.

(a) Procedures for Claims for Indemnification.

(i) Each claim for indemnification by an Indemnified Party pursuant to the terms of this
Article VIII shall be made only in accordance with this Section 8.4.

(ii) Officer’s Certificate. At any time on or prior to the date that is 14 days following the
Survival Date (the “Claim Deadline Date”), an Indemnified Party may make an indemnification claim
pursuant to this Agreement by delivering a certificate (an “Officer’s Certificate”) to the
Shareholder Representative, with a copy to the Escrow Agent (i) stating that an Indemnified Party
has paid, sustained, incurred, properly accrued, or reasonably anticipates in good faith that it
will have to pay, sustain, incur or accrue Losses and (ii) specifying in reasonable detail the
individual items of Losses included in the amount so stated (and the method of computation of each
such item of Loss, if applicable), the date each such item was paid, sustained, incurred, or
properly accrued (in accordance with GAAP), or the basis for such reasonably anticipated Loss(es);
and (iii) the basis for indemnification under this Article VIII to which such item of Loss is
related (including, if applicable, the specific nature of the misrepresentation, breach of warranty
or covenant to which such item is related) and (iv) the amount of the Founders’ combined Pro Rata
Portion of such indemnification claim (the “Founder’s Indemnification Portion”).

 

52

 

(iii) Objection Notice. Following the receipt of an Officer’s Certificate, the Shareholder
Representative, on behalf of the Shareholders, shall have fifteen (15) Business Days to object to
any item(s) or amount(s) set forth therein by delivering written notice thereof (an “Objection
Notice”) to Parent, with a copy to the Escrow Agent. In the event that the Shareholder
Representative shall fail to object to any item or amount set forth in an Officer’s Certificate by
delivering to Parent an Objection Notice within the foregoing ten (15) Business Day period, such
failure shall be an irrevocable acknowledgement and be deemed to be an agreement by the Shareholder
Representative and the Shareholders that the Indemnified Party is entitled to the full amount of
the claim for Losses set forth in the Officer’s Certificate and upon the expiration of such fifteen
(15) Business Day period, the Escrow Agent shall promptly release from the Escrow Fund and deliver
to Parent or its designated Indemnified Party an amount of cash equal to (i) any item(s) and
amount(s) that the Shareholder Representative is deemed to have acknowledged and agreed to pursuant
to this Section 8.4(a)(iii) minus (ii) the applicable Founder’s Indemnification Portion.

(iv) Resolution of Conflicts; Arbitration.

(1) In the event that the Shareholder Representative shall have objected to any item(s) or
amount(s) set forth in any Officer’s Certificate pursuant to Section 8.4(a)(iii), the Shareholder
Representative and Parent shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims. If the Shareholder Representative and Parent should
so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties
and, in the case of a claim against the Escrow Fund, shall be furnished to the Escrow Agent. The
Escrow Agent shall be entitled to rely on any such memorandum and make distributions from the
Escrow Fund in accordance with the terms thereof.

(2) If no such agreement can be reached after good faith negotiation and prior to thirty (30)
calendar days after delivery of an Objection Notice, either Parent or the Shareholder
Representative may demand arbitration of the matter unless the amount of the Loss that is at
issue is the subject of pending litigation with a third party, in which event arbitration shall not
be commenced with respect to the amount of any potential award or settlement amount in such pending
litigation (without limiting an Indemnified Parties’ right to claim and recover amounts incurred or
accrued by the Indemnified Parties in defense of a Third Party Claim) until such amount is
ascertained pursuant to an award or settlement of such pending litigation or if Parent and the
Shareholder Representative agree to arbitration, and in either such event the matter shall be
settled by arbitration conducted by one arbitrator mutually agreeable to Parent and the Shareholder
Representative and not affiliated with either party. In the event that, within thirty (30)
calendar days after submission of any dispute to arbitration, Parent and the Shareholder
Representative cannot mutually agree on one arbitrator, then, within fifteen (15) calendar days
after the end of such thirty (30) calendar day period, Parent and the Shareholder Representative
shall each select one arbitrator. The two (2) arbitrators so selected shall select a third
arbitrator. If either party fails to select an arbitrator during this fifteen (15) day period,
then the parties agree that the arbitration will be conducted by one arbitrator selected by the
party that did not fail to select an arbitrator during such period.

 

53

 

(3) Any such arbitration shall be held in Santa Clara County, California, under the rules then
in effect of the American Arbitration Association. The arbitrator(s) shall determine how all
expenses relating to the arbitration shall be paid, including the respective expenses of each
party, the fees of each arbitrator and the administrative fee of the American Arbitration
Association. The arbitrator or arbitrators, as the case may be, shall set a limited time period
and establish procedures designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgment of the arbitrator or majority of the three
(3) arbitrators, as the case may be, to discover relevant information from the opposing parties
about the subject matter of the dispute. The arbitrator, or a majority of the three (3)
arbitrators, as the case may be, shall rule upon motions to compel or limit discovery and shall
have the authority to impose sanctions, including reasonable attorneys’ fees and costs, to the same
extent as a competent court of law or equity, should the arbitrators or a majority of the three (3)
arbitrators, as the case may be, determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial justification. The
decision of the arbitrator or a majority of the three (3) arbitrators, as the case may be, as to
the validity and amount of any claim in such Officer’s Certificate shall be final, binding, and
conclusive upon the parties to this Agreement and the Shareholders. Such decision shall be written
and shall be supported by written findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrator(s). The Escrow Agent shall be entitled to rely
on, and make distributions from the Escrow Fund in accordance with, the terms of such award,
judgment, decree or order as applicable and following receipt of such award, judgment, decree or
order, the Escrow Agent shall promptly release from the Escrow Fund and deliver to Parent an amount
of cash equal to (i) the amount that Parent is entitled to pursuant to such award, judgment, decree
or order minus (ii) the applicable Founder’s Indemnification Portion.

(4) Judgment upon any award rendered by the arbitrator(s) may be entered in any court having
jurisdiction. Except as set forth in Section 8.4(a)(v) hereof, the forgoing arbitration provision
shall apply to any dispute among the Shareholders or any Indemnified Parties under this Article
VIII with respect to claims made against the Escrow Fund.

(5) This Section 8.4(a)(iv) shall not apply to claims against the Escrow Fund made in respect
of any Dissenting Share Payments to the extent that such Dissenting Share Payments exceed the
consideration that such dissenting Shareholders would have received in the Merger had no Dissenting
Share Payment been made (an “Agreed-Upon Loss”).

(v) Agreed-Upon Losses. Notwithstanding the foregoing, the Shareholder Representative hereby
waives the right to object to any claims against the Escrow Fund in respect of any
Agreed-Upon Loss. The Shareholder Representative hereby authorizes the Escrow Agent to pay
from the Escrow Fund all such amounts equal to the amount of Losses claimed in any Officer’s
Certificate in respect of any Agreed-Upon Loss upon receipt of such Officer’s Certificate without
regard to the fifteen (15) Business Day period set forth in this Section 8.4(a)(iii).

(b) Third-Party Claims. In the event Parent becomes aware of a third party claim or other
circumstance (other than a claim or circumstance that is the subject of an Agreed-Upon Loss) (a
“Third Party Claim”) which Parent reasonably believes may result in a demand against the Escrow
Fund or for other indemnification pursuant to this Article VIII, Parent shall notify the
Shareholder Representative of such claim or circumstance, and the Shareholder Representative shall
be entitled on behalf of the Shareholders, at their expense, to participate in, but not to
determine or conduct, the defense of such Third Party Claim; provided, however,
that Parent will conduct any defense and/or settlement of any Third Party Claim in good faith.
Parent shall have the right in its sole discretion to conduct the defense of, and to settle, any
such claim by providing Shareholder Representative prompt notice of such election; provided,
however, that except with the consent of the Shareholder Representative, no settlement of any such
Third Party Claim with third party claimants shall be determinative of the amount of Losses
relating to such matter. In the event that the Shareholder Representative has consented to any
such settlement, the Shareholders shall have no power or authority to object under any provision of
this Article VIII to the amount of any Third Party Claim by Parent against the Escrow Fund or the
Shareholders, with respect to such settlement. If there is a Third Party Claim that, if adversely
determined would give rise to a right of recovery for Losses hereunder, then any amounts incurred
or accrued by the Indemnified Parties in defense of such Third Party Claim, regardless of the
outcome of such claim, shall be deemed Losses hereunder. Notwithstanding anything in this Agreement
to the contrary, this Section 8.4(a) shall not apply to any Third Party Claim that is the subject
of an Agreed-Upon Loss. Claims against the Total Escrow Amount made in respect of any Agreed-Upon
Loss shall be resolved in the manner described in Section 8.4(a)(v) above.

 

54

 

8.5 Escrow Arrangements.

(a) Escrow Fund. The Escrow Fund shall constitute security for the indemnification
obligations provided for in this Article VIII and shall be available to compensate the Indemnified
Parties for any claims made by such parties for any Losses paid, sustained, suffered or incurred by
them and for which they are entitled to recovery under this Article VIII. The Escrow Agent may
execute this Agreement following the date hereof and prior to the Closing, and such later
execution, if so executed after the date hereof, shall not affect the binding nature of this
Agreement as of the date hereof between the other signatories hereto.

(b) Distribution of Escrow Fund. Subject to the following requirements, the Escrow Fund shall
be in existence immediately following the Closing until 11:59 p.m., Pacific Time, on the Claim
Deadline Date (the “Escrow Period”) and the Escrow Agent shall, subject to the terms hereof,
promptly distribute the funds then held in the Escrow Fund to the Shareholders following such
termination; provided, however, that the Escrow Fund shall not terminate with respect to any amount
necessary in the good faith, reasonable judgment of Parent to satisfy any unsatisfied claims
specified in any Officer’s Certificate (“Unresolved Claims”) delivered to the Escrow Agent and the
Shareholder Representative during the Escrow Period and any such amount shall not be distributed to
the Shareholders at such time; provided that as soon as all such Unresolved Claims have been
resolved and all amounts to which the Indemnified Parties are entitled have been distributed to the
Indemnified Parties, the Escrow Agent shall promptly deliver to the Shareholders that portion of
the remaining Escrow Fund, if any. Deliveries of the amounts held in the Escrow Fund to the
Shareholders pursuant to this Section 8.5 shall be made in proportion to their respective Pro Rata
Portions of the amounts remaining in the Escrow Fund, with the amount delivered to each Shareholder
rounded to the
nearest one hundredth (0.01) (with amounts 0.005 and above rounded up), it being understood
that no amounts held in the Escrow Fund shall be distributed to the Founders.

(c) Protection of Escrow Fund.

(i) The Escrow Agent shall hold and safeguard the Escrow Fund during the Escrow Period, shall
treat such fund as an escrow fund in accordance with the terms of this Agreement and shall hold and
dispose of the Escrow Fund only in accordance with the terms of Section 8.4 Section 8.5 and Section
8.6, as applicable and only pursuant to their terms.

(ii) The Escrow Agent is hereby directed to deposit and invest the Escrow Funds in the U.S.
Bank Money Market Deposit Account. The parties hereto acknowledge that the U.S. Bank Money Market
account is a U.S. Bank National Association (“U.S. Bank”) interest-bearing money market deposit
account designed to meet the needs of U.S. Bank’s Corporate Trust Services Escrow Group and other
Corporate Trust customers of U.S. Bank. Selection of this investment includes authorization to
place funds on deposit with U.S. Bank. U.S. Bank uses the daily balance method to calculate
interest on this account (actual/365 or 366). This method applies a daily periodic rate to the
principal balance in the account each day. Interest is accrued daily and credited monthly to the
account. Interest rates currently offered on the accounts are determined at U.S. Bank’s discretion
and may be tiered by customer deposit amount. The owner of the accounts is U.S. Bank as escrow
agent for its trust customers. U.S. Bank’s trust department performs all account deposits and
withdrawals. Each account is insured by the Federal Deposit Insurance
Corporation as determined

 

55

 

under FDIC Regulations, up to applicable FDIC limits. Any and all interest earned on the Escrow
Fund after the deposit shall be added to the Escrow Fund and shall become a part thereof. Escrow
Agent shall thereafter hold, maintain and utilize the Escrow Fund pursuant to the terms and
conditions of this Agreement. The letter of transmittal delivered to the Shareholders pursuant to
Section 2.8 shall include a Form W-9 or original W-8 IRS tax form which shall be provided to the
Escrow Agent prior to the disbursement of interest and the Escrow Agent will file the appropriate
1099 or other required forms pursuant to Federal and State laws. A statement of citizenship will be
provided if requested by Escrow Agent. Escrow Agent shall not be responsible for maximizing the
yield on the Escrow Fund. Escrow Agent shall not be liable for losses, penalties or charges
incurred upon any sale or purchase of any such investment. For tax reporting and withholding
purposes, and consistent with Proposed Treasury Regulation Section 1.468B 8(c), Parent shall be
treated as the owner of the cash in the Escrow Fund and shall be liable and responsible for any
Taxes due with respect to such income; provided, however that interest earned on the Escrow Fund is
intended to qualify for the “portfolio interest” exemption from U.S. federal withholding tax.
Upon the release of any portion of the Escrow Fund to the Shareholders, a portion of such amount
paid from the Escrow Fund shall be treated as interest under the imputed interest rules of the
Code. The parties acknowledge that to the extent regulations of the Comptroller of Currency or
other applicable regulatory entity grant a right to receive brokerage confirmations of security
transactions of the escrow, the parties waive receipt of such confirmations, to the extent
permitted by law. The Escrow Agent shall furnish a statement of security transactions on its
regular monthly reports.

(d) Escrow Agent’s Duties.

(i) The Escrow Agent shall be obligated only for the performance of such duties as are
specifically set forth herein, and as set forth in any additional written escrow instructions which
the Escrow Agent may receive after the date of this Agreement which are signed by an officer of
Parent and the Shareholder Representative, and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed to be genuine and to have been signed
or presented by the proper party or parties. The Escrow Agent shall not be liable for any act done
or omitted hereunder as Escrow Agent while
acting in good faith and in the exercise of reasonable judgment, and any act done or omitted
pursuant to the advice of legal counsel shall be conclusive evidence of such good faith.

(ii) The Escrow Agent is hereby expressly authorized to disregard any and all warnings given
by any of the parties hereto or by any other Person, excepting only orders or process of courts of
law, and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any
court, awards of arbitrators and joint written instructions of Parent and the Shareholder
Representative. In case the Escrow Agent obeys or complies with any such order, judgment or decree
of any court, award of arbitrator or instructions, the Escrow Agent shall not be liable to any of
the parties hereto or to any other Person by reason of such compliance, notwithstanding any such
order, judgment, decree or award being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.

(iii) The Escrow Agent shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to execute or deliver this
Agreement or any documents or papers deposited or called for hereunder.

(iv) The Escrow Agent shall not be liable for the expiration of any rights under any statute
of limitations with respect to this Agreement or any documents deposited with the Escrow Agent.

 

56

 

(v) In performing any duties under this Agreement, the Escrow Agent shall not be liable to any
party for damages, losses, or expenses, except for gross negligence or willful misconduct on the
part of the Escrow Agent. The Escrow Agent shall not incur any such liability for (A) any act or
failure to act made or omitted in good faith, or (B) any action taken or omitted in reliance upon
any instrument, including any written statement or affidavit provided for in this Agreement that
the Escrow Agent shall in good faith believe to be genuine, nor will the Escrow Agent be liable or
responsible for forgeries, fraud, impersonations of another Person, or determining the scope of any
representative authority. In addition, the Escrow Agent may consult with legal counsel in
connection with performing the Escrow Agent’s duties under this Agreement and shall be fully
protected in any act taken, suffered, or permitted by him/her in good faith in accordance with the
advice of counsel. The Escrow Agent is not responsible for determining and verifying the authority
of any Person acting or purporting to act on behalf of any party to this Agreement.

(vi) If any controversy arises between the parties to this Agreement, or with any other party,
concerning the subject matter of this Agreement, its terms or conditions, the Escrow Agent will not
be required to determine the controversy or to take any action regarding it. The Escrow Agent may
hold all documents and all amounts held in the Escrow Fund and may wait for settlement of any such
controversy by final appropriate legal proceedings or other means as may be required, despite what
may be set forth elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for damages, except for gross negligence or willful misconduct on the part of the Escrow Agent.
Furthermore, the Escrow Agent may at its option, file an action of interpleader requiring the
parties to answer and litigate any claims and rights among themselves. The Escrow Agent is
authorized to deposit with the clerk of the court all documents and the Escrow Fund, except all
costs, expenses, charges and reasonable attorney fees incurred by the Escrow Agent due to the
interpleader action (the “Agent Interpleader Expenses”) and which the parties agree to pay as
follows: 50% to be paid by Parent and 50% to be paid by the Escrow Fund. Upon initiating such
action, the Escrow Agent shall be fully released and discharged of and from all obligations and
liability imposed by the terms of this Agreement.

(e) The parties and their respective successors and assigns agree severally, but not jointly,
to indemnify and hold Escrow Agent harmless against any and all losses, claims, damages,
liabilities, and expenses, including reasonable costs of investigation, counsel fees, including
allocated costs of in house counsel and disbursements that may be imposed on Escrow Agent or
incurred by Escrow Agent in connection
with the performance of his/her duties under this Agreement, including any litigation arising
from this Agreement or involving its subject matter, other than those arising out of the gross
negligence or willful misconduct of the Escrow Agent (the “Agent Indemnification Expenses”) as
follows: 50% to be paid by Parent and 50% to be paid by the Escrow Fund; provided, however, that in
the event any Shareholder fails to timely pay his or her Pro Rata Portion of the Agent
Indemnification Expenses, the parties agree that Parent may at its option pay such Shareholder’s
Pro Rata Portion of the Agent Indemnification Expenses and recover an equal amount from such
Shareholder’s Pro Rata Portion of the Escrow Fund.

(f) The Escrow Agent may resign at any time upon giving at least thirty (30) days written
notice to the Parent and the Shareholder Representative; provided, however, that no such
resignation shall become effective until the appointment of a successor escrow agent which shall be
accomplished as follows: Parent and the Shareholder Representative shall use their commercially
reasonable efforts to mutually agree on a successor escrow agent within thirty (30) days after
receiving such notice. If the parties fail to agree upon a successor escrow agent within such
time, the Escrow Agent shall have the right to appoint a successor escrow agent. The successor
escrow agent shall execute and deliver an instrument accepting such appointment, and it shall,
without further acts, be vested with all the estates, properties, rights, powers, and duties of the
predecessor escrow agent as if originally named as escrow agent. Upon appointment of a successor
escrow agent, the Escrow Agent shall be discharged from any further duties and liability under this
Agreement.

 

57

 

(g) Fees. All fees of the Escrow Agent for performance of its duties hereunder shall be paid
50% by Parent and 50% from the Escrow Fund and such fee shall be based in accordance with the
standard fee schedule of the Escrow Agent, attached hereto as Exhibit C. It is understood that the
fees and usual charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the event that the
conditions of this Agreement are not promptly fulfilled, or if the Escrow Agent renders any service
not provided for in this Agreement but that has been requested by an officer of Parent, or if the
parties request a substantial modification of the terms of this Agreement, or if any controversy
arises, or if the Escrow Agent is made a party to, or intervenes in, any litigation pertaining to
the Escrow Fund or its subject matter, the Escrow Agent shall be reasonably compensated for such
extraordinary services and reimbursed for all costs, attorney’s fees, including allocated costs of
in house counsel, and expenses occasioned by such default, delay, controversy or litigation.

(h) Successor Escrow Agents. Any corporation into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Escrow Agent in its individual
capacity shall be a party, or any corporation to which substantially all the corporate trust
business of the Escrow Agent in its individual capacity may be transferred, shall be the Escrow
Agent under this Agreement without further act.

(i) Disclosure. The parties hereto hereby agree not to use the name of U.S. BANK NATIONAL
ASSOCIATION to imply an association with the transaction other than that of a legal escrow agent.

(j) Pro Rata Portions. For purposes of calculating the Pro Rata Portions referenced in this
Article VIII, in the absence of mutual written instructions to the contrary by Parent and the
Shareholder Representative, the Escrow Agent shall be entitled to rely on the amount of the Pro
Rata Portions set forth in the Spreadsheet.

8.6 Shareholder Representative.

(a) By virtue of the approval of the Merger and this Agreement by the Shareholders, each of
the Shareholders shall be deemed to have agreed to appoint Shasta Ventures II, L.P. as its agent
and attorney-in-fact, as the Shareholder Representative for and on behalf of the Shareholders to
give and receive notices and communications, to agree to the adjustment (if any) of the Aggregate
Consideration Amount pursuant to the terms of the Article VIII, to authorize deductions from the
Escrow Fund and a proportionate forfeiture of the Founder’s Holdback Shares pursuant to the Stock
Consideration Agreements, in satisfaction of claims by any Indemnified Party, to object to the
foregoing adjustments or payments, to agree to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect
to such claims, to assert, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators with respect to, any other
claim by any Indemnified Party against any Shareholder or by any such Shareholder against any
Indemnified Party, any dispute between any Indemnified Party and any such Shareholder, any dispute
relating to the Company Assumed Liabilities Report, in each case relating to this Agreement or the
transactions contemplated hereby, and to take all other actions that are either (1) necessary or
appropriate in the judgment of the Shareholder Representative for the accomplishment of the
foregoing, or (2) specifically mandated by the terms of this Agreement. Such agency may be changed
by the Shareholders from time to time upon not less than thirty (30) days prior written notice to
Parent; provided, however, that the Shareholder Representative may not be removed unless holders of
a two-thirds interest of the Total Escrow Amount agree to such removal and to the identity of the
substituted agent. Notwithstanding the foregoing, a vacancy in the position of Shareholder
Representative may be filled by the holders of a majority in interest of the Total Escrow Amount.
No bond shall be required of the Shareholder Representative, and the Shareholder Representative
shall not receive any compensation for its services. Notices or communications to or from the
Shareholder Representative shall constitute notice to or from the Shareholders.

 

58

 

(b) The Shareholder Representative shall not be liable for any act done or omitted hereunder
as Shareholder Representative while acting in good faith and in the exercise of reasonable
judgment. The Shareholders shall indemnify the Shareholder Representative and hold the Shareholder
Representative harmless against any loss, liability or expense incurred without gross negligence or
bad faith on the part of the Shareholder Representative and arising out of or in connection with
the acceptance or administration of the Shareholder Representative’s duties hereunder, including
the reasonable fees and expenses of any legal counsel retained by the Shareholder Representative
(“Shareholder Representative Expenses”). Following the resolution of all Unresolved Claims and the
satisfaction of all claims made by Indemnified Parties for Losses, the Shareholder Representative
shall have the right to recover Shareholder Representative Expenses from the Escrow Fund (and the
Founders agree to pay the Shareholder Representative their Pro Rata Portion of such amount) prior
to any distribution to the Shareholders, and prior to any such distribution, shall deliver to
Parent and the Escrow Agent a certificate setting forth the Shareholder Representative Expenses
actually incurred and the amount in cash to be distributed as satisfaction of such expenses. The
Escrow Agent shall be entitled to rely upon such certificate and shall have no duty to investigate
or confirm its accuracy. A decision, act, consent or instruction of the Shareholder
Representative, including an amendment, extension or waiver of this Agreement pursuant to Section
9.4 and Section 9.5 hereof, shall constitute a decision of the Shareholders and shall be final,
binding and conclusive upon the Shareholders; and Parent may rely upon any such decision, act,
consent or instruction of the Shareholder Representative as being the decision, act, consent or
instruction of the Shareholders. Parent, Sub and Payment Agent is hereby relieved from any
liability to any person for any acts done by them in accordance with such decision, act, consent or
instruction of the Shareholder Representative.

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

9.1 Termination. Subject to Section 9.2 hereof, this Agreement may be terminated and the
Merger abandoned at any time prior to the Closing:

(a) by mutual agreement of the Company and Parent;

(b) by Parent or the Company if any Governmental Entity shall have enacted, issued,
promulgated, enforced or entered Law or Order which is in effect and which has the effect of making
the Merger illegal;

(c) by Parent if neither it nor Merger Sub is in material breach of its obligations under this
Agreement and there has been a breach of any representation, warranty, covenant or agreement of the
Company or the Founders contained in this Agreement such that the conditions set forth in Section
7.2(a) hereof would not be satisfied and such breach has not been cured within twenty (20) calendar
days after written notice thereof to the Company;

(d) by the Company if none of the Company or the Founders is in material breach of its
respective obligations under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement of Parent or Merger Sub contained in this Agreement such that the
conditions set forth in Section 7.3(a) hereof would not be satisfied and such breach has not been
cured within twenty (20) calendar days after written notice thereof to Parent; or

 

59

 

(e) by Parent or the Company if the Closing Date shall not have occurred by April 1, 2010 (the
“Termination Date”); provided, however, that the right to terminate this Agreement under this
Section 9.1(e) shall not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes breach of this Agreement.

9.2 Effect of Termination. In the event of termination of this Agreement as provided in
Section 9.1 hereof, this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, the Company, or its respective officers, directors or
Shareholders, if applicable; provided, however, that Parent and the Company shall remain liable for
any knowing, intentional or willful breaches of this Agreement or in any certificate or other
instruments delivered pursuant to this Agreement prior to its termination; and provided further,
however, that the provisions of Sections 6.2, 6.3, and 9.3 hereof, Article X hereof and this
Section 9.2 shall remain in full force and effect and survive any termination of this Agreement
pursuant to the terms of this Article IX.

9.3 Fees and Expense. All fees and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such expenses if the
Merger is not consummated. The parties hereby agree that all fees and expenses to be paid to China
e-Capital shall be deemed Third Party Expenses.

9.4 Amendment. This Agreement may be amended by the parties hereto at any time by execution
of an instrument in writing signed on behalf of the party against whom enforcement is sought. For
purposes of this Section 9.4, the Shareholders agree that any amendment of this Agreement signed by
the Shareholder Representative shall be binding upon and effective against the Shareholders whether
or not they have signed such amendment.

9.5 Extension; Waiver. At any time prior to the Closing, Parent, on the one hand, and the
Company and the Shareholder Representative, on the other hand, may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations of the other party hereto, (ii)
waive any inaccuracies in the representations and warranties made to such party contained herein or
in any document delivered pursuant hereto, and (iii) waive compliance with any of the covenants,
agreements or conditions for the benefit of such party contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. For purposes of this Section 9.5, the Shareholders
agree that any extension or waiver signed by the Shareholder Representative shall be binding upon
and effective against all Shareholders whether or not they have signed such extension or waiver.

 

60

 

ARTICLE X

GENERAL PROVISIONS

10.1 Notices. All notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial messenger or courier service, or mailed by
registered or certified mail (return receipt requested) or sent via facsimile (with acknowledgment
of complete transmission) to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice or, if specifically provided for elsewhere in this
Agreement such as Section 5.3, by email); provided, however, that notices sent by mail will not be
deemed given until received:

(a) if to Parent or Sub, to:

Shanda Games Limited

No. 1 Intelligent Building

No. 690 Bibo Road

Pudong New Area

Shanghai 201203

People’s Republic of China

Attn: Chief Executive Officer

Telephone: 86-21-5050-4740

Facsimile: 86-21-5080-5132

with a copy to:

Wilson Sonsini Goodrich & Rosati, Professional Corporation

650 Page Mill Road

Palo Alto, CA 94304

Attention: Carmen Chang

Telephone No.: (650) 493-9300

Facsimile No.: (650) 493-6811

(b) if to the Company or the Shareholder Representative, to:

Mochi Media, Inc.

611 Mission Street, 5th Floor

San Francisco, California

Attention: Jameson Hsu

Telephone No.:

Facsimile No.:

and

SHASTA VENTURES II, L.P.

2440 Sand Hill Road, Suite 300

Menlo Park, CA 94025

Attn: Austin Grose

Tel: 650-543-1700

Fax: 650-543-1799

with a copy to:

Gunderson Dettmer

1200 Seaport Blvd.

Redwood City, CA 94063

Attention: David Van Horne

Telephone No.: (650) 321-2400

Facsimile No.: (650) 321-2800

 

61

 

(c) if to the Escrow Agent, to:

U.S. Bank National Association

Attention: Bridget Greiber

EP MN WS3C

60 Livingston Avenue

St. Paul, Minnesota 55107

Telephone No.: (651) 495-3725

Facsimile No.: (651) 495-8087

with a copy to:

U.S. Bank National Association

Attention: Kyle J. Lunde

1420 5th Ave, Ste 700

Seattle, Washington 98101

Telephone No.: (206) 344-4677

Facsimile No.: (206) 344-4630

10.2 Counterparts. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.

10.3 Entire Agreement; Assignment. This Agreement, the Exhibits hereto, the Disclosure
Schedule, the Confidentiality Agreement, and the documents and instruments and other agreements
among the parties hereto referenced herein: (i) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and understandings
both written and oral, among the parties with respect to the subject matter hereof; (ii) except as
otherwise provided in Section 6.13 and Article VIII herein, are not intended to confer upon any
other person any rights or remedies hereunder; and (iii) shall not be assigned by operation of Law
or otherwise, except that Parent may assign its rights and delegate its obligations hereunder to
its Affiliates as long as Parent remains ultimately liable for all of Parent’s obligations
hereunder.

10.4 Severability. In the event that any provision of this Agreement or the application
thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force and effect and the
application of such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of such void or
unenforceable provision.

10.5 Other Remedies. Except as otherwise expressly set forth herein, any and all remedies
herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of
any one remedy will not preclude the exercise of any other remedy.

 

62

 

10.6 Governing Law; Exclusive Jurisdiction. 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 laws thereof. Subject to the terms of Article
VIII with respect to the resolution of indemnification claims, each of the parties hereto
irrevocably consents to the exclusive jurisdiction and venue of the Delaware Chancery Court and any
appellate court thereto in the State of Delaware, in connection with any matter based upon or
arising out of this Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of Delaware for such persons and waives
and covenants not to assert or plead any objection which they might otherwise have to such
jurisdiction, venue and such process. Subject to the terms of Article VIII with respect to the
resolution of indemnification claims, each party agrees not to commence any legal proceedings
related hereto except in such courts.

10.7 Specific Performance. The parties hereto agree that irreparable damage could occur in
the event that provisions of this Agreement were not performed in accordance with the terms hereof
and that the parties shall be entitled to seek specific performance of the terms hereof in addition
to any other remedy at law or in equity.

10.8 Rules of Construction. The parties hereto agree that they have been represented by
counsel during the negotiation and execution of this Agreement and, therefore, waive the
application of any Law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such agreement or
document.

10.9 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

[Remainder of Page Intentionally Left Blank]

 

63

 

IN WITNESS WHEREOF, Parent, Sub, the Company, each of the Founders, the Shareholder
Representative and the Escrow Agent have caused this Agreement to be signed, all as of the date
first written above.

	 	 	 	 	 
	 	SHANDA GAMES LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	M ACQUISITION CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	MOCHI MEDIA, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	FOUNDER

 	 
	 	
 	 
	 	JAMESON HSU 	 
	 	 	 
	 	FOUNDER

 	 
	 	
 	 
	 	BOB IPPOLITO 	 

SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER

 

 

 

	 	 	 	 	 
	 	SHAREHOLDER REPRESENTATIVE

SHASTA VENTURES II, L.P.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	ESCROW AGENT

US BANK NATIONAL ASSOCIATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION

 

 

 

Exhibit C

Schedule of Fees for Services as

Escrow AgentExhibit 4.26

Exhibit 4.26

SALE AND PURCHASE AGREEMENT

THIS SALE AND PURCHASE AGREEMENT is made this 7th day of September, 2010 by and between:

Shanda Games International PTE. Ltd., a company duly incorporated and existing under the laws
of the Republic of Singapore (“Singapore”) and having its principal place of business at
One Fusionopolis Way, Connexis North #05-10, Singapore 138632 (the “Buyer”);

Persons listed on Part I and Part III of Schedule 2.1 hereto (collectively, the “Company
Shareholders” and each a “Company Shareholder”); and

Eun Sang Lee, a Korean citizen with resident registration number 731120-1052836, as the
Sellers’ Representative.

The Buyer, the Company Shareholders and the Third Party Shareholders (as defined below) (for
each Third Party Shareholder, upon execution of a Joinder Agreement by such Third Party
Shareholder) may collectively be referred to as the “Parties” and, individually, as a “Party.”

RECITALS:

WHEREAS, the Company Shareholders are the record and beneficial owners of One Million Five
Hundred Thirty Thousand Six Hundred and Twenty (1,530,620) shares of Common Stock (as defined
below) representing approximately sixty percent (60%) of the total number of issued and outstanding
shares of Common Stock, calculated on a Fully-Diluted basis, and desire to sell such shares to the
Buyer, and the Buyer desires to purchase such shares from the Company Shareholders, upon the terms
and subject to the conditions hereinafter set forth;

WHEREAS, the Third Party Shareholders are the record and beneficial owners of Nine Hundred
Ninety Nine Thousand Eight Hundred and Twenty Four (999,824) shares of Common Stock representing
approximately forty percent (40%) of the total number of shares of issued and outstanding shares of
Common Stock, calculated on a Fully-Diluted basis; the Buyer desires to purchase such shares from
the Third Party Shareholders upon the terms and subject to the conditions hereinafter set forth and
the Company Shareholders intend to facility such purchase;

NOW, THEREFORE, in consideration of the mutual promises and covenants stated below, the
Parties hereto agree as follows:

ARTICLE 1.

DEFINITIONS.

1.1 Definitions. When used in this Agreement, the following terms shall have the
respective meanings set forth below:

“Acquisition Proposal” shall have the meaning specified in Section 7.2 hereof.

 

 

 

“Affiliate” shall mean, (x) with respect to any Person (whether an individual or not), (i)
any Person directly or indirectly controlling, controlled by or under common control with, such
Person; (ii) any Person owning five percent (5%) or more of the outstanding stock of such Person;
and (iii) any Person who is a director, officer or key employee of such Person or of any Person
described in clause (i) above and (y) with respect to any Person who is an individual, the spouse
or any lineal descendant, sibling or parent of such Person. As used herein, “control” means the
possession, direct or indirect, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by contract or
otherwise.

“Agreement” shall mean this Sale and Purchase Agreement, including all schedules hereto and
the Joinder Agreements, as the same may hereafter be amended, modified or supplemented from time
to time.

“Applicable Law” shall mean, with respect to any Person, any transnational, domestic or
foreign national, federal, provincial, state or local law (statutory, common or otherwise),
constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment,
decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a
Governmental Authority that is binding upon or applicable to such Person, as amended, modified or
supplemented unless expressly specified otherwise.

“Approvals” shall mean any and all permits, consents, acceptances of filings and reports,
authorizations, and other approvals from any relevant Governmental Authority in Korea, China,
Singapore, United States of America or the Cayman Islands.

“Balance Sheet Date” shall mean June 30, 2010.

“Business Day” shall mean any day that is not a Saturday, Sunday or a day on which commercial
banks in China, Korea or Singapore are required or authorized by Applicable Law to close.

“Buyer Directors” shall have the meaning specified in Section 10.6 hereof.

“CCG” shall mean CCG Investment, Inc., a corporation duly organized and validly existing
under the laws of Korea and a Founder Shareholder.

“China” shall mean the People’s Republic of China.

“Claim Date” shall have the meaning specified in Section 12.4 hereof.

“Claim Notice” shall have the meaning specified in Section 12.4 hereof.

 

- 2 -

 

“Closing” shall mean the closing of the transactions contemplated under this Agreement.

“Closing Date” shall mean the date of the Closing, which date shall be as soon as possible
but not later than five (5) Business Days after (x) the satisfaction or the waiver of the
conditions precedent to the Parties’ obligations hereunder and (y) a written notice of the Buyer
to the Sellers’ Representative confirming that the due diligence review by the Buyer pursuant to
Section 7.3 has been completed to its satisfaction, or such other date as shall be mutually agreed
by the Parties.

“Company” shall mean Eyedentity Games, Inc., a corporation duly organized and validly
existing under the laws of Korea and having its principal place of business at 3F., Hyundai Dream
Valley, 34-2, Bangyi-dong, Songpa-gu Seoul, Korea.

“Company Securities” shall have the meaning specified in Section 3.3 hereof.

“Common Stock” shall mean the common stock of the Company, par value 500 Won per share.

“Contract” shall mean any agreement, contract, indenture, letter of credit, mortgage,
security agreement, pledge agreement, deed of trust, bond, note, guarantee, surety obligation,
warranty, license, franchise, permit, power of attorney, purchase order, lease, and other
agreement, contract, instrument, obligation, offer, commitment, arrangement and understanding,
written or oral, to which the Company is a party or by which the Company or any of its assets or
properties may be bound or affected, including without limitation, the Material Agreements.

“Covenantors” shall have the meaning specified in Section 7.8 hereof.

“Disability” shall mean, with respect to any Company Shareholder (except for CCG and Ki Yong
Cho), the inability (supported by a written opinion of an independent doctor in the relevant
field) to perform, because of physical, mental or emotional incapacity resulting from injury,
sickness or disease, his or her duties or responsibilities at the same level as performed
immediately prior to such injury, sickness or disease, if such inability continues for two
consecutive months.

“Disclosure Schedule” shall have the meaning specified in Article 3 hereof.

“Employee Shareholders” shall mean the Persons set forth in Part III of Schedule 2.1 hereof.

“Escrow Distribution Date” shall have the meaning specified in Section 12.3 hereof.

“Financial Statements” shall have the meaning specified in Section 3.7 hereof.

“Form Employment Contracts” shall have the meaning specified in Section 3.15 hereof.

 

- 3 -

 

“Founder Shareholders” shall mean the Persons set forth in Part I of Schedule 2.1 hereof.

“Founder Shareholders Directors” shall have the meaning specified in Section 10.6 hereof.

“Fully-Diluted” shall mean all outstanding shares of Common Stock, all shares of Common Stock
issuable in respect of all outstanding securities convertible into or exchangeable for Common
Stock if such securities are converted or exchanged for Common Stock immediately prior to the time
of calculation, and all shares of Common Stock issuable in respect of all outstanding options,
warrants and other rights to acquire Common Stock if such options, warrants and other rights are
exercised immediately prior to the time of calculation; provided that, if any of the foregoing
Company Securities are subject to vesting, such Company Securities subject to vesting shall be
included in the definition of “Fully-Diluted” only if and to the extent that such Company
Securities are vested immediately prior to the time of calculation.

“Government Licenses” shall have the meaning specified in Section 3.14 hereof.

“Government Official” shall be broadly defined to include any (i) officer or employee at any
level of the government of Korea or any other country (including its political subdivisions), or
any department, agency, or instrumentality thereof, or of a public international organization, or
any natural person acting in an official capacity for or on behalf of any such government or
department, agency or instrumentality or any such public international organization; (ii) any
candidate for political office; or (iii) any person who holds or held a prominent public position
in Korea or any other country (including its political subdivisions), including head of state,
senior government, judicial or military official, official of a political party, candidate for
political office, or senior executive of a state-owned enterprise of national importance.

“Governmental Authority” shall mean any government or governmental, legislative, executive,
regulatory or administrative body, or political subdivision thereof, whether international,
federal, state, municipal, local or foreign, or any agency, board, bureau, commission, office,
instrumentality or authority thereof, or any court or arbitrator (public or private).

“Governmental Charges” shall mean any and all taxes payable to any Governmental Authority,
including, without limitation, income, value-added, withholding, excise, sales, use, personal
property, occupancy, business and occupation, mercantile, real estate, employment, payroll,
franchise or capital gains tax, mortgage, registration, stamp, documentary, recording, real
property, rent occupancy, license, and all other like imposts, duties, assessments and charges
payable to any Governmental Authority (including interest and penalties thereon, whether or not
disputed).

“Governmental Order” shall mean any order, writ, injunction, decree, stipulation,
determination or award entered by or with any Governmental Authority.

 

- 4 -

 

“Gross Revenues” shall have the meaning specified in Section 8.1 hereof.

“Indemnified Party” shall have the meaning specified in Section 12.2 hereof.

“Indemnifying Party” shall have the meaning specified in Section 12.2 hereof.

“Initial Cash Consideration” shall have the meaning specified in Section 2.1 hereof.

“Intellectual Property” shall mean (i) trademarks, service marks, brand names, certification
marks, trade dress, domain names and other indications of origin (whether or not registered), the
goodwill associated with the foregoing and registrations in any jurisdiction of, and applications
in any jurisdiction to register, the foregoing, including any extension, modification or renewal
of any such registration or application, (ii) inventions and discoveries, whether patentable or
not, in any jurisdiction, patents, applications for patents (including divisions, continuations,
continuations in part and renewal applications), and any renewals, extensions or reissues thereof,
in any jurisdiction, (iii) Trade Secrets, (iv) writings and other works, whether copyrightable or
not, in any jurisdiction, and any and all copyrights, whether registered or not, and registrations
or applications for registration of copyrights in any jurisdiction, including all derivative
works, moral rights, renewals, extensions, reversions or restorations associated with such
copyrights, now or hereafter provided by law, regardless of the medium of fixation or means of
expression, (v) moral rights, database rights, design rights, industrial property rights,
publicity rights and privacy rights, (vi) Software, (vii) any similar intellectual property or
proprietary rights, (viii) copies and tangible embodiments of any of the foregoing, in whatever
form or medium, (ix) all rights in all of the foregoing provided by Applicable Laws and (x) all
rights to sue or recover and retain damages and costs and attorneys’ fees for past, present and
future infringement or misappropriation of any of the foregoing.

“Joinder Agreements” shall have the meaning specified in Section 7.9 hereof.

“Justifiable Cause” shall mean, with respect to any Company Shareholder (other than CCG and
Ki Yong Cho), the existence or occurrence of any of the following: (i) a material failure or
refusal of such Company Shareholder to perform his assigned duties for the Company or a refusal to
follow the directions of the Company, provided that such assigned duties and/or directions are
lawful, (ii) a material, serious or repeated breach by such Company Shareholder of the terms of
his or her employment agreement, confidentiality agreement or service agreement, as applicable,
with the Company, (iii) dishonesty of such Company Shareholder, or gross negligence or willful
misconduct of such Company Shareholder resulting in any financial loss to, or injury to the
reputation of, the Company or (iv) such Company Shareholder’s conviction for any serious offense
(whether or not related to his services for the Company), excluding any conviction for domestic or
familial matters that do not result in imprisonment.

“knowledge” of any Person that is not an individual shall mean the knowledge of such
Person’s officers after due inquiry.

 

- 5 -

 

“Korea” shall mean the Republic of Korea.

“Korean GAAP” shall mean the generally accepted accounting principles in Korea.

“Lease” shall have the meaning specified in Section 3.13 hereof.

“Lien or Other Encumbrance” shall mean any lien, pledge, mortgage, security interest, lease,
charge, conditional sales contract, option, restriction, reversionary interest, right of first
refusal or other transfer restriction, voting trust arrangement, preemptive right, claim, easement
or any other encumbrance, adverse claim or right or demands of any nature whatsoever.

“Losses” shall have the meaning specified in Section 12.2 hereof.

“Material Adverse Effect” shall mean a material adverse effect on the condition (financial or
otherwise), business, assets, results of operations or prospects of the Company.

“Material Agreement” shall have the meaning specified in Section 3.16 hereof.

“Objection Deadline” shall have the meaning specified in Section 12.4 hereof.

“Officer’s Certificate” shall have the meaning specified in Section 12.3 hereof.

“Objection Notice” shall have the meaning specified in Section 12.4 hereof.

“Offset Amount” shall have the meaning specified in Section 12.6 hereof.

“Person” shall mean any natural person, entity, corporation, company, association, joint
venture, joint stock company, partnership, trust, organization, individual or Governmental
Authority.

“Preferred Stock” shall mean the convertible preferred stock of the Company, par value 500
Won per share.

“Pro Rata Portion” shall mean, with respect to each Company Shareholder, an amount equal to
the quotient of (i) the sum of the Initial Cash Consideration of such Company Shareholder divided
by (ii) the sum of the Initial Cash Considerations of all Company Shareholders.

“Released Persons” shall have the meaning specified in Section 7.8 hereof.

“Representative Director” shall mean the representative director of the Company.

 

- 6 -

 

“Sellers” shall mean, collectively, the Founder Shareholders, the Third Party Shareholders
and the Employee Shareholders.

“Shares” shall have the meaning specified in Section 2.1 hereof.

“Software” shall mean computer software (whether in source code or object code form),
including source code, object code, firmware, operating systems and specifications).

“Stock Option Grants” shall mean the issuance of stock options approved by the shareholders
of the Company on August 25, 2008, April 27, 2009 and December 11, 2009, respectively.

“Stock Options” shall have the meaning specified in Section 3.3 hereof.

“Stock Options Shares Sale and Purchase Agreements” shall have the meaning specified in
Section 7.5 hereof.

“Subsequent Cash Consideration” shall have the meaning specified in Section 2.1(b) hereof.

“Subsequent Payment Date” shall have the meaning specified in Section 2.1(b) hereof.

“Survival Date” shall mean the day which is eighteen (18) months after the Closing Date.

“Tax” means (a) taxes on income, profits and gains, and (b) all other taxes, levies, duties,
imposts, charges and withholdings of any nature, in each case imposed, levied, collected, withheld
or assessed by (or on behalf of) any Governmental Authority in any jurisdiction, including any
excise, customs, property, sales, transfer, franchise, turnover and payroll taxes and other
benefits related tax and stamp duties, and any payment whatsoever which the relevant Person may be
or become bound to make to any other Person as a result of the discharge by such other Person of
any tax which the relevant Person has failed to discharge, together with all penalties, charges
and interest relating to any of the foregoing or to any late or incorrect return in respect of any
of them, and regardless of whether such taxes, levies, duties, imposts, charges, withholdings,
penalties and interest are chargeable directly or primarily against or attributable directly or
primarily to the relevant Person or any other Person and of whether any amount in respect of them
is recoverable from any other Person.

“Tax Returns” shall have the meaning specified in Section 3.12 hereof.

“Third Party Claim” shall have the meaning specified in Section 12.5 hereof.

“Third Party Shareholders” shall mean the Persons set forth in Part II of Schedule 2.1
hereof.

 

- 7 -

 

“Total Escrow Amount” shall mean an amount in cash equal to Five Million Seven Hundred Forty
Six Thousand Three Hundred Seventy Eight United States Dollars and Ninety Cents (US$5,746,378.90).

“Trade Secrets” shall mean trade secrets and, whether or not confidential, business
information (including all source code for any Software owned or distributed by the Company,
pricing and cost information, business and marketing plans and customer and supplier lists) and
rights in any jurisdiction to limit the use or disclosure thereof by any Person.

“2010 Budget” shall have the meaning specified in Section 7.1 hereof.

“United States Dollars” or “US$” shall mean the official currency of the United States of
America.

“Unresolved Claims” shall have the meaning specified in Section 12.3 hereof.

“US GAAP” shall mean the generally accepted accounting principles in the United States of
America.

“Withheld Amount” shall have the meaning specified in Section 12.3 hereof.

“Won” or “KRW” shall mean Korean Won, the official currency of Korea.

1.2 Schedules. The schedules which are attached to this Agreement are incorporated
into this Agreement by reference and are deemed to be a part hereof.

ARTICLE 2.

SALE AND PURCHASE OF THE SHARES; CLOSING.

2.1 Sale and Purchase. (a) Subject to the terms and conditions set forth in this
Agreement, on the Closing Date, (i) each of the Sellers shall sell, assign and transfer to Buyer,
all of such Seller’s right, title and interest in and to the shares of Common Stock and/or shares
of Preferred Stock owned by such Seller, in the case of Founder Shareholders and Third Party
Shareholders, as set forth opposite the name of such Founder Shareholder or Third Party Shareholder
under the heading “Shares” in Schedule 2.1 hereto or, in the case of Employee Shareholders, as set
forth in the signature page applicable to such Employee Shareholder under the heading “Shares”
(such Seller’s “Shares”) free and clear of any Lien or Other Encumbrance and (ii) the Buyer
shall pay the amount in cash to such Seller, in the case of Founder Shareholders and Third Party
Shareholders, as set forth opposite the name of such Founder Shareholder or Third Party Shareholder
under the heading “Initial Cash Consideration” in Schedule 2.1 hereto or, in the case of Employee
Shareholders, as set forth in the signature page applicable to such Employee Shareholder under the
heading “Initial Cash Consideration” (such Seller’s “Initial Cash Consideration”).

 

- 8 -

 

(b) Subject to the terms and conditions set forth in this Agreement (including but not limited
to Section 12.3 hereof), on the third anniversary of the Closing Date (the “Subsequent Payment
Date”), the Buyer shall pay the amount in cash to each of the Company Shareholders, in the case
of Founder Shareholders, as set forth opposite their respective names under the heading “Subsequent
Cash Consideration” in Part I of Schedule 2.1 hereto or, in the case of Employee Shareholders, as
set forth in the signature page applicable to such Employee Shareholder under the heading
“Subsequent Cash Consideration” (such Company Shareholder’s “Subsequent Cash
Consideration”) so long as such Company Shareholder (other than CCG and Ki Yong Cho) remains an
employee of the Company on such date; provided, however, that (i) if such Company Shareholder is
dismissed by the Company prior to the Subsequent Payment Date without Justifiable Cause under the
pertinent laws of Korea or due to layoff for reasons of managerial necessity (jung-ri-hae-go),
then, for purposes of this Agreement, such Company Shareholder shall be deemed to have been
employed by the Company until the Subsequent Payment Date, and (ii) if such Company Shareholder’s
employment is terminated due to death or Disability, then such Company Shareholder (or his or her
estate in the case of death) shall be entitled to receive, on the Subsequent Payment Date, an
amount in cash equal to (x) such Company Shareholder’s Subsequent Cash Consideration had such
Company Shareholder remained an employee of the Company on the Subsequent Payment Date multiplied
by (y) a ratio, the numerator of which is the number of days from (and excluding) the Closing Date
to (and excluding) (A) in the case of death, the date of such death and (B) in the case of
Disability, the date which is the first day of the 2-month period referred to in the definition of
Disability, and the denominator of which is the number of days from (and excluding) the Closing
Date to (and including) the Subsequent Payment Date.

2.2 Escrow Amount. At the Closing, notwithstanding anything to the contrary set forth
in this Agreement, the Buyer will withhold from each Company Shareholder’s Initial Cash
Consideration, such Company Shareholder’s Pro Rata Portion of the Total Escrow Amount pursuant to
Article 12 hereof.

2.3 Closing. (a) Subject to the satisfaction or, if permissible, waiver of the
conditions set forth in this Agreement, the Closing shall take place at the offices of Bae, Kim &
Lee LLC, Hankook Tire Bldg., 647-15 Yoksam-dong, Kangnam-gu Seoul, 135-723, Korea at 11:00 A.M.
local time on the Closing Date or at such other place as Buyer and the Sellers may agree.

(b) [RESERVED]

(c) On the Closing Date, each Seller shall deliver to the Buyer:

(i) The stock certificates representing such Seller’s Shares, free and clear of any Liens or
Other Encumbrance;

(ii) A copy of the shareholders registry of the Company showing the registration of such
Seller’s Shares in the Buyer’s name;

 

- 9 -

 

(iii) Such Seller’s certificate referred to in Section 10.2 hereof, confirming that the
representations and warranties set forth in Article 4 hereof are true and correct as of the
Closing Date, and further confirming that all conditions, covenants and other duties under this
Agreement applicable to such Seller have been satisfied and complied with;

(iv) Opinion of the Korean counsel for the Founder Shareholders, referred to in Section
10.10, substantially in the form attached hereto as Exhibit D; and

(v) Notarized resignation letters of (x) all four (4) incumbent directors of the Company and
(y) the incumbent statutory auditor of the Company.

(d) On the Closing Date, the Buyer shall

(i) Deliver to each Seller such Seller’s Initial Cash Consideration (less such Seller’s Pro
Rata Portion of the Total Escrow Amount if such Seller is a Company Shareholder) to the bank
account of such Seller set forth opposite the name of such Seller under the heading “Bank Account”
in Schedule 2.1 hereto in immediately available funds; and

(ii) Deliver to the Sellers’ Representative the Buyer’s certificate referred to in Section
9.1, confirming that the representations and warranties set forth in Article 5 hereof are true and
correct as of the Closing Date, and further confirming that all conditions, covenants and other
duties under this Agreement applicable to the Buyer have been satisfied and complied with.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY

Subject only to the express exceptions set forth in the section of the disclosure schedule
attached hereto (each of which disclosures, in order to be effective, shall clearly reference the
appropriate section and, if applicable, subsection, of this Article 3 to which it relates and each
of which disclosures shall be deemed to be incorporated by reference into the representations and
warranties made in this Article 3) delivered by the Company Shareholders to the Buyer concurrently
with the execution of this Agreement and dated as of the date hereof (the “Disclosure
Schedule”), each Company Shareholder, jointly and severally, hereby represents and warrants to
the Buyer, as of the date hereof and as of the Closing Date with the same force and effect as if
made at and as of such time (or, if such representation or warranty is made as of a specified
date, as of such date), as set forth below:

3.1 Due Organization. The Company is a joint stock corporation duly organized and
validly existing under the laws of Korea, with the power and authority (corporate and other) to
own, lease and operate its properties and conduct its business as currently conducted, and has been
duly qualified as a foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification.

 

- 10 -

 

3.2 [RESERVED]

3.3 Capitalization. (a) The authorized capital stock of the Company is 5,120,000
shares with par value 500 Won per share. 1,619,500 shares of Common Stock are issued and
outstanding and 910,944 shares of Preferred Stock are issued and outstanding. All such issued and
outstanding shares are duly authorized, validly issued, fully paid and non-assessable and except
for such shares of Common Stock and Preferred Stock, there exist no other shares of capital stock
or other equity related securities of the Company.

(b) There are outstanding stock options (the “Stock Options”) to purchase an aggregate
of 75,000 shares of Common Stock, none of which are vested, and an aggregate of 75,000 shares of
Common Stock are reserved for issuance pursuant to the Stock Option Grants. Section 3.3(b) of the
Disclosure Schedule contains a complete and correct list of each outstanding stock option and other
right to purchase Common Stock, the name of the holder, the number of shares of Common Stock
subject thereto, the exercise price thereof and the exercise period thereof.

(c) All outstanding capital shares of the Company have been duly authorized and validly issued
and are fully paid and non-assessable. Except as set forth in Section 3.3(a) and Section 3.3(b),
there are no outstanding (i) shares of capital stock or voting securities of the Company, (ii)
securities of the Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options or other rights to acquire from the Company, or other
obligation of the Company to issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of the Company (the items in Section
3.3(c)(i), Section 3.3(c)(ii), and Section 3.3(c)(iii) being referred to collectively as the
“Company Securities”).

(d) Except for this Agreement, there is no Contract or obligation of any kind (and no
authorization therefore has been given) obligating the Company or any other Person (i) to issue or
sell, or cause to be issued or sold, any Company Securities; or (ii) to repurchase, redeem or
otherwise acquire any Company Securities.

3.4 Non-contravention. The execution, delivery and performance by any Party of this
Agreement and the consummation by any Party of the transactions contemplated hereby do not and will
not (i) violate, conflict with or result in a breach by the Company of the articles of
incorporation of the Company, (ii) violate, conflict with or result in a breach of, or constitute a
default (or create an event which, with or without notice or lapse of time or both, would
constitute a default) under or give rise to any right of termination, cancellation or acceleration
under, or give rise to a loss of any benefit to which the Company is entitled under any Contract to
which the Company is a party or under which the Company or any of its assets or properties may be
bound, (iii) violate or result in a breach of any Governmental Order or Applicable Law, or (iv)
result in the creation of any Lien or Other Encumbrance upon any of the assets or properties of
the Company.

 

- 11 -

 

3.5 Government Approvals. Other than as set forth in Section 3.2, the execution,
delivery and performance by the Company of this Agreement and the consummation of the transactions
contemplated hereby require no action by or in respect of, or filing with, any Governmental
Authority.

3.6 Third Party Consents. Except as set forth in Section 3.6 of the Disclosure
Schedule, no consents from third parties are necessary in order to complete the sale of any
Seller’s Shares or to consummate the transactions contemplated by this Agreement in accordance with
the terms of this Agreement, without (A) causing the termination of any Material Agreement to which
the Company is a party, (B) causing a material interruption of the business of the Company, (C)
giving rise to an obligation of the Company to any director, officer or employee of the Company,
immediately or upon termination of employment of such director, officer or employee following a
specified period or upon a specified event, or (D) triggering any other provision of any agreement
to which the Company or any Seller is a party and the triggering of which would have, or could be
reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

3.7 Financial Statements. Attached hereto as Schedule 3.7(a) are copies of the (i)
audited financial statements of the Company (and the notes and schedules thereto) as of and for the
year ended December 31, 2009 and (ii) unaudited financial statements of the Company as of and for
the years ended December 31, 2007 and 2008 and as of and for the six months ended June 30, 2010.
Such financial statements are collectively referred to herein as the “Financial
Statements.” The Financial Statements (i) are true, correct and complete and have been
prepared in accordance with the books and records of the Company, (ii) have been prepared in
accordance with Korean GAAP, applied on a consistent basis throughout the periods indicated
therein, and (iii) fairly present the financial condition and results of operations and cash flows
of the Company, as of the dates and for the periods to which they relate, subject to normal
adjustments in connection with audit in the case of any unaudited interim financial statements,
which will not be material in amount or significance in the aggregate.

3.8 No Material Change. Except as disclosed in Section 3.8 of the Disclosure
Schedule, since the Balance Sheet Date, the Company has conducted it business only in the ordinary
course of business consistent with past practices and there has not been:

(a) any event, occurrence, development or state of circumstances or facts that has had or
would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(b) any amendment of the memorandum and articles of incorporation or other similar
organizational documents (whether by merger, consolidation or otherwise) of the Company;

 

- 12 -

 

(c) any splitting, combination or reclassification of any shares of capital stock of the
Company or declaration, setting aside or payment of any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of the capital stock of the Company,
or redemption, repurchase or other acquisition or offer to redeem, repurchase, or otherwise acquire
any Company Securities;

(d) (i) any issuance, delivery or sale, or authorization of the issuance, delivery or sale of,
any shares of any Company Securities, other than the issuance of Company Securities to certain of
the Company’s employees pursuant to the Stock Option Grants or (ii) any amendment of any term of
any Company Security, whether by merger, consolidation or otherwise;

(e) any incurrence of any capital expenditures or any obligations or liabilities in respect
thereof by the Company;

(f) any acquisition (by merger, consolidation, acquisition of stock or assets or otherwise),
directly or indirectly, by the Company of any assets, securities, properties, interests or
businesses;

(g) any sale, lease or other transfer, or creation or incurrence of any Lien or Other
Encumbrance on, any assets, securities, properties, interests or businesses of the Company;

(h) the making by the Company of any loans, advances or capital contributions to, or
investments in, any other Person;

(i) the creation, incurrence, assumption or sufferance to exist by the Company of any
indebtedness for borrowed money or guarantees thereof;

(j) any damage, destruction or other casualty loss (whether or not covered by insurance)
affecting the business or assets of the Company;

(k) the entry into, amendment or modification, or termination of any Material Agreement or
waiver, release or assignment of any material rights, claims or benefits of the Company;

(l) (i) the grant or increase of any severance or termination pay to (or amend any existing
arrangement with) any director, officer or employee of the Company, (ii) any increase in benefits
payable under any existing severance or termination pay policies or employment agreement or service
agreement, (iii) the entry into any employment, deferred compensation or other similar agreement
(or amendment of any such existing agreement) with any director, officer or employee of the
Company, (iv) the establishment, adoption or amendment
of any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other benefit plan or arrangement
covering any director, officer or employee of the Company or (v) any increase in compensation,
bonus or other benefits payable to any director, officer or employee of the Company;

 

- 13 -

 

(m) any labor dispute or any activity or proceeding by a labor union or representative thereof
to organize any employees of the Company, or any lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to any employees;

(n) any change in the Company’s methods of accounting, except as required by concurrent
changes in Korean GAAP as agreed to by its independent public accountants;

(o) any settlement, or offer or proposal to settle (i) any litigation, investigation,
arbitration, proceeding or other claim involving or against the Company, (ii) any shareholder
litigation or dispute against the Company; or (iii) any litigation, arbitration, proceeding or
dispute that relates to the transactions contemplated hereby; or

(p) any Tax election, change any annual Tax accounting period made or changed, any method of
Tax accounting adopted or changed, any Tax Returns amended or claims for Tax refunds filed, any Tax
claim, audit or assessment settled, or any right to claim a Tax refund, offset or other reduction
in Tax liability surrendered.

3.9 No Undisclosed Liabilities. There are no material liabilities of the Company of
any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise,
and there is no existing condition, situation or set of circumstances which would reasonably be
expected to result in such a liability, other than liabilities provided for in the Company’s
audited balance sheet as of December 31, 2009 or disclosed in the notes thereto.

3.10 Related Party Transactions. (a) Except as disclosed in Section 3.10 of the
Disclosure Schedule, (i) the Company is not indebted, either directly or indirectly, to any Seller
or any Affiliate of any Seller in any amount whatsoever and (ii) no Seller or any Affiliate of any
Seller is, directly or indirectly, a party to or otherwise an interested party with respect to any
Contract with the Company.

(b) The Company has entered into each Contract disclosed in Section 3.10 of the Disclosure
Schedule in a bona fide, arm’s-length manner.

3.11 Director and Executive Officer Loans. Section 3.11 of the Disclosure Schedule
sets forth a list of all extensions of credit in the form of a personal loan made, directly or
indirectly, by the Company to any director or executive officer of the Company or any Affiliate
thereof. Since the Balance Sheet Date, the Company has not, directly or indirectly, including
through any of the its Affiliates: (i) extended credit, arranged to extend credit, or renewed any
extension of credit, in the form of a personal loan, to or for any director or executive
officer of the Company, or to or for any Affiliate of any director or executive officer of the
Company; or (ii) made any material modification, including any renewal thereof, to any term of any
personal loan to any director or executive officer of the Company, or any Affiliate of any director
or executive officer.

 

- 14 -

 

3.12 Tax Matters. All tax returns, reports and statements required to be filed by the
Company (the “Tax Returns”) have been filed on a timely basis with the appropriate
Governmental Authority, and all Tax Returns reflect accurately the tax liabilities of the Company
for the periods, properties, or events covered thereby in all material respects. All Taxes,
including those called for by the Tax Returns, or claimed to be due by any Governmental Authority
from the Company, or upon or measured by properties, assets, capital, turnover, or income of the
Company, have been paid (other than Taxes that are not due and have been adequately reserved for on
the relevant Financial Statements). There is no Tax examination, inquiry, or audit by any
Governmental Authority presently pending or threatened against the Company. All Taxes which the
Company is required by Applicable Law to withhold or collect have been withheld or collected and
have been paid over to the proper Governmental Authority or are properly held by the Company for
such payment. The Company has no Tax liability, or Tax obligation of any nature, whether,
absolute, contingent or otherwise, except for any Tax liabilities that are (i) fully reflected on
the Financial Statements or (ii) incurred in the ordinary course of business consistent with past
practices since the Balance Sheet Date.

3.13 Properties. (a) The Company has good and marketable title to, or in the case of
leased property and assets have valid leasehold interests in, all property and assets (whether
real, personal, tangible or intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date, except for properties and assets sold since the Balance Sheet Date in the
ordinary course of business consistent with past practices. None of such property or assets is
subject to any Lien or Other Encumbrance.

(b) Each lease, sublease or license (each, a “Lease”) under which the Company leases,
subleases or licenses any real property is valid and in full force and effect and the Company has
not violated any provision of, or taken or failed to take any act which, with or without notice,
lapse of time, or both, would constitute a default under the provisions of such Lease, and the
Company has not received notice that it has breached, violated or defaulted under any Lease.

(c) The property and assets owned or leased by the Company, or which it otherwise has the
right to use, constitute all of the property and assets used or held for use in connection with the
businesses of the Company and are adequate to conduct such businesses as currently conducted.

 

- 15 -

 

3.14 Government Licenses. Section 3.14 of the Disclosure Schedule sets forth a
complete list of all of the Approvals of and from all Governmental Authorities affecting, or
relating in any way to, the properties, assets, or business of the Company (“Government
Licenses”). Except as set forth in Section 3.14 of the Disclosure Schedule, (i) the Government
Licenses are in full force and effect, (ii) none of the Company nor any of the Company Shareholders
has a reasonable basis to believe that any regulatory body is considering modifying, suspending or
revoking any Government License, (iii) the Company is in compliance with the provisions of the
Government Licenses, and no condition exists that with or without notice or lapse of time or both
would constitute a material default under any of the Government Licenses, (iv) the Government
Licenses do not contain any restrictions or conditions except such restrictions or conditions as
would not reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate, and (v) none of the Government Licenses will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated hereby.

3.15 Employees. (a) Section 3.15(a) of the Disclosure Schedule sets forth a true and
complete list of the names, titles, annual salaries and other compensation of all employees of the
Company.

(b) The Company does not have any material liabilities in respect of actual or contingent
employment termination payments to employees (including any severance payments, any cash-out or
acceleration of options and restricted stock and any “gross-up” payments with respect to any of the
foregoing).

(c) Schedule 3.15(c) sets forth the template employment contract used by the Company (the
“Form Employment Contracts”). All employment contracts entered into by the Company are in
the form of the Form Employment Contracts.

(d) Section 3.15(d) of the Disclosure Schedule contains a correct and complete list of all
bonus, severance, retirement, death, disability, deferred compensation, pension, profit sharing,
stock option, employee stock purchase or other employee benefit plans of the Company.

(e) There are no disputes pending or, to the knowledge of the Company, threatened against, the
Company by any trade union or other representatives of its employees. The Company has not entered
into any collective bargaining agreement with any labor union.

(f) The Company (i) is in compliance with all Applicable Laws in all material respects
relating to its employees, consultants, dispatched, subcontracted or outsourced workers and
independent contractors, including all such Applicable Laws, Contracts, policies or plans relating
to wages, hours, collective bargaining, compensation, benefits, terms and conditions of employment,
termination of employment, employment discrimination, immigration, disability, civil rights,
occupational safety and health, workers’ compensation, pay equity, collection and payment of
withholding and/or social contribution taxes and similar Taxes, national pension, national medical
insurance, worker’s compensation insurance, unemployment
insurance and other mandatory social security matters, and (ii) is not engaged, in any
material respect, in any unfair labor practice or discriminatory employment practice.

 

- 16 -

 

(g) No employee or former employee of the Company will become entitled to any bonus,
retirement, severance, job security or similar benefit or such enhanced benefit (including
acceleration of vesting or exercise of an incentive award) as a result of the transactions
contemplated hereby.

3.16 Material Agreement. (a) Except as set forth in Section 3.16 of the Disclosure
Schedule, the Company is not a party to or bound by:

(i) any Contract which contains restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock,

(ii) any Contract for the purchase of materials, supplies, goods, services, equipment or other
assets providing for payment by the Company in excess of KRW40,000,000 (either individually or in
the aggregate),

(iii) any Contract relating to indebtedness for borrowed money or the deferred purchase price
of property (in either case, whether incurred, assumed, guaranteed or secured by any asset),

(iv) any loan or advance by the Company to any Person which involves an amount in excess of
KRW40,000,000 (either individually or in the aggregate), or any Contract relating to the making of
any such loan, advance or investment,

(v) any Contract requiring payment by the Company of an amount in excess of KRW40,000,000 per
year (either individually or in the aggregate),

(vi) any Contract limiting in any respect or otherwise restricting the ability of the Company
to engage in any line of business or to compete with any Person in any location or which would so
limit the freedom of the Company or any of its Affiliates after the Closing Date,

(vii) any warranty, guaranty or similar undertaking with respect to contractual performance
extended by the Company other than in the ordinary course of business consistent with past
practices,

(viii) any Contract providing for the sale by the Company of materials, supplies, goods,
services, equipment or other assets that provides for the annual payment to the Company of
KRW40,000,000 or more or aggregate payments to the Company of KRW50,000,000 or more,

 

- 17 -

 

(ix) any collective bargaining agreement with any labor union or other representative of
employees,

(x) any Contract that governs any joint venture, partnership or other cooperative arrangement
or any other relationship involving a sharing of profits,

(xi) any Contract relating to the acquisition or disposition of any business (whether by
merger, sale of share, sale of assets or otherwise),

(xii) any option, license, franchise or similar agreement,

(xiii) any agency, dealer, sales representative, marketing or other similar agreement;

(xiv) any Contract with (A) any Seller or any of its Affiliates, (B) any Person directly or
indirectly owning, Controlling or holding with power to vote, 5% or more of the outstanding voting
securities of any Seller or any of its Affiliates, (C) any Person 5% or more of whose outstanding
voting securities are directly or indirectly owned, Controlled or held with power to vote by any
Seller or any of its Affiliates or (D) any director or officer of any Seller or any of its
Affiliates or any Affiliates of any such director or officer,

(xv) any agreement under which any director, officer or employee of the Company is prohibited
from or restricted in engaging in any business or activities competing with the Company,

(xvi) any Contract that requires a consent to or otherwise contains a provision relating to a
“change of control”, or that would prohibit or delay the consummation of the transactions
contemplated by this Agreement,

(xvii) any Contract for any reimbursement, subsidy, or similar arrangement with any
Governmental Authority or any Person Controlled by a Governmental Authority,

(xviii) any other Contract or plan not made in the ordinary course of business that is
material to the Company,

(xix) any material amendment, modification or supplement in respect of any of the foregoing
(each of (i)-(xix), a “Material Agreement”).

(b) Except for failures to be in force or effect, breaches, violations or defaults which would
not reasonably be expected to be, individually or in the aggregate, material to the Company, each
Material Agreement is a valid and binding agreement of the Company, and is in full force and
effect, and none of the Company or, to the knowledge of the Company or any Company Shareholder, any
other party thereto is in default or breach under the terms of any such
Material Agreement, and, to the knowledge of the Company and the Company Shareholders, no
event or circumstance has occurred that, with or without notice or lapse of time or both, would
constitute any event of default thereunder. A true and complete copy of each Material Agreement
has been delivered to Buyer.

 

- 18 -

 

3.17 Intellectual Property. (a) Section 3.17(a)(i) of the Disclosure Schedule sets
forth a complete and correct list of all registrations and applications for registration of any
Intellectual Property owned by the Company. Section 3.17(a)(ii) of the Disclosure Schedule sets
forth a complete and correct list of all agreements (whether written or otherwise, including
license agreements, research agreements, development agreements, distribution agreements,
settlement agreements, consent to use agreements and covenants not to sue, but excluding licenses
for personal computer software that are generally available on nondiscriminatory pricing terms and
have an individual acquisition cost of US$1,000 per seat or less) to which the Company is a party
or otherwise bound, granting or restricting any right to use, exploit or practice any Intellectual
Property.

(b) The Company owns, or is licensed to use or distribute, as applicable, pursuant to a
written agreement (in each case, free and clear of any Liens or Other Encumbrances), all
Intellectual Property used in, distributed by the Company in or necessary for the conduct of its
business as currently conducted.

(c) The Company holds all right, title and interest in and to all Intellectual Property owned
by the Company and all of the Company’s licenses under the Intellectual Property licensed by the
Company, free and clear of any Lien or other Encumbrance.

(d) The Company has not infringed, misappropriated or otherwise violated the Intellectual
Property of any Person. The Company has not received any written notice or otherwise has knowledge
of any pending or threatened claim, action, suit, order, investigation or proceeding with respect
to any Intellectual Property used or distributed by the Company or alleging that any services
provided, processes used or products distributed, manufactured, used, imported, offered for sale or
sold by the Company infringes, misappropriates or otherwise violates any Intellectual Property of
any Person.

(e) To the knowledge of the Company, no Person has challenged, infringed, misappropriated or
otherwise violated any Intellectual Property owned or licensed by the Company.

(f) The consummation of the transactions contemplated by this Agreement will not alter,
encumber, impair or extinguish any Intellectual Property right of the Company or impair the right
of Buyer to distribute, develop, use, sell, license or dispose of, or to bring any action for the
infringement of, any Intellectual Property owned by the Company.

 

- 19 -

 

(g) All Software owned by the Company was (i) developed by employees
of the Company working within the scope of their employment at the Company, (ii) developed by
officers, directors, agents, consultants, contractors, subcontractors or others who have executed
appropriate instruments of assignment or who have agreed in writing to effect such assignment,
which ultimately runs in favor of the Company as assignee, which assignments have conveyed or will
convey to the Company ownership of all of such person’s rights in the Intellectual Property
relating to such developments, or (iii) acquired in connection with acquisitions in which the
Company obtained appropriate representations, warranties or indemnities from the transferring party
relating to the title to such Intellectual Property.

(h) There are no defects in any Software distributed by the Company that would prevent such
Software from performing in accordance with its user specifications and there are no viruses,
worms, Trojan horses or similar programs in any such Software.

(i) None of the Software distributed by the Company contains any software code that is
licensed under any terms or conditions that require that any software be (i) made available or
distributed in source code form, (ii) licensed for the purpose of making derivative works, (iii)
licensed under terms that allow reverse engineering, reverse assembly or disassembly of any kind or
(iv) redistributable at no charge.

3.18 Litigation. There is no action, suit, investigation or proceeding (or any basis
therefor) pending against, or to the knowledge of the Company and the Company Shareholders,
threatened against or affecting, the Company or any of its assets or properties before any
Governmental Authority which, individually or in the aggregate, if determined or resolved adversely
in accordance with the plaintiff’s demands, could reasonably be expected to have a Material Adverse
Effect or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.

3.19 Compliance with Laws. (a) The Company is not in violation of, has not violated,
is not under investigation with respect to and has not been threatened to be charged with or given
notice of any violation of, any Applicable Law, except for violations that have not had and would
not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) None of the Company nor any of its directors, officers, employees or agents has made any
offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift,
promise to give, or authorization of the giving of anything of value to any Government Official or
political party for purposes of influencing any act or decision of such official or party in his or
its official capacity, in order to obtain or retain business or secure any improper advantage.

(c) None of the Company Securities are, to the knowledge of the Company and Company
Shareholders, beneficially or legally owned or held by any Government Official who is in a position
to award or influence decisions favorable to the Company or by any
close family member of, or any entity directly or indirectly owned by, such a Person. To the
knowledge of the Company and Company Shareholders, none of the officers or directors of the Company
is a Government Official (or close family member of a Government Official) who is in a position to
award or influence decisions favorable to the Company.

 

- 20 -

 

3.20 Finders’ Fees. There are no Contracts or understandings between any Seller or
the Company and any Person that would give rise to a valid claim against the Buyer or the Company
for a brokerage commission, finder’s fee, advisory fee or other like payment in connection with the
sale by any Seller of such Seller’s Shares to the Buyer under this Agreement.

3.21 No Listed Assets. The Company has no assets listed in Article 105, Paragraph (6)
of the Local Tax Act of Korea.

3.22 Books and Records. The books and records of the Company are true and correct in
all material respects and have been maintained in accordance with Applicable Laws and good business
practices so as to permit the Company to prepare its financial statements in accordance with Korean
GAAP. The minute books of the Company accurately reflect all material actions and proceedings
taken to date by the shareholders, board of directors and committees of the Company and such minute
books contain true and complete copies of the charter documents of the Company and all related
amendments. The stock record books of the Company reflect accurately all transactions in their
respective capital stock of all classes.

3.23 Bank Accounts, Powers, etc. Section 3.23 of the Disclosure Schedule lists each
bank, trust company, savings institution, brokerage firm, mutual fund or other financial
institution with which the Company has an account or safe deposit box, the account number of all
accounts maintained there and the names and identification of all Persons authorized to draw
thereon or to have access thereto, and lists the names and each Person holding powers of attorney
or agency authority from the Company and a summary of the terms thereof.

3.24 Accuracy of Information. None of the documents or information delivered to Buyer
in connection with the transactions contemplated by this Agreement contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the statements
contained therein not misleading. The financial projections relating to the Company delivered to
the Buyer are made in good faith and are based upon reasonable assumptions, and neither the Company
nor any Company Shareholder is aware of any fact or set of circumstances that would lead them to
believe that such projections are incorrect or misleading.

 

- 21 -

 

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each Seller represents and warrants to the Buyer as of (x) the date hereof (in the case of
the Company Shareholders) or the date of such Seller’s Joinder Agreement (in the case of the Third
Party Shareholders) and (y) as of the Closing Date that:

4.1 Due Organization, Good Standing and Power. Such Seller that is not a natural
person has been duly organized, is validly existing and is in good standing (if applicable) under
the laws of Korea, and has the corporate power and authority to execute and deliver this Agreement
and perform its obligations hereunder. Such Seller that is a natural person has the legal right
and full power and authority to execute and deliver this Agreement and perform his or her
obligations hereunder.

4.2 Authorization, Enforceability. The execution and delivery of this Agreement by
such Seller that is not a natural person and the performance by such Seller of its obligations
hereunder have been duly authorized by all necessary corporate action on the part of such Seller.
This Agreement has been duly executed and delivered by such Seller and, assuming due authorization,
execution and delivery by the other parties thereto, constitutes a valid and binding agreement of
such Seller, enforceable against such Seller in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting
creditors’ rights generally and general principles of equity). This Agreement is in proper legal
form to be enforceable against such Seller in accordance with its terms in Korea and to ensure the
legality, validity, enforceability or admissibility into evidence in Korea of this Agreement, and
it is not necessary that this Agreement be filed or recorded with any court or other authority in
Korea other than the filing by the Buyer of a foreign investment report with a foreign exchange
bank prior to the Closing Date in accordance with the Foreign Investment Promotion Act of Korea
(which filing does not affect the validity or enforceability of this Agreement) and the filing by
the Buyer with, and the approval of such filing by, the Bank of Korea with respect to the Stock
Options Shares Sale and Purchase Agreements prior to the execution thereof in accordance with the
Foreign Exchange Transactions Act of Korea.

4.3 Ownership of Shares. On the date hereof and on the Closing Date, such Seller is
the only record and beneficial owner of such Seller’s Shares and has good and marketable title to
such Shares, free and clear of any and all Liens or Other Encumbrances (including any restriction
on the right to vote, sell or otherwise dispose of such Shares). Such Seller that is not an
individual has the corporate or other applicable organizational power and authority to sell,
transfer, assign and deliver such Seller’s Shares to the Buyer as provided in this Agreement free
and clear of any and all Liens or Other Encumbrances (including any restriction on the right to
vote, sell or otherwise dispose of such Shares). Such Seller will transfer and deliver to the
Buyer at the Closing valid title to such Shares free and clear of any and all Liens or Other
Encumbrances (including any restriction on the right to vote, sell or otherwise dispose of such
Shares).

4.4 Non-contravention. The execution, delivery and performance by such Seller of this
Agreement and the consummation by such Seller of the transactions contemplated hereby do not and
will not (i) violate, conflict with or result in a breach by such Seller of the organizational
documents of such Seller (if such Seller is not a natural person), (ii) violate, conflict with or
result in a breach of, or constitute a default by such Seller (or create an event which, with or
without notice or lapse of time or both, would constitute a default) or give rise to
any right of termination, cancellation or acceleration under, or result in the creation of any
Lien or Other Encumbrance upon such properties of such Seller or on such Seller’s Shares under, any
Contract to which such Seller or any of its properties may be bound, (iii) violate or result in a
breach of any Governmental Order or Applicable Law or (iv) require any order, consent, approval or
authorization of, or notice to, or declaration, filing, application, qualification or registration
by such Seller with, any Governmental Authority.

 

- 22 -

 

4.5 Litigation. There is no action, suit, investigation or proceeding (or any basis
therefor) pending against, or to the knowledge of such Seller, threatened against or affecting,
such Seller or any of its properties before any Governmental Authority which, individually or in
the aggregate, if determined or resolved adversely in accordance with the plaintiff’s demands,
would reasonably be expected to have an adverse impact on the ownership of such Seller’s Shares or
which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.

4.6 Governmental Authorization. Other than as set forth in Section 4.2, the
execution, delivery and performance by such Seller of this Agreement and the consummation of the
transactions contemplated hereby require no action by or in respect of, or filing with, any
Governmental Authority.

4.7 Finders’ Fees. There is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of such Seller or any
other party hereto who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement from any party other than such Seller.

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF THE BUYER.

The Buyer represents and warrants to each Seller as of the date hereof and as of the Closing
Date that:

5.1 Corporate Existence and Power. The Buyer is a company duly incorporated, validly
existing and in good standing under the laws of Singapore and has all corporate powers and all
material governmental licenses, authorizations, permits, consents and approvals required to carry
on its business as now conducted.

5.2 Corporate Authorization. The execution, delivery and performance by the Buyer of
this Agreement and the consummation of the transactions contemplated hereby are within the
corporate powers of the Buyer and have been duly authorized by all necessary corporate action on
the part of the Buyer. This Agreement constitutes a valid and binding agreement of the Buyer in
accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws affecting creditors’ rights generally and general
principles of equity).

 

- 23 -

 

5.3 Governmental Authorization. The execution, delivery and performance by the Buyer
of this Agreement and the consummation of the transactions contemplated hereby require no action by
or in respect of, or filing with, any Governmental Authority, other than filings to be made by the
Buyer pursuant to applicable federal securities laws of the United States of America (including the
rules and regulations of NASDAQ), the filing by the Buyer of a foreign investment report with a
foreign exchange bank prior to the Closing Date in accordance with the Foreign Investment Promotion
Act of Korea, and the filing by the Buyer with, and the approval of such filing by, the Bank of
Korea with respect to the Stock Options Shares Sale and Purchase Agreements prior to the execution
thereof in accordance with the Foreign Exchange Transactions Act of Korea.

5.4 Non-contravention. The execution, delivery and performance by the Buyer of this
Agreement and the consummation of the transactions contemplated hereby do not and will not (i)
violate the memorandum and articles of association of the Buyer, (ii) violate any Applicable Law,
or (iii) conflict with, result in any default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under material Contract to which the Buyer is a party or by which it is
or may be bound.

ARTICLE 6.

COVENANTS OF THE BUYER AND THE SELLERS

6.1 Commercially Reasonable Best Efforts; Further Assurances. Upon the terms and
subject to the conditions contained herein, each Party agrees, both before and after the Closing:
(i) to use all commercially reasonable efforts to take, or cause to be taken, diligently and in
good faith all actions and to do, or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated under this Agreement; (ii)
to execute any documents, instruments or conveyances of any kind which may be reasonably necessary
or advisable to carry out the transactions contemplated under this Agreement; (iii) to cooperate
with each other and use its best efforts to satisfy all conditions precedent to the Closing; and
(iv) to make all necessary filings and exercise its commercially reasonable efforts to obtain all
necessary Approvals and necessary consents of third parties for which it is responsible, in order
to expedite the consummation of the transactions contemplated hereby, and to provide reasonable
assistance to other Parties for such purpose.

6.2 Filings and Consents. Each of the Sellers, on the one hand, and the Buyer, on
the other hand, shall use commercially reasonable efforts to obtain and to cooperate in obtaining
any consent, approval, authorization or order of, and in making any registration or filing with,
any Governmental Authority or other Person required in connection with the execution, delivery or
performance of this Agreement, including without limitation any filings pursuant to (i) the Foreign
Investment Promotion Act of Korea, (ii) the Securities Act of 1933 and the Securities Exchange Act
of 1934 of the United States of America, and (iii) any other Applicable Laws.

 

- 24 -

 

6.3 Confidentiality. Each Party shall keep confidential, and shall cause its
officers, directors, and employees to keep confidential, the terms and conditions hereof
(collectively, the “Confidential Information”) except as Buyer and the Sellers mutually
agree otherwise; provided that any party may disclose Confidential Information (i) to the extent
advised by competent legal advisors that such disclosure is required by Applicable Law and so long
as, where such disclosure is to a Governmental Authority, such party shall use all reasonable
efforts to obtain confidential treatment of the Confidential Information so disclosed, (ii) to the
extent required by the rules of any stock exchange, (iii) to its officers, directors, employees and
professional advisors as necessary to the performance of its obligations in connection herewith so
long as such party advises each Person to whom the Confidential Information is so disclosed as to
the confidential nature thereof, and (iv) to its investors and any Person otherwise providing
substantial debt or equity financing to such party so long as the party advises each Person to whom
the Confidential Information is so disclosed as to the confidential nature thereof.

6.4 Public Announcement. The Parties agree to consult with each other before issuing
any press release or making any public statement with respect to this Agreement or the transactions
contemplated hereby and, except for any press releases and public statements the making of which
may be required by Applicable Law or any listing agreement with any national securities exchange,
will not issue any such press release or make any such public statement prior to such consultation.

6.5 Tax Matters. Each Party shall be solely responsible for all applicable Taxes to
be imposed on or to be due from such Party arising out of or in connection with the consummation of
the transactions contemplated under this Agreement. If any document should be filed with any
Governmental Authority for Tax obligations arising from the transactions contemplated in this
Agreement, prior to such filing, the filing Party shall (i) deliver to each other Party a copy of
such filing (ii) afford each other Party and, if applicable, its counsel, the opportunity to review
and provide comments with respect to such filing and (iii) cooperate with each other Party and its
counsel in incorporating each other Party’s and its counsel’s reasonable comments in such filings.

ARTICLE 7

COVENANTS OF THE SELLERS AND THE COMPANY.

  7.1 Conduct of the Company. (a) From the date hereof until the Closing
Date, each Company Shareholder shall, and shall cause the Company to, conduct the Company’s
business in the ordinary course consistent with past practice and use its best efforts to (i)
preserve intact its present business organization, (ii) maintain in effect all of its Government
Licenses, (iii) keep available the services of its directors, officers and key employees, (iv)
maintain satisfactory relationships with its customers, lenders, suppliers and others having
material business relationships with it, (v) manage its working capital (including the timing of
collection of accounts receivable and of the payment of accounts payable and the management of
inventory) in
the ordinary course of business consistent with past practice and (vi) continue to make capital
expenditures consistent with the Company’s budget for the year ended 2010 attached as Schedule 7.1
hereto (the “2010 Budget”).

 

- 25 -

 

(b) Without limiting the generality of the foregoing, except as expressly contemplated by this
Agreement, from the date hereof until the Closing Date, each Company Shareholder shall not cause or
permit the Company to do any of the following without the prior written consent of Buyer:

(i) amend the articles of incorporation or other similar organizational documents of the
Company (whether by merger, consolidation or otherwise);

(ii) split, combine or reclassify any shares of capital stock of the Company or declare, set
aside or pay any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of the capital stock of the Company, or redeem, repurchase or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any Company Securities;

(iii) issue, deliver or sell, or authorize the issuance, delivery or sale of, any shares of
any Company Securities (whether by merger, consolidation or otherwise);

(iv) except as contemplated by the 2010 Budget, incur any capital expenditures or any
obligations or liabilities in excess of KRW40,000,000 in the aggregate;

(v) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly
or indirectly, any assets, securities, properties, interests or businesses, other than supplies in
the ordinary course of business of the Company in a manner that is consistent with past practice;

(vi) sell, lease or otherwise transfer, or create or incur any Lien or Other Encumbrance on,
any of the Company’s assets, securities, properties, interests or businesses;

(vii) make any loans, advances or capital contributions to, or investments in, any Person;

(viii) create, incur, assume, suffer to exist or otherwise be liable with respect to any
indebtedness for borrowed money or guarantees thereof;

(ix) enter into any agreement or arrangement that limits or otherwise restricts in any
material respect the Company or any of its Affiliates or any successor thereto or that could, after
the Closing Date, limit or restrict in any material respect the Company, Buyer or any of their
respective Affiliates, from engaging or competing in any line of business, in
any location or with any Person, or enter into, amend or modify in any material respect or
terminate any Material Agreement or otherwise waive, release or assign any material rights, claims
or benefits of the Company;

 

- 26 -

 

(x) (1) except as required by Applicable Law, grant or increase any severance or termination
pay to (or amend any existing arrangement with) any director, officer or employee of the Company,
(2) increase benefits payable under any existing severance or termination pay policies or
employment agreement or service agreement, (3) enter into any employment, deferred compensation or
other similar agreement (or amend any such existing agreement) with any director, officer or
employee of the Company, (4) establish, adopt or amend (except as required by Applicable Law) any
collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation,
compensation, stock option, restricted stock or other benefit plan or arrangement covering any
director, officer or employee of the Company or (5) increase compensation, bonus or other benefits
payable to any director, officer or employee of the Company or grant stock options, restricted
stock or any other stock award to any director, officer or employee of the Company;

(xi) change the Company’s methods of accounting, except as required by concurrent changes in
Korean GAAP, as agreed to by its independent public accountants;

(xii) settle, or offer or propose to settle, (1) any material litigation, investigation,
arbitration, proceeding or other claim involving or against the Company, (2) any stockholder
litigation or dispute against the Company or any of its officers or directors or (3) any
litigation, arbitration, proceeding or dispute that relates to the transactions contemplated
hereby;

(xiii) make or change any Tax election, change any annual Tax accounting period, adopt or
change any method of Tax accounting, amend any Tax Returns or file claims for Tax refunds, settle
any Tax claim, audit or assessment, or surrender any right to claim a Tax refund, offset or other
reduction in Tax liability;

(xiv) take any action that would make any representation or warranty of the Company hereunder,
or omit to take any action necessary to prevent any representation or warranty of the Company
hereunder from being, inaccurate in any respect at, or as of any time before, the Closing Date; or

(xv) agree, resolve or commit to do any of the foregoing.

 

- 27 -

 

7.2 Non-solicitation. (a) From the date hereof until the Closing Date, each Seller
shall not, and each Company Shareholder shall cause the Company and each of its officers,
directors, employees, agents, representatives and Affiliates not to, directly or indirectly, take
any of the following actions with any Person other than the Buyer and its designees: (i) solicit,
encourage, seek, entertain, support, assist, initiate or participate in any inquiry, negotiations
or discussions, or enter into any agreement, with respect to any offer or proposal to acquire all
or any part of the business, properties, assets or technologies of the Company (other than
inventory or licenses in the ordinary course of business of the Company consistent with past
practice), or any amount of the Company Securities (whether or not outstanding), whether by merger,
purchase of assets, tender offer, license or otherwise, or effect any such transaction (any such
offer or proposal, an “Acquisition Proposal”); (ii) disclose any information not
customarily disclosed to any Person concerning the business, technologies or properties of the
Company, or afford to any Person access to its or their respective properties, technologies, books
or records, not customarily afforded such access; (iii) assist or cooperate with any Person in
connection with an Acquisition Proposal; or (iv) enter into any agreement with any Person relating
to an Acquisition Proposal. Each Seller shall, and each Company Shareholder shall cause the
Company to, provide copies of all writings provided by any Person other than the Buyer and its
designees in connection with any Acquisition Proposal. Each Seller shall, and each Company
Shareholder shall cause the Company to, immediately cease and cause to be terminated any
negotiations, discussion or agreements (other than with the Buyer) in connection with the subject
matter of clause (i), (ii), (iii) or (iv) above.

(b) Each Seller shall, and each Company Shareholder shall cause the Company to, notify the
Buyer as promptly as practicable (but in no event later than twenty-four (24) hours) after receipt
of any Acquisition Proposal, or modification of or amendment to any Acquisition Proposal, or
request for nonpublic information relating to the Company or for access to the properties, books or
records of the Company, or notice by any Person that it is considering making, or has made, an
Acquisition Proposal. Such notice to the Buyer shall be made orally and in writing and shall
indicate the identity of the Person making the Acquisition Proposal or intending to make or
considering making an Acquisition Proposal or requesting non-public information or access to the
books and records of the Company and the terms of any such Acquisition Proposal or modification or
amendment to the Acquisition Proposal. Each Seller shall, and each Company Shareholder shall cause
the Company to, keep the Buyer informed, on a current basis, of any material changes in the status
and any material changes or modifications in the terms of any such Acquisition Proposal, indication
or request.

(c) The Parties hereto agree that irreparable damage would occur in the event that the
provisions of this Section 7.2 were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed by the Parties hereto that the Buyer shall be
entitled to an immediate injunction or injunctions, without the necessity of proving the inadequacy
of money damages as a remedy and without the necessity of posting any bond or other security, to
prevent breaches of the provisions of this Section 7.2 and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which the Buyer may be entitled at law or in equity. Without
limiting the foregoing, it is understood that any violation of the restrictions set forth above by
any officer, director, agent, representative or Affiliate of Company shall be deemed to be a breach
of this Agreement by Company.

 

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7.3 Due Diligence. (a) From the date hereof until the Closing Date, each Company
Shareholder shall cause the Company to (i) give the Buyer, its counsel, financial advisors,
auditors and other authorized representatives full access to the offices, properties, books and
records of the Company, (ii) furnish to the Buyer, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other information relating
to the Company as such Persons may reasonably request and (iii) instruct the employees and advisors
of the Company to cooperate with the Buyer in its investigation of the Company. No investigation
by the Buyer or other information received by the Buyer shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by any Seller hereunder.

 (b) After the Closing, each Seller and its Affiliates will hold, and will use their
best efforts to cause their respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial
or administrative process or by other requirements of Applicable Law, all confidential documents
and information concerning the Company, except to the extent that such information can be shown to
have been (i) previously known on a nonconfidential basis by such Seller, (ii) in the public domain
through no fault of such Seller or its Affiliates or (iii) later lawfully acquired by such Seller
from sources other than those related to its prior ownership of the Company. The obligation of
each Seller and its Affiliates to hold any such information in confidence shall be satisfied if
they exercise the same care with respect to such information as they would take to preserve the
confidentiality of their own similar information.

7.4 Agreements with Key Employees. (a) The Sellers shall cause each employee of the
Company to enter into a confidentiality agreement with the Company in the form attached hereto as
Exhibit A-1

(b) Each of the Founder Shareholders Directors shall enter into a service agreement with the
Company in the form attached hereto as Exhibit A-2.

7.5 Stock Options. Each Seller shall exercise its best efforts to cause each holder
of Stock Options to enter into a Sale and Purchase Agreement in the form attached hereto as
Exhibit B promptly after the date hereof and prior to the Closing (the “Stock Options
Shares Sale and Purchase Agreements”).

7.6 Restriction on Transfers. From the date hereof until the Closing Date, none of
the Sellers shall, directly or indirectly: (i) transfer to any Person other than the Buyer any
Company Securities; (ii) deposit any Company Securities into a voting trust or grant any proxies or
powers of attorney to any Person other than the Buyer, or enter into a voting agreement,
understanding or arrangement with respect to such Company Securities; or (iii) enter into any
agreement for transfer of any Company Securities to any Person.

 

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7.7 Joinder by Third Party Shareholders. Each Company Shareholder shall use his
or its best efforts to cause each of the Third Party Shareholders to execute and deliver to
the Buyer a joinder agreement substantially in the form attached as Exhibit C (the
“Joinder Agreements”).

7.8 Non-compete. Each of Ji Ho Kim, Jin Min Kim, Jung Sic Park, Tae Hun O, Eun Sang
Lee, Je Kyon Chung, Su Ji Chun, Yong Hyuk Park, Seung Youn Woo, Soo Ho Kang, Joon Myung Jung and
Sang Hyun Park (collectively, the “Covenantors”) hereby agrees with, and represents to, the
Buyer that, from the date hereof until the third anniversary of the Closing Date:

(i) such person shall not, as principal, employee, consultant or agent or in any other
capacity, for himself or herself or for any person or entity other than the Company, (x) work for,
(y) directly or indirectly own or have an interest in or (z) promote or assist any business that
relates in any way to, in each case any online game business, any mobile phone game business, any
other networked game business, any console game business, any online game portal business or any
other business that the Company engages in, in each case anywhere in China (including Taiwan) or
Korea; provided that Eun Sang Lee shall be permitted to be a director of Reloaded Studios, Inc.
until sixty (60) days from the date hereof; and

(ii) such person shall not, directly or indirectly, (A) either for himself or herself or for
any person or entity other than the Company, (w) induce or attempt to induce any officer or
employee of the Company to leave the employment of the Company, (x) in any way interfere with the
relationship between the Company and any of its officers or employees, (y) employ, or otherwise
engage as an employee, independent contractor or otherwise, any officer or employee of the Company
or (z) induce or attempt to induce any customer, supplier, licensee or any person or entity having
a business relationship with the Company to cease doing business with the Company, or in any way
interfere with the relationship between any customer, supplier, licensee or any person or entity
having a business relationship with the Company; (B) either for himself or herself or any other
person or entity, solicit the business of any person or entity known to himself or herself to be a
customer of the Company, whether or not he or she had personal contact with such person or entity,
with respect to products or activities which compete in whole or in part with the products or
activities of the Company; (C) use the name of the Company or any part thereof or any name
resembling the same or capable of confusion therewith in any business activities without the prior
written consent of the Company; or (D) knowingly aid or assist any other person or entity with
respect to any of the foregoing;

provided that the foregoing sentence of this Section 7.8 shall terminate with respect to any
Covenantor if and when such Covenantor is dismissed by the Company without Justifiable Cause under
the pertinent laws of Korea.

 

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ARTICLE 8.

COVENANTS OF THE BUYER.

8.1 Bonus Awards. As soon as reasonably practicable following the Closing Date
but no later than 3 months from the Closing Date, the Buyer shall cause the Company to
establish an incentive program (applicable on a full-year basis from the 2010 fiscal year) pursuant
to which the Company shall pay to employees of the Company, an aggregate amount equal to Four
Percent (4%) of the Company’s annual gross revenues for each fiscal year (as calculated in
accordance with US GAAP) (the “Gross Revenues”) if the Gross Revenues of such year is equal
to or less than Fifty Million United States Dollars (US$50,000,000); an additional Three Percent
(3%) of the portion of such Gross Revenues in excess of Fifty Million United States Dollars
(US$50,000,000) but equal to or less than One Hundred Million United States Dollars
(US$100,000,000); and an additional Two Percent (2%) of the portion of such Gross Revenues in
excess of One Hundred Million United States Dollars (US$100,000,000). Subject to the approval of
the board of directors of the Company following the Closing Date, the Chief Executive Officer of
the Company shall have the discretion to allocate such incentive among the Company’s employees.

8.2 Stock Incentive Awards. As soon as reasonably practicable following the Closing
Date, the Buyer shall cause the Company to increase the number of stock options authorized for
issuance under the Stock Option Grants by One Hundred Thousand (100,000) shares of Common Stock.
Following the Closing, the board of directors of the Company shall approve any grants of Common
Stock pursuant to the Stock Option Grants.

8.3 Ongoing Game Development Efforts. The Parties acknowledge and agree that the
Company shall have independent and full control over its decisions associated with its creativity,
ideas and game development efforts.

8.4 CEO. The Buyer shall appoint Eun Sang Lee as the Chief Executive Officer of the
Company during the period from the Closing Date to the third anniversary of the Closing Date.

8.5 Representative Director. The Buyer shall appoint one of the Buyer Directors as
the Representative Director of the Company as soon as practicable after the Closing and the Sellers
agree to such appointment.

ARTICLE 9.

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS.

The obligations of each Seller to sell and deliver such Seller’s Shares pursuant to Article 2
hereof and to consummate the transactions contemplated hereby shall be subject to the fulfillment,
or waiver by such Seller, on or prior to the Closing Date, of all of the conditions set forth
below:

9.1 Bring-down Certificate. The Buyer shall have delivered to the Sellers’
Representative a certificate dated as of the Closing Date, confirming that the representations and
warranties set forth in Article 5 hereto are true and correct as of the Closing Date, and further
confirming that all conditions, covenants and other duties under this Agreement applicable to the
Buyer have been satisfied and complied with.

 

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9.2 Representations and Warranties. All representations and warranties of the Buyer
contained in Article 5 hereto were true when made and shall be true on and as of the Closing Date
as if made on such date.

9.3 Performance. The Buyer shall have performed and complied in all material
respects with all agreements and covenants applicable to such Seller required by this Agreement to
be performed or complied with by the Buyer on or prior to the Closing Date.

9.4 Government Approvals. All necessary Approvals from the Governmental Authorities
applicable to the Buyer, which are required to be obtained prior to the Closing Date in connection
with the transactions contemplated hereby, including the foreign investment report under the
Foreign Investment Promotion Act of Korea and the filing with, and approval by, the Bank of Korea
with respect to the Stock Options Shares Sale and Purchase Agreements (unless the Buyer has waived
the condition set forth in Section 10.8), shall have been obtained or filed within the period
prescribed by the relevant statute.

9.5 No provision of any Applicable Law shall prohibit the consummation of the Closing.

ARTICLE 10

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER.

The obligations of the Buyer to purchase any Seller’s Shares pursuant to Article 2 hereof and
to consummate the transactions contemplated hereby shall be subject to the fulfillment, or waiver
by the Buyer, on or prior to the Closing Date, of all of the conditions set forth below:

10.1 All corporate and other proceedings in connection with the transactions contemplated by
this Agreement, and all documents incident thereto, shall be in form and substance reasonably
satisfactory to Buyer, and Buyer shall have received from each of the Sellers, all such
counterpart original and certified or other copies of such documents as Buyer may reasonably
request.

10.2 (i) Each of the Sellers shall have performed all of its or his obligations hereunder
required to be performed by it or him on or prior to the Closing Date, including without
limitation, the execution and delivery of this Agreement, (ii) all representations and warranties
of the Sellers contained in Article 3 (in the case of Company Shareholders only) and Article 4
hereto shall be true on and as of the Closing Date as if made on such date, (iii) in the case of
Company Shareholders only, the consents, waivers, approvals or other authorizations listed on
Section 3.6 of the Disclosure Schedule shall have been obtained or otherwise satisfied and shall
continue to be in effect, and (iv) each of the Sellers that is not a natural person shall have
delivered to the Buyer a certificate signed by the Chief Executive Officer, Managing
Director or a director of such Seller, and each of the Sellers that is a natural person shall
have delivered to the Buyer a certificate signed by such Seller, in each case dated as of the
Closing Date, confirming the foregoing.

 

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10.3 There shall not be threatened, instituted or pending any action or proceeding by any
Person before any Governmental Authority, (i) seeking to restrain, prohibit or otherwise interfere
with the ownership or operation by Buyer or any of its Affiliates of all or any material portion
of the business or assets of the Company or of Buyer or any of their Affiliates or to compel Buyer
or any of its Affiliates to dispose of all or any material portion of the business or assets of
the Company or of Buyer or any of their Affiliates, (ii) seeking to impose or confirm limitations
on the ability of Buyer or any of its Affiliates effectively to exercise full rights of ownership
of any Seller’s Shares, including the right to vote any such Shares acquired or owned by Buyer or
any of its Affiliates on all matters properly presented to the Company’s shareholders or (iii)
seeking to require divestiture by Buyer or any of its Affiliates of any such Shares or any
business or assets of Buyer or any of its Affiliates.

10.4 No provision of any Applicable Law shall prohibit the consummation of the Closing.

10.5 Approvals and Third Party Consents. All necessary Approvals which are required
to be obtained prior to the Closing in connection with the transactions contemplated hereby,
including the foreign investment report under the Foreign Investment Promotion Act of Korea, shall
have been obtained or filed within the period prescribed thereunder and be in full force and
effect. The Buyer shall have received all necessary assignments of Contracts and consents,
waivers, and approvals of parties to each Contract set forth on Section 3.16 of the Disclosure
Schedule as are required thereunder for such Contract to remain in full force and effect without
limitation, modification or alteration after the Closing. The Buyer shall have received all
necessary consents or waivers of parties to each Contract set forth on Section 3.6 of the
Disclosure Schedule as are required thereunder in order to complete the sale of any Seller’s
Shares or to consummate the transactions contemplated by this Agreement in accordance with the
terms of this Agreement.

10.6 Composition of Board of Directors; Resignation and Election of Directors. (i)
As of the Closing Date, the Board of Directors of the Company shall consist of seven (7)
directors, of which four (4) shall be nominees of the Buyer (collectively, the “Buyer
Directors”) and three (3) shall be nominees of the Founder Shareholders (collectively, the
“Founder Shareholders Directors”); (ii) all four (4) incumbent directors and the statutory
auditor of the Company shall have submitted their resignations effective as of the Closing Date;
and (iii) all four (4) nominees of the Buyer shall have been elected as directors of the Company
effective as of the Closing Date and the nominee of the Buyer shall have been elected as statutory
auditor of the Company effective as of the Closing Date.

10.7 Employees. (x) Each employee of the Company shall have entered into a
confidentiality agreement with the Company in the form attached hereto as Exhibit A-1 and
such
agreement shall remain effective and in full force; and (y) each of the Founder Shareholders
Directors shall have entered into a service agreement with the Company in the form attached hereto
as Exhibit A-2 and such agreement shall remain effective and in full force.

 

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10.8 Stock Option Shares Sale and Purchase Agreements. (x) The Bank of Korea shall
have approved the entry into the Stock Option Shares Sale and Purchase Agreements by Buyer and all
holders of Stock Options prior to the execution thereof; and (y) each holder of Stock Options
shall have executed and delivered to the Buyer a Stock Options Shares Sale and Purchase Agreement
in the form attached hereto as Exhibit B and such agreement shall remain effective and in
full force.

10.9 Joinder Agreements. Each Third Party Shareholder shall have executed and
delivered to the Buyer a joinder agreement in the form attached hereto as Exhibit C and
such agreement shall remain effective and in full force.

10.10 Legal Opinion. The Buyer shall have received an opinion from Lee International
IP & Law Group, Korean counsel to the Founder Shareholders, dated the Closing Date, substantially
in the form attached hereto as Exhibit D.

10.11 Termination of Share Subscription Agreement. The parties to the Share
Subscription Agreement, dated as of September 28, 2009, among the Company, NEXON Corporation, Eun
Sang Lee, Jung Sic Park and Tae Hun O shall have terminated such agreement in its entirety,
including provisions that provide NEXON Corporation with exclusive negotiation rights and the
right of last offer.

ARTICLE 11.

TERMINATION.

11.1 Termination Prior to Closing. This Agreement may be terminated at any time
prior to the Closing:

(a) by mutual written agreement of the Company Shareholders and Buyer;

(b) by either the Company Shareholders or Buyer if there shall be any Applicable Law that
makes consummation of the transactions contemplated hereby illegal or otherwise prohibited or if
consummation of the transactions contemplated hereby would violate any nonappealable final order,
decree or judgment of any Governmental Authority having competent jurisdiction; or

(c) by the Buyer, if any of the Sellers breaches or fails to perform in any respect any of
their representations, warranties or covenants contained in this Agreement and such breach or
failure to perform (A) would give rise to the failure of a condition set forth in
Article 10 hereof, (B) cannot be or has not been cured within fifteen (15) days following
written notice of such breach or failure to perform and (C) has not been waived by the Buyer; or

 

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(d) by the Seller’s Representative, if the Buyer breaches or fails to perform in any respect
any of its representations, warranties or covenants contained in this Agreement and such breach or
failure to perform (A) would give rise to the failure of a condition set forth in Article 9
hereof, (B) cannot be or has not been cured within fifteen (15) days following written notice of
such breach or failure to perform and (C) has not been waived by the Buyer.

The party desiring to terminate this Agreement pursuant to Section 11.1 shall give notice of
such termination to the other parties.

11.2 Effect of Termination. If this Agreement is terminated as permitted by Section
11.1 hereof, such termination shall be without liability of any Party (or any stockholder,
director, officer, employee, agent, consultant or representative of such party) to the other
Parties; provided that if such termination shall result from the (i) willful failure of any Party
to fulfill a condition to the performance of the obligations of the other Parties, (ii) failure to
perform a covenant of this Agreement or (iii) breach by any Party of any representation or
warranty or agreement contained herein, such Party shall be fully liable for any and all Losses
incurred or suffered by the other Parties as a result of such failure or breach. The provisions
of Sections 6.3, 6.4, 13, and 14.7 shall survive any termination hereof.

ARTICLE 12.

INDEMNIFICATION.

12.1 Survival. Except as to a claim for breach of the representations and warranties
in (a) Sections 3.1 (Due Organization), 3.2 (Corporate Authority; Enforceability), 3.4
(Non-contravention), 3.5 (Government Approvals), 3.17 (Intellectual Property), 3.20 (Finders’
Fees), 4.1 (Due Organization, Good Standing and Power), 4.2 (Authorization, Enforceability), 4.3
(Ownership of Shares), 4.4 (Non-contravention) and 4.6 (Government Approvals), which shall survive
for a period of sixty (60) months after the Closing Date, and (b) Section 3.12 (Tax Matters), which
shall expire at the end of the relevant statute of limitations, the representations and warranties
of the Sellers contained in this Agreement shall survive for a period of eighteen (18) months after
the Closing Date; provided, however, that in the event of fraud, intentional breach, willful
misconduct or gross negligence, such representation or warranty shall survive indefinitely with
respect to the Person committing such fraud, intentional breach, willful misconduct or gross
negligence. If a claim or notice is given under Section 12.4 with respect to any representation or
warranty within the applicable claim period, such representation or warranty shall continue
indefinitely until such claim is finally resolved.

 

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12.2 Indemnification. Subject to the following, each of the Company Shareholders (the
“Indemnifying Party”) shall jointly and severally indemnify and hold the Buyer and its
Affiliates and their respective successors and the officers, directors, employees, agents and
representatives of the foregoing (the “Indemnified Party”) harmless from and against
all claims, losses, liabilities, damages, deficiencies, diminution in value, costs, interest,
awards, judgments, penalties and expenses, including reasonable attorneys’ and consultants’ fees
and expenses and including any such reasonable expenses incurred in connection with investigating,
defending against or settling any of the foregoing (hereinafter individually a “Loss” and
collectively, the “Losses”) that may be sustained, suffered or incurred by the Indemnified
Party arising out of or relating to (i) any breach or inaccuracy of a representation or warranty by
the Sellers contained in this Agreement or the certificates delivered by or on behalf of the
Sellers pursuant hereto (provided that, in the event of any such breach or inaccuracy, for purposes
of determining the amount of any Losses, no effect will be given to any qualification as to
“materiality”, a “Material Adverse Effect” or “knowledge” contained therein); (ii) any failure by
the Company or the Sellers to perform or comply with any covenant applicable to it contained in
this Agreement or any certificates or other instruments delivered pursuant to this Agreement; (iii)
any fraud in connection with this Agreement or the certificates delivered by or on behalf of any
Seller pursuant to this Agreement; (iv) any payment or consideration arising under any Approvals,
including without limitation, consents of any third parties, under any Contract as are required in
connection herewith or for any such Contract to remain in full force or effect following the
Closing; or (v) any claim by any Seller or any of its Affiliates that questions or challenges (A)
the validity of this Agreement, (B) any action taken or to be taken by the Company or holder of any
other Company Securities pursuant to this Agreement or in connection with the transactions
contemplated herein or (C) the adequacy of the consideration to be received by the Sellers under
Section 2.1.

12.3 Means of Indemnification.

(a) Escrow Amount. At the Closing, notwithstanding anything to the contrary set forth
in this Agreement, the Buyer will withhold from each Company Shareholder’s Initial Cash
Consideration, such Company Shareholder’s Pro Rata Portion of the Total Escrow Amount. The portion
of the Total Escrow Amount that the Buyer shall distribute to the Company Shareholders on the
Escrow Distribution Date shall be the cash, if any, comprising the Total Escrow Amount following
all reductions for aggregate Losses suffered by Indemnified Parties pursuant to Section 12.2 hereof
prior to the Escrow Distribution Date.

(b) Distribution at Escrow Distribution Date.

(i) Promptly following the date that is thirty (30) days after the Survival Date (the
“Escrow Distribution Date”), one-hundred percent (100%) of the Total Escrow Amount, less
any amount in respect of any satisfied claims and unsatisfied claims (“Unresolved Claims”)
specified in a certificate signed by an officer of Buyer (an “Officer’s Certificate”)
delivered to the Sellers’ Representative on or prior to the Escrow Distribution Date with respect
to facts and circumstances existing on or prior to the Survival Date with respect to claims for
Losses relating to representations and warranties or on or prior to the Escrow Distribution Date
for all other claims, shall be distributed to the Shareholders in accordance with clause (iii) of
this Section
12.3(b).

 

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(ii) In the event that (A) there exist Unresolved Claims as of or following the Escrow
Distribution Date, and (B) the amount of Losses incurred by the Indemnified Parties is determined
to be less than the amount claimed on all such Officer’s Certificates under the objection and
conflict procedures in Section 12.4(a) and Section 12.4(b) herein, then the Buyer shall promptly
deliver to the Company Shareholders that portion of such Unresolved Claim(s) that should have been
distributed to the Company Shareholders at the Escrow Distribution Date had such Officer’s
Certificates alleged the correct amount of Losses finally determined pursuant to Section 12.4(b)
and Section 12.4(c) herein, which portion of the Total Escrow Amount shall be distributed to the
Company Shareholders in accordance with clause (iii) of this Section 12.3(b).

(iii) Delivery of the Total Escrow Amount or any portion thereof to each Company Shareholder
pursuant to this Section 12.3(b) shall be made in proportion to such Company Shareholder’s
respective Pro Rata Portion of the remaining portion of the Total Escrow Amount, with the cash
amount delivered to each Company Shareholder rounded to the nearest whole cent (with US$0.005
rounded down).

(c) Subsequent Cash Consideration of Founder Shareholders. On the Subsequent Payment
Date, notwithstanding anything to the contrary set forth in this Agreement, if (x) any claim for
Losses brought by any Indemnified Person under Section 12.4 or Section 12.5 is still outstanding
and (y) the Total Escrow Amount has been reduced to zero, the Buyer will withhold from each Founder
Shareholder’s Subsequent Cash Consideration, such Founder Shareholder’s pro rata portion
(calculated as the quotient of (i) the sum of the Subsequent Cash Consideration of such Founder
Shareholder divided by (ii) the sum of the Subsequent Cash Considerations of all Founder
Shareholders) of the amount of such claim (the “Withheld Amount” for such claim). If such
claim has been resolved pursuant to Section 12.4 or Section 12.5, as applicable, after the
Subsequent Payment Date and under such resolution the Indemnified Party is entitled to an amount
less than the amount claimed, the Buyer shall pay to each Founder Shareholder its pro rata portion
of an amount equal to the Withheld Amount minus the amount that the Indemnified Party is entitled
to. For the avoidance of doubt, notwithstanding any Joinder Agreement, this Section 12.3(c) shall
not be applicable to any of the Third Party Shareholders or any of the Employee Shareholders.

 

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12.4 Direct Claims; Resolution of Conflicts.

(a) An Indemnified Person may seek recovery for Losses pursuant to this Article 12 by
delivering to the Sellers’ Representative a Claim Notice (as defined below) in respect of such
claim. To be valid pursuant to this Section 12.4(a), a Claim Notice relating to Losses under
Section 12.2 must be delivered to the Sellers’ Representative prior to the applicable Survival
Date; provided, however, that any claims by the Indemnified Parties with respect to any such Loss
made prior to the applicable Survival Date shall continue indefinitely until such claim is resolved
pursuant to the terms of this Article 12. The date of such delivery of a Claim Notice
is referred to herein as the “Claim Date” of such Claim Notice (and the claims for
indemnification contained therein). For the purposes hereof, “Claim Notice” shall mean a
written notice of an Indemnified Person: (A) stating that an Indemnified Person has paid,
sustained, incurred or accrued, or reasonably anticipates in good faith that it will have to pay,
sustain, incur or accrue Losses and (B) specifying in reasonable detail, to the extent practical,
the individual items of Losses included in the amount so stated, the date each such item was paid,
sustained, incurred, or accrued, or the good faith basis for such anticipated liability, and the
nature of the indemnification claim to which such item is related. The Sellers’ Representative may
object to a claim for indemnification set forth in a Claim Notice by delivering to the Indemnified
Person seeking indemnification within ten (10) days from the delivery by an Indemnified Person of a
Claim Notice (such date, the “Objection Deadline”), a written statement of objection to the
claim made in the Claim Notice (an “Objection Notice”), which Objection Notice, in order to
be effective, shall set forth in reasonable detail the nature of the objections to the claims in
respect of which the objection is made. If the Sellers’ Representative does not object in writing
by the Objection Deadline, such failure to so object shall be an irrevocable acknowledgement by the
Sellers’ Representative that the Indemnified Person is entitled to the full amount of the claims
for Losses set forth in such Claim Notice (and such entitlement shall be conclusively and
irrefutably established), and the Sellers’ Representative shall take all necessary actions under
this Agreement to effect payment in respect thereof.

(b) If the Sellers’ Representative timely delivers an Objection Notice in accordance with
Section 12.4(a) hereof, the Sellers’ Representative and the Indemnified Person shall attempt in
good faith for fifteen (15) days to resolve such dispute. If the Sellers’ Representative and the
Indemnified Person reach an agreement with respect to such dispute, a memorandum setting forth such
agreement shall be prepared and signed by both parties. The Buyer shall be entitled to rely on any
such memorandum and make deductions from the Total Escrow Amount in accordance with the terms
thereof.

(c) If no such agreement can be reached after good faith negotiation and prior to thirty (30)
days after delivery of an Objection Notice, either the Buyer or the Sellers’ Representative may
demand arbitration of the matter unless the amount of the Loss that is at issue is the subject of a
pending litigation with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration, and in either such event the matter
shall be settled by arbitration conducted in accordance with Section 13.1 hereof.

 

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12.5 Third Party Claims. In the event the Buyer becomes aware of a third party claim
or other circumstance (a “Third Party Claim”) which the Buyer reasonably believes may
result in a demand against the Total Escrow Amount or for other indemnification pursuant to this
Article 12, the Buyer shall notify the Sellers’ Representative of such claim or circumstance, and
the Sellers’ Representative shall be entitled on behalf of the Company Shareholders, at their
expense, to participate in, but not to determine or conduct, the defense of such Third Party Claim.
The Buyer shall have the right in its sole discretion to conduct the defense of, and to settle,
any
such claim; provided that, except with the consent of the Sellers’ Representative, no
settlement of any such Third Party Claim with third party claimants shall be determinative of the
amount of Losses relating to such matter. In the event that the Sellers’ Representative has
consented to any such settlement, the Company Shareholders shall have no power or authority to
object under any provision of this Article 12 to the amount of any Third Party Claim by the Buyer
against the Total Escrow Amount or the Company Shareholders, with respect to such settlement. If
there is a Third Party Claim that, if adversely determined would give rise to a right of recovery
for Losses hereunder, then any amounts incurred or accrued by the Indemnified Parties in defense of
such Third Party Claim, regardless of the outcome of such claim, shall be deemed Losses hereunder.

12.6 Availability of Total Escrow Amount and Withheld Amount. The Buyer agrees that
the payment of any and all claims pursuant to this Article 12 (other than any claims arising out
of, relating to, caused by or resulting from any fraud, intentional breach, willful misconduct or
gross negligence) shall only be satisfied (y) first from the Total Escrow Amount to the extent that
the Total Escrow Amount remains available, and (z) when the Total Escrow Amount is no longer
available or is reduced to zero, from the Subsequent Cash Considerations of the Founder
Shareholders up to an aggregate of US$3,753,621.10 (the “Offset Amount”). For the
avoidance of doubt, recourse to the Total Escrow Amount and the Offset Amount shall be the Buyer’s
sole and exclusive remedy for any and all claims pursuant to this Agreement except for claims
arising out of, relating to, caused by or resulting from any fraud, intentional breach, willful
misconduct or gross negligence.

12.7 No Waiver. No right of the Buyer for indemnification under this Article 12 shall
be affected by any examination made for or on behalf of the Buyer, the knowledge of any member of
the Buyer or the acceptance by the Buyer of any certificate or opinion. No right of the Sellers
for indemnification under this Article 12 shall be affected by any examination made for or on
behalf of the Sellers, the knowledge of any of the Sellers or the acceptance by any of the Sellers
of any certificate or opinion.

ARTICLE 13.

DISPUTE RESOLUTION.

13.1 Arbitration. The Parties agree that any dispute, controversy or claim arising
out of or relating to this Agreement or the relationship between the Parties created by this
Agreement, including the breach, termination or invalidity thereof, and the validity and scope of
this agreement to arbitrate under this Article 13.1, shall be resolved in accordance with the
following procedures:

(a) Informal dispute resolution. Upon occurrence of a dispute, the Parties shall
initially attempt to resolve such dispute amicably through consultations and negotiations. If at
any time a dispute arises between the Parties, any Party may give notice in writing to the other
Parties of the existence of such dispute. Unless all Parties agree otherwise, within thirty (30)
days of such written notice, the representatives of the Parties with authority to settle the
dispute shall meet at a mutually acceptable time and place, or confer by telephone, and
continue such meeting or conference as often thereafter as they deem reasonably necessary, in
an effort to reach an amicable resolution. In no event will the period for consultations and
negotiations under this subsection extend beyond sixty (60) days from the date of the written
notice, unless the Parties agree otherwise.

 

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(b) Formal dispute resolution. If the Parties fail to resolve any dispute, claim or
controversy amicably, such dispute, claim or controversy shall be finally resolved by and through
an arbitration proceeding to be conducted in Singapore in the English language, in accordance with
the Rules of Arbitration of the International Chamber of Commerce. Arbitration shall be conducted
by one arbitrator mutually agreeable to the Buyer and the Sellers’ Representative. In the event
that, within thirty (30) days after submission of any dispute to arbitration, the Buyer and the
Sellers’ Representative cannot mutually agree on one arbitrator, then, within fifteen (15) days
after the end of such thirty (30) day period, the Buyer and the Sellers’ Representative shall each
select one arbitrator. The two (2) arbitrators so selected shall select a third arbitrator. If
the Sellers’ Representative fails to select an arbitrator during this fifteen (15) day period, then
the parties agree that the arbitration will be conducted by one arbitrator selected by the Buyer.
The decision of the arbitration tribunal shall be final and binding on the Parties, without right
of appeal. Each Party shall continue to perform its obligations under this Agreement pending
conclusion of the arbitration proceeding.

13.2 Preliminary or Injunction Relief. Notwithstanding any other provision of this
Agreement, any Party shall be entitled to seek preliminary or injunctive relief from any court of
competent jurisdiction, pending the final decision in the legal suit, action or proceeding under
Article 13.1.

13.3 Governing Law. The terms and conditions of this Agreement shall be governed by
and construed in accordance with the Law of Korea.

ARTICLE 14.

MISCELLANEOUS.

14.1 Notices. All notices, consents, waivers, and other communications under this
Agreement shall be (i) in writing, (ii) delivered by hand-delivery, registered first class mail
(return receipt requested), facsimile, or air courier guaranteeing overnight delivery, (iii)
deemed to have been given on the date on which it is received, and (iv) shall be addressed as
follows:

If to the Buyer:

Shanda Games International PTE. Ltd.

One Fusionopolis Way

Connexis North #05-10

Singapore 138632

Phone:

Facsimile:

 

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Attention:

Shanda Games Limited

No.1 Office Building, No. 690 Bibo Road

Zhangjiang High Technology District, Pudong New Area

Shanghai 201203, China

Phone: 86-21-5050-4740, ext. 8709

Facsimile: 86-21-5080-4740, ext. 7286

Attention: General Counsel

With a copy to:

Davis Polk & Wardwell LLP

The Hong Kong Club Building, 18th Floor

3A Chater Road

Central, Hong Kong

Phone: 852-2533-3300

Facsimile: 852-2533-3388

Attention: James C. Lin

Bae, Kim & Lee LLC

647-15 Yoksam-dong

Kangnam-gu

Seoul, 135-723, Korea

Phone: 82-2-3404-0000

Facsimile: 82-2-3404-0001

Attention: Sang Goo Lee

If to the Sellers:

Eyedentity Games, Inc.

3F., Hyundai Dream Valley, 34-2, Bangyi-dong

Songpa-gu

Seoul, Korea

Phone: 82-2-3432-5115

Facsimile: 82-2-3432-0050

Attention: Eun Sang Lee

With a copy to:

Lee International IP & Law Group

14F., Kukdong Bldg., Chungmuro 3-ga,

Chung-gu

Seoul, 100-705, Korea

Phone: 82-2-2279-3631

Facsimile: 82-2-2262-6088

Attention: Young Ik Choi

 

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14.2 Successors and Assignment. Subject to the second sentence of this Section 14.2,
the provisions of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Neither this Agreement nor any right or
obligation arising under this Agreement may be assigned by any Seller, without the prior written
consent of the Buyer, or by the Buyer, without the prior written consent of the Sellers, provided
that, the Buyer may assign this Agreement and/or its rights and obligations under this Agreement
to any of its Affiliates by providing the Company with a 5-day prior written notice, provided,
however, that in case of any such assignment by the Buyer, the Buyer shall remain jointly
responsible for any and all obligations set out in this Agreement, including the obligations to
make any deposit or payments.

14.3 No Third-Party Beneficiaries. This Agreement shall be binding upon, and inure
solely to the benefit of, the Buyer and the Sellers, and their respective heirs, successors and
assigns, and no other Person shall acquire or have any right under or by virtue of this Agreement.

14.4 Amendments and Waiver. This Agreement may be amended only by written agreement
between the Buyer and the Company Shareholders. Any provision of this Agreement may be waived if
such waiver is in writing and is signed by the Party against whom the waiver is to be effective.
No failure or delay by any Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

14.5 Severability. If one of more provisions of this Agreement are held to be
invalid or unenforceable to any extent under Applicable Law, such provision shall be interpreted
as if it were written so as to be enforceable to the maximum extent permitted by Applicable Law,
so as to effectuate the Parties’ intent to the maximum extent, and the remainder of this Agreement
shall be interpreted as if such provision were excluded and shall be valid and enforceable in
accordance with its terms to the maximum extent permitted by Applicable Law.

14.6 Costs and Expenses. Each Party shall bear its own costs and expenses incurred
in connection with this Agreement, including, without limitation, the fees and expenses of their
respective accountants and legal counsel, regardless of whether the transactions contemplated
hereby shall be consummated. For the avoidance of doubt, all Governmental Charges levied in
connection with the transfer and acquisition of any Seller’s Shares shall be paid by the
respective Party obligated under Applicable Law to bear such Governmental Charges.

14.7 Governing Language. In the event of any conflict between the English language
version of this Agreement and any translation hereof, the English language version shall prevail.

 

- 42 -

 

14.8 Entire Agreement. This Agreement (including all exhibits and schedules hereto)
constitutes the entire agreement and understanding of the Parties hereto with respect to the
subject matter of such documents, and supersedes all prior agreements and understandings, both
written and oral, of the Parties relating to the subject matter of such documents.

14.9 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which together shall constitute one
and the same document.

14.10 Effectiveness. This Agreement shall become effective with respect to, and
binding on, (i) each Company Shareholder when such Company Shareholder shall have received a
counterpart hereof signed by the Buyer and (ii) the Buyer when the Buyer shall have received a
counterpart hereof signed by each Company Shareholder.

[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

 

- 43 -

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective duly authorized representatives as of the date first above written.

	 	 	 	 	 
	 	SHANDA GAMES INTERNATIONAL PTE. LTD.

 	 
	 	By:  	 	 
	 	 	Name:  	Qunzhao Tan 	 
	 	 	Title:  	Chairman, CEO 	 
	 
	 	SELLERS’ REPRESENTATIVE

 	 
	 	
 	 
	 	Eun Sang Lee 	 
	 	 	 
	 	CCG INVESTMENT, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 

	 	 

Ji Ho Kim
	 	 
	 
	 	 	 	 
	 

	 	 

Jin Min Kim
	 	 
	 
	 	 	 	 
	 

	 	 

Jung Sic Park
	 	 

 

- 44 -

 

	 	 	 	 	 
	 

	 	 

Tae Hun O
	 	 
	 
	 	 	 	 
	 

	 	 

Eun Sang Lee
	 	 
	 
	 	 	 	 
	 

	 	 

Je Kyon Chung
	 	 
	 
	 	 	 	 
	 

	 	 

Ki Yong Cho
	 	 
	 
	 	 	 	 
	 

	 	 

Su Ji Chun
	 	 
	 
	 	 	 	 
	 

	 	 

Yong Hyuk Park
	 	 
	 
	 	 	 	 
	 

	 	 

Jung Hwan Ku
	 	 
	 
	 	 	 	 
	 

	 	 

Mi Sun Na
	 	 

 

- 45 -

 

	 	 	 	 	 
	 

	 	 

Seung Youn Woo
	 	 
	 
	 	 	 	 
	 

	 	 

Soo Ho Kang
	 	 
	 
	 	 	 	 
	 

	 	 

In Hwan Park
	 	 
	 
	 	 	 	 
	 

	 	 

Eun Ha Na
	 	 
	 
	 	 	 	 
	 

	 	 

Han Gi Jung
	 	 
	 
	 	 	 	 
	 

	 	 

Myung Jae Kang
	 	 
	 
	 	 	 	 
	 

	 	 

Joon Myung Jung
	 	 
	 
	 	 	 	 
	 

	 	 

Do Kyung Kim
	 	 

 

- 46 -

 

	 	 	 	 	 
	 

	 	 

Noh Chan Kwak
	 	 
	 
	 	 	 	 
	 

	 	 

Sang Hyun Park
	 	 
	 
	 	 	 	 
	 

	 	 

Seung Chan Lee
	 	 

 

- 47 -

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