Document


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of report (Date of earliest event reported): September 20, 2016
https://cdn.kscope.io/acc2b72d5562694d162ccd024a302001-remarklogoa16.jpg
Remark Media, Inc.

Delaware
 
001-33720
 
33-1135689
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
 
3960 Howard Hughes Parkway, Suite 900
Las Vegas, NV
 
89169
 
702-701-9514
(Address of principal executive offices)
 
(Zip Code)
 
(Registrant’s telephone number, including area code)
 
 
 
 
 
 
(Former name or former address, if changed since last report.)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 1.01
Entry into a Material Definitive Agreement.

Completion of Acquisition of China Branding Group Limited

On September 20, 2016, Remark Media, Inc. (“we”, “us” or “our”), together with our wholly-owned subsidiary KanKan Limited, completed the acquisition (the “CBG Acquisition”) of assets of China Branding Group Limited (“CBG”), pursuant to the terms of the Second Amended and Restated Asset and Securities Purchase Agreement, dated as of the same date (the “Purchase Agreement”). The Purchase Agreement amended and restated the Amended and Restated Asset and Securities Purchase Agreement, dated as of July 6, 2016 (the “Prior Agreement”), previously described in our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on July 12, 2016, which had amended and restated the Asset and Securities Purchase Agreement, dated as of May 16, 2016 (the “Prior Agreement”), previously described in our Current Report on Form 8-K filed with the SEC on May 18, 2016. The amendments to the Prior Agreement reflected in the Purchase Agreement include, among other things, (i) changes related to the placement of CBG into official liquidation, (ii) changes to the indemnification provisions and (iii) changes related to the CBG Acquisition Warrants (as defined below) such that they are issuable after the closing of the CBG Acquisition at a time to be determined by CBG and will be exercisable for seven years after the closing date.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed herewith as Exhibit 2.1 and is incorporated herein by reference. We have included the Purchase Agreement to provide investors and stockholders with information regarding its terms, but not to provide any other factual information about us or any of the other parties. The Purchase Agreement contains representations and warranties that the parties to the Purchase Agreement made to and solely for the benefit of each other, and the assertions embodied in such representations and warranties are qualified by information contained in confidential disclosure schedules that the parties exchanged in connection with signing the Purchase Agreement. Accordingly, investors and stockholders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances, since they were only made as of the date of the Purchase Agreement and are modified in important part by the underlying disclosure schedules.

The aggregate consideration for the CBG Acquisition included (i) approximately $7.4 million of cash and (ii) the future issuance of seven-year warrants (the “CBG Acquisition Warrants”) to purchase up to 6,250,000 shares of our common stock at an exercise price of $10.00 per share, subject to certain anti-dilution adjustments (collectively, the “Purchase Price”). At closing, the parties deposited $375,000 of the cash portion of the Purchase Price into escrow for 15 months to secure certain obligations of CBG under the Purchase Agreement. The CBG Acquisition Warrants are not exercisable unless we obtain the approval of our stockholders for issuances under the Purchase Agreement and in related transactions (including under the CBG Acquisition Warrants and the CBG Financing Warrants (as defined below)) in excess of 19.9% of our shares outstanding in accordance with Nasdaq Listing Rule 5635 (the “Stockholder Approval”). In connection with the CBG Acquisition and the Amendment (as defined below), we entered into Voting Agreements with certain stockholders collectively holding approximately 37% of our shares outstanding providing for their agreement to vote in favor of the Stockholder Approval. We intend to hold a special meeting of stockholders to seek the Stockholder Approval within 90 days after the closing of the CBG Acquisition (the “Special Meeting”).


Acquisition Financing

On September 20, 2016, concurrently with the closing of the CBG Acquisition, we entered into the First Amendment to Financing Agreement, dated as of the same date (the “Amendment”), to amend the Financing Agreement, dated as of September 24, 2015 (as amended, the “Financing Agreement”), between certain of our subsidiaries as borrowers (together with us, the “Borrowers”), certain of our subsidiaries as guarantors (the “Guarantors”), the lenders from time to time party thereto (the “Lenders”) and MGG Investment Group LP, in its capacity as collateral agent and administrative agent for the Lenders (“MGG”). Pursuant to the Amendment, the Lenders agreed, among other things, (i) to extend additional credit to the Borrowers under the Financing Agreement in the additional principal amount of $8,000,000 and (ii) to modify certain of the financial covenants in the Financing Agreement, including financial covenants with respect to quarterly EBITDA levels, in a manner beneficial to us. The amount outstanding under the Financing Agreement will accrue interest at three month LIBOR plus 10.0% per annum, payable monthly, and has a maturity date of September 24, 2018. The Amendment and related documents also provide for certain fees payable to the Lenders and for the issuance of the CBG Financing Warrants.

As a condition to closing the Financing Amendment, we issued to affiliates of MGG warrants to purchase up to 2,670,736 shares of our common stock at an exercise price of $5.50 per share, subject to certain anti-dilution adjustments (the “CGB Financing Warrants”). The CBG Financing Warrants also provide as follows: (i) the CBG Financing Warrants expire on





September 24, 2020; (ii) the CBG Financing Warrants are exercisable on a cashless basis only; (iii) the number of shares of our common stock issuable upon exercise of the CBG Financing Warrants and the exercise price thereof are subject to anti-dilution protection; and (iv) the CBG Financing Warrants may not be exercised if a holder, together with its affiliates, collectively would beneficially own in excess of 9.99% of our common stock after giving effect to such exercise. Also, we are not permitted to issue any shares under the CBG Financing Warrants to the extent that the issuance of such shares, when aggregated together with issuances in related transactions in accordance with Nasdaq rules, would exceed 19.9% of the shares outstanding, unless we obtain the Stockholder Approval.

On September 20, 2016, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) to provide the holders of the CBG Financing Warrants with registration rights for the shares of our common stock issuable under such warrants.

The foregoing descriptions of the Amendment, the Registration Rights Agreement and the CBG Financing Warrants do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are attached as Exhibits 10.1, 10.2 and 4.2, respectively, hereto and are incorporated herein by reference.


Item 2.01
Completion of Acquisition or Disposition of Assets.

We incorporate the information set forth in Item 1.01 with respect to the closing of the CBG Acquisition into this Item 2.01 by reference.


Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

We incorporate the information set forth in Item 1.01 with respect to the Amendment into this Item 2.03 by reference.


Item 3.02
Unregistered Sales of Equity Securities.

We incorporate the information set forth in Item 1.01 with respect to the issuance of our common stock pursuant to the CBG Financing Warrants into this Item 3.02 by reference. The offer and sale of such securities is being made in reliance upon an exemption from the registration requirements pursuant to Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended, based upon representations made by the Lenders in the Amendment and related documents.


Item 8.01
Other Events

On September 21, 2016, we issued a press release announcing the closing of the CBG Acquisition.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.







Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits

Exhibit Number
 
Description
 
2.1
 
Second Amended and Restated Asset and Securities Purchase Agreement, dated as September 20, 2016, by and among China Branding Group Limited (in official liquidation), certain of its managers and subsidiaries listed on the signature page thereto, the joint official liquidators, KanKan Limited and Remark Media, Inc. 1 
4.1
 
Form of CBG Acquisition Warrant.
4.2
 
Form of CBG Financing Warrant.
10.1
 
First Amendment to Financing Agreement, dated as of September 20, 2016, by and among Remark Media, Inc. and certain of its subsidiaries named as Borrowers and Guarantors, the Lenders and MGG Investment Group LP, as Collateral Agent and Administrative Agent for the Lenders.
10.2
 
Registration Rights Agreement dated as of September 20, 2016, by and between Remark Media, Inc. and the Subscribers listed on the signature page thereto.
99.1
 
Press release dated September 21, 2016.

1.
We have omitted certain schedules and exhibits to this agreement in accordance with Item 601(b)(2) of Regulation S-K. We will furnish a copy of any omitted schedule and/or exhibit to the SEC upon request.






Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

    
 
 
 
 
Remark Media, Inc.
 
 
 
 
 
Date:
September 26, 2016
 
By:
/s/ Douglas Osrow
 
 
 
Name:
Douglas Osrow
 
 
 
Title:
Chief Financial Officer




Exhibit


EXHIBIT 2.1



SECOND AMENDED AND RESTATED
ASSET AND SECURITIES PURCHASE AGREEMENT
by and among
CHINA BRANDING GROUP LIMITED (IN OFFICIAL LIQUIDATION)
and
THE JOINT PROVISIONAL LIQUIDATORS
and
SELLER MANAGEMENT
and
TARGET ENTITIES
and
KANKAN LIMITED
and
REMARK MEDIA, INC.
dated as of September 20, 2016




TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
PURCHASE AND SALE
Section 2.01
Purchase and Sale of Assets
Section 2.02
Purchase Consideration
Section 2.03
Pre-Closing Deliveries

Section 2.04
Determination of Closing Purchase Consideration

Section 2.05
Escrow
ARTICLE III
CLOSING
Section 3.01
Closing
Section 3.02
Closing Deliverables
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER MANAGEMENT AND TARGET ENTITIES
Section 4.01
Organization, Good Standing and Qualification

Section 4.02
Target Equity

Section 4.03
Corporate Authority; Approval and Fairness
Section 4.04
Consents and Approvals; No Violations; Certain Contracts

Section 4.05
Target Entity Reports; Financial Statements

Section 4.06
Absence of Certain Changes

Section 4.07
Litigation and Liabilities
Section 4.08
Employee Benefits

Section 4.09
Compliance with Laws; Licenses

Section 4.14
Material Contracts

Section 4.11
Properties
Section 4.12
Taxes and Tax Returns
Section 4.13
Labor Matters
Section 4.14
Intellectual Property
Section 4.15
Insurance
Section 4.16
Brokers and Finders
Section 4.17
Solvency
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER

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Section 5.01
Organization, Good Standing and Qualification

Section 5.02
Corporate Authority
Section 5.03
Consents and Approvals; No Violations

Section 5.04
Warrant
Section 5.05
Brokers and Finders
Section 5.06
Solvency
Section 5.07
Litigation
ARTICLE VI
COVENANTS
Section 6.01
Conduct of Business Prior to the Closing
Section 6.02
Filings; Other Actions; Notification

Section 6.03
Parent Shareholder Approval
Section 6.04
Access and Reports
Section 6.05
Publicity
Section 6.06
Expenses
Section 6.07
Indemnification Agreements
Section 6.08
Resignations
Section 6.09
Confidentiality Agreement
Section 6.10
Tax Matters
Section 6.11
Management
Section 6.12
Assigned Contracts
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01
Conditions to Obligations of All Parties
Section 7.02
Conditions to Obligations of Buyer
Section 7.03
Conditions to Obligations of Seller
ARTICLE VIII
INDEMNIFICATION
Section 8.01
Survival
Section 8.02
Indemnification
Section 8.03
Exclusive Remedy
ARTICLE IX
TERMINATION
Section 9.01
Termination by Mutual Consent

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Section 9.02
Termination by Either the Buyer or the Seller

Section 9.03
Termination by the Seller
Section 9.04
Termination by the Buyer
Section 9.05
Effect of Termination and Abandonment
ARTICLE X
MISCELLANEOUS
Section 10.01
Seller Release
Section 10.02
Joinder/Assumption Agreements
Section 10.03
Modification or Amendment
Section 10.04
Waiver of Conditions
Section 10.05
Counterparts; Signatures
Section 10.06
Governing Law and Venue; Waiver of Jury Trial

Section 10.07
Notices
Section 10.08
Entire Agreement
Section 10.09
No Third Party Beneficiaries
Section 10.10
Severability
Section 10.11
Interpretation; Absence of Presumption

Section 10.12
Assignment
Section 10.13
Attorneys’ Fees
Section 10.14
Remedies
Section 10.15
Exclusion of Liability



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SECOND AMENDED AND RESTATED
ASSET AND SECURITIES PURCHASE AGREEMENT
This Second Amended and Restated Asset and Securities Purchase Agreement (this “Agreement” or this “Asset and Securities Purchase Agreement”), dated as of September 20, 2016, is entered into by and among:
(1)
China Branding Group Limited (In Official Liquidation), an exempted company organized under the laws of the Cayman Islands, by and through its Joint Official Liquidators (the “Joint Official Liquidators”), with no personal liability, Hugh Dickson of Grant Thornton Specialist Services (Cayman) Ltd, 10 Market Street #765, Camana Bay, Grand Cayman, Cayman Islands KY1 9006 and David Bennett of Grant Thornton Recovery and Reorganisation Ltd, 12th floor, 28 Hennessy Road, Wanchai, Hong Kong (“Seller”);

(2)
the Joint Official Liquidators;

(3)
Adam Roseman (the “Seller Management”)

(4)
the entities set forth on Schedule I attached hereto (each, a “Target Entity” and together, the “Target Entities”);

(5)
KanKan Limited, a company organized under the laws of the British Virgin Islands (the “Buyer”), and

(6)
Remark Media, Inc., a Delaware corporation (the “Parent”).

RECITALS
WHEREAS, Seller owns 100% of the equity of each Target Entity (as defined below);
WHEREAS, Seller was placed into official liquidation (the “Official Liquidation”) by Order of the Grand Court of the Cayman Islands dated August 18, 2016 and filed August 22, 2016, pursuant to which the Joint Official Liquidators were appointed over the Seller;
WHEREAS, Parent owns 100% of the equity of the Buyer;
WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, 100% of the equity of each Target Entity, subject to the terms and conditions set forth herein (the “Transaction”);
WHEREAS, the Joint Official Liquidators are joined as a party to this Agreement in their personal capacities (but with no personal liability) solely for the purposes of receiving the benefit of the waivers and exclusions of liability in their favour contained in this Agreement;



WHEREAS, certain of the parties hereto are party to an Amended and Restated Asset and Securities Purchase Agreement, dated as of July 5, 2016, by and among Seller, the Target Entities, Buyer and Parent (the “Prior Agreement”), which amended and restated in its entirety the Asset and Securities Purchase Agreement dated as of May 16, 2016, by and among Seller, the Target Entities, Buyer and Parent (the “Original Agreement”); and
WHEREAS, the parties hereto now wish to amend and restate in its entirety the Prior Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS
The following terms have the meanings specified or referred to in this Article I:
(1)AAA” shall have the meaning set forth in Section 2.04.

(2)“Acquisition Financing” shall mean financing from the Buyer’s Lender, in form and substance mutually agreed upon between Buyer and Buyer’s Lender, each in its sole discretion, in an amount equal to or greater than the cash payments required to be made by Buyer pursuant to Section 2.02(a).

(3)“Actions” shall have the meaning set forth in Section 4.07.

(4)“Affiliate” of any Person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise.

(5)“Agreement” refers to this agreement.

(6)“Assumed Warrant Value” shall mean the Black-Scholes calculated fair value per Warrant Share as more fully described on Schedule II.

(7)“Bankruptcy and Equity Exception” shall have the meaning set forth in Section 4.03.

(8)“Base Purchase Consideration” means US$6,750,000 in cash, plus the Management Incentive Payments, minus the Working Capital Adjustment.


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(9)“Base Working Capital” means negative USD$250,000 in aggregate for the Target Entities.

(10)“Basket” shall have the meaning set forth in Section 8.02(c).

(11)“business day” or “Business Day” means any day other than a Saturday, Sunday or other day on which banks are required to close in the State of California, the Cayman Islands, the People’s Republic of China or Hong Kong.

(12)“Buyer” has the meaning set forth in the preamble.

(13)“Buyer Indemnitees” shall have the meaning set forth in Section 8.02.

(14)“Buyers Lender” shall mean MGG Investment Group LP, as Administrative Agent and Collateral Agent for the several lenders of the Parent.

(15)“Closing” and “Closing Date” shall have meanings set forth in Section 3.01.

(16)“Closing Purchase Consideration” means the Base Purchase Consideration.

(19)“Closing Working Capital” means (i) the consolidated cash and cash equivalents, accounts receivable, intercompany receivables due from non-Target Entities, prepaid expenses and all other current assets of the Target Entities in the aggregate as of immediately prior to the Closing (net of all applicable reserves), minus (ii) the consolidated current liabilities of the Target Entities in the aggregate as of immediately prior to the Closing, excluding for this purpose (A) all intercompany payables due to non-Target Entities to the extent terminated at Closing and (B) all Indebtedness and Transaction Expenses paid by or on behalf of the Seller (if any) at the Closing which are already deducted from the Closing Purchase Consideration. The Closing Working Capital shall be determined in accordance with GAAP in a manner consistent with the Target Entities past accounting principles, methods, practices and conventions.

(20)“Code” means the United States Internal Revenue Code of 1986, as amended.

(21)“Confidentiality Agreement” shall have the meaning set forth in Section 6.04.

(22)“Contract” means any contract, agreement, indenture, note, bond, loan, instrument, lease, commitment, work order, task order, statement of work or other arrangement, whether, express or implied, written or oral.

(23)“Delivered Purchase Consideration” means the amount of the Base Purchase Consideration plus the amount of Warrants delivered or finally determined to be

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deliverable (without the possibility of appeal) to the Contributories pursuant to the Distribution Agreement.

(24)“Disclosure Schedule” means the Disclosure Schedules attached to this Agreement.

(25)“Disputed Items Notice” shall have the meaning set forth in Section 2.04(2).

(26)“Distribution Agreement” means the Asset Sale Realisation Distribution Agreement entered into on or around the date of this Agreement between (1) the Seller, (2) and the Contributories (as defined in the Distribution Agreement) in substantially the form attached as Schedule VII.

(27)“Employees” shall have the meaning set forth in Section 4.13.

(28)“Encumbrance” shall have the meaning set forth in Section 4.11.

(29)“Escrow Agent” means Computershare Limited, or such other escrow agent as mutually agreed by Buyer and Seller.

(30)“Escrow Agreement” means the Escrow Agreement among the Buyer, the Seller and the Escrow Agent, in substantially the form set forth on Schedule III.

(31)“Escrow Amount” means $375,000 in cash, and with respect to the Warrants, the right to purchase up to an aggregate of 312,500 shares of Parent Common Stock underlying such Warrants, which will be deposited at the Closing with the Escrow Agent pursuant to the Escrow Agreement.

(32)“Estimated Closing Purchase Consideration” means the estimate of the Closing Purchase Consideration set forth on the Estimated Closing Purchase Consideration Certificate.

(33)FCPA” shall have the meaning set forth in Section 4.09.

(34)“Financial Advisor” means Houlihan Lokey, Inc.

(35)“Fundamental Representations” shall mean the representations of either the Seller, or the Seller Management, set forth in Sections 4.01, 4.02, 4.03, 4.04, 4.09(iii) and 4.12 and the representations of the Buyer set forth in Sections 5.01, 5.02, 5.03 and 5.04.

(34)“GAAP” means generally accepted accounting principles in the United States of America, consistently applied.

(35)“Governmental Entity” shall have the meaning set forth in Section 4.04.

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(36)“Grand Court” shall mean the Grand Court of the Cayman Islands.

(37)“Indebtedness” means with respect to the Target Entities in the aggregate (i) all principal, interest, fees, prepayment and redemption premiums or penalties, expenses and other obligations or amounts in respect of borrowed money, notes, bonds, debentures and other debt securities, interest rate, currency or other hedging arrangements, letters of credit or similar extensions of credit, trade payables, and/or installment purchases incurred by the Target Entities prior to the Closing, or required to be paid in order to discharge fully all such amounts as of the Closing (other than capital leases and trade payables not overdue by more than ninety (90) days and incurred in the ordinary course of business); (ii) all obligations of the type referred to in clause (i) for the payment of which any of the Target Entities is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; (iii) all capital lease and similar obligations; and (iv) all obligations of the type referred to in clauses (i), (ii) and (iii) of other Persons secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien on any property or asset of the Seller (whether or not such obligation is assumed by such Person).

(38)“Indemnification Claim Notice” shall have the meaning set forth in Section 8.02(d).

(39)“Indemnified Party” shall have the meaning set forth in Section 8.02(d).

(40)“Indemnifying Party” shall have the meaning set forth in Section 8.02(d).

(41)“Indemnitees” shall have the meaning set forth in Section 8.02(b).

(42)“Injunction” shall have the meaning set forth in Section 7.01(c).

(43)“Intellectual Property” shall have the meaning set forth in Section 4.14.

(44)“Joinders” shall have the meaning set forth in Section 10.02.

(45)“Judgment” shall have the meaning set forth in Section 4.07.

(46)“Knowledge” shall mean, with respect to the Target Entities or the Seller, in all cases the actual knowledge of a particular fact or other matters after reasonable inquiry of the Chief Executive Officer of the Seller, and with respect to any other party hereto, of any C-level officer of such party or any employees of such party with equivalent titles, provided, however, that such individuals shall be deemed to have “knowledge” of a fact or matter if in exercising reasonable care he or she would reasonably be expected to discover or become aware of such fact or matter in the ordinary course of carrying out his or her employment duties and responsibilities.


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(47)“Laws” shall have the meaning set forth in Section 4.09.

(48)“Leased Real Property” shall have the meaning set forth in Section 4.11.

(49)“Liabilities” shall have the meaning set forth in Section 4.07.

(50)“Licenses” shall have the meaning set forth in Section 4.09(ii).

(51)“Lien” means, with respect to any asset (including any security), any liens, charges, claims, deeds of trust, easements, encumbrances, leases, mortgages, options, pledges, proxies, rights of first refusal, security interests, voting trusts or agreements and restrictions or limitations of any kind, including any transfer restrictions.

(52)“Losses” means any losses, damages, claims (including third-party claims), charges, interest, penalties, Taxes, costs, and expenses (including legal, consultant, accounting and other professional fees), after reduction (a) for any proceeds of insurance or other recoveries from third parties relating thereto; (b) for the value of any Tax benefits to be received in connection with such Loss or payments made in relation thereto; and (c) for any reserve or accrual expressly for such Loss reflected Closing Working Capital (but only to the extent of any such reserve or accrual), provided, however, Losses shall not include, unless paid or payable pursuant to a final, nonappealable judgment or fully executed settlement agreement to a third party, any punitive damages, special damages or consequential damages.

(53)“Management Incentive Payments” means the aggregate of US$750,000 in cash, payable to certain officers and employees of the Seller and/or the Target Entities as well as certain other parties, as set forth on Schedule IV.

(54)”Material Adverse Effect” means any change or effect, event, violation, circumstance, occurrence, state of facts or development (any such item, an “Effect”) that is, or would reasonably be expected to be, either individually or in the aggregate with all changes, effects, events, violations, circumstances, occurrences, states of fact or developments, materially adverse to the business, assets, results of operations, financial condition of the Target Entities and/or their Subsidiaries, taken as a whole; provided that no effect, alone or in combination, related to or arising out of any of the following shall be taken into account in determining whether a Material Adverse Effect may exist: (A) circumstances generally affecting the relevant industry (which changes or developments, in each case, do not materially disproportionately affect the Target Entities and their Subsidiaries taken as a whole, as compared to other companies participating in the same industry as the Target Entities and their Subsidiaries); (B) changes affecting the United States or PRC economy or political conditions in the United States, PRC, Hong Kong or the Cayman Islands in general or any acts of terrorism, military actions or war (which changes or developments, in each case, do not materially disproportionately affect the Target Entities and their Subsidiaries taken as a whole, as compared to other companies participating in the same industry as the Target Entities and their Subsidiaries), (C) the announcement of this

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Agreement or pendency of the Transaction contemplated by this Agreement or the identity of the Buyer as the acquiror of the Seller; (D) any changes in applicable Law or GAAP; provided that such changes to not materially disproportionately affect the Target Entities and their Subsidiaries, taken as a whole, as compared to other companies participating in the same industry as the Target Entities and their subsidiaries; (E) any failure to meet internal or published projections, forecasts or revenue or earnings predictions for any period (provided that the underlying causes of such failures shall not be excluded); (F) actions or omissions of the Seller, the Target Entities or any of their Subsidiaries taken with the consent, authorization, approval, involvement or knowledge of the Buyer; or (G) any breach of this Agreement by the Buyer.

(55)“Material Contract” shall have the meaning set forth in Section 4.10.

(56)“Memorandum and Articles of Association” means the memorandum and articles of association of the Seller or the comparable governing documents of the Target Entities or any of their Subsidiaries.

(57)“Parent” shall have the meaning set forth in the preamble.

(58)“Parent Common Stock” means shares of common stock of the Buyer, par value $0.001 per share.

(59)“Parent Shareholder Approval” shall have the meaning set forth in
Section 6.03.
(60)“Permitted Liens” means (i) Liens for Taxes, assessments and governmental charges or levies not yet due and payable or that are being contested in good faith and by appropriate proceedings; (ii) mechanics’, carriers’, workmen’s, repairmen’s, materialmen’s or other Liens or security interests that secure a liquidated amount that are being contested in good faith and by appropriate proceedings; (iii) leases, subleases and licenses (other than capital leases and leases underlying sale and leaseback Transaction); (iv) Liens imposed by applicable Law; (v) required pledges or deposits to secure obligations under workers’ compensation Laws or similar legislation or to secure public or statutory obligations; (vi) recorded easements, covenants and rights of way and other similar restrictions of record, and zoning, building and other similar restrictions, in each case that do not adversely affect in any material respect the current use of the applicable property owned, leased, used or held for use by the Target Entities or any of their Subsidiaries; and (viii) Liens unrelated to any Indebtedness the existence of which are specifically disclosed in the notes to the financial statements of the Target Entities prior to the date of this Agreement.
(61)“Person” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature.

(62)“Post Survival Claim” shall have the meaning set forth under Section 2.05

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(63)PRC” means the People’s Republic of China, but solely for the purposes of this Agreement, excluding the Hong Kong S.A.R., the Macau Special Administrative Region and the islands of Taiwan.

(63)“Proceeding” shall have the meaning set forth in Section 8.02(i).

(64)“Representatives” shall have the meaning set forth in Section 2.02(b)(D).

(65)“Seller” means China Branding Group Limited (In Official Liquidation), a Cayman Islands company, acting by and through the Joint Official Liquidators (as agents with no personal liability), and any reference to actions being taken by the Seller shall be taken to include such actions being taken by the Joint Official Liquidators on behalf of the Seller, as appropriate.

(66)“Special Shareholder Meeting” shall have the meaning set forth in Section 6.03.

(67) “Shareholders” means the shareholders of the Seller immediately prior to the Closing, and “Shareholder” means each of them.

(68)“Subsidiary” shall mean, with respect to any party, any corporation, limited liability company, partnership or similar entity of which (x) such party or any other Subsidiary of such party is a general partner or (y) at least a majority of the securities (or other interests having by their terms ordinary voting power to elect a majority of the board of directors or other performing similar functions with respect to such corporation or other organization) is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries.

(69)“Target Benefit Plans” shall have the meaning set forth in Section 4.08(i).

(70)“Target Equity” means, collectively, 100% of the equity interest of each Target Entity.

(71)“Target Entity” or “Target Entities” shall have the meaning set forth in the Preamble.

(72)“Target IP” shall have the meaning set forth in Section 4.14(i).

(73)“Tax” or “Taxes” means all taxes (whether United States federal, state, local or non-United States national provincial or local) including all income, profits, franchise, gross receipts, environmental, customs duty, capital stock, net worth, severances, stamp, payroll, sales, employment, use, property, withholding, excise, production, value added, goods and services, occupancy, transfer and other taxes, duties or assessments of any nature

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whatsoever, together with all interest, penalties and additions imposed with respect to such amounts.

(74)“Tax Return” means all returns, forms, reports and other documentation required to be filed with, or supplied to, any United States federal, state, local or nonUnited States national provincial or local tax authority with respect to Taxes (and any amendments, supplements and supporting documentation thereto).

(75)“Total Purchase Consideration” means the Closing Purchase Consideration plus the Warrants.

(76)“Trade Secrets” shall have the meaning set forth in Section 4.14.

(77)“Transaction Expenses” means the aggregate fees, costs, expenses and obligations incurred by or on behalf of the Seller, or for which the Seller is liable, in connection with the Transaction including all amounts in respect of legal, accounting, investment banking, management bonuses and other similar fees and expenses through and including the Closing Date.

(78)“Transaction” shall have the meaning set forth in Recitals.

(79)“Updated Disclosure Schedules” shall have the meaning set forth in the preamble to Article IV.

(80)“Warrant Exercise Price” means US$10.00 per share of Parent Common Stock, as adjusted pursuant to the mechanism set forth in Section 2.02(b).

(81)“Warrant Share” shall have the meaning set forth in Section 2.02(b).

(82)“Working Capital Adjustment” shall mean the amount, if any, that the Closing Working Capital is less then Base Working Capital.
ARTICLE II
PURCHASE AND SALE
Section 2.01Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, at the Closing, (i) Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller free and clear of all Liens (other than the Permitted Liens), all of Seller's right, title and interest in, to and under the Target Equity of China SNS Group Limited and Fanstang (Shanghai) Entertainment Information Consulting Co. Ltd.; (ii) Seller shall sell, assign, transfer, convey and deliver to Parent, and Parent shall purchase from Seller free and clear of all Liens (other than the Permitted Liens), all of Seller's right, title and interest in, to and under the Target Equity of RAAD Productions, LLC; and (iii) Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller (but not have any duties or obligations with respect thereto without the express assumption thereof by the Buyer in its sole discretion), all of such right, title and interest

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in, to and under the other assets of the Seller that the Seller has at the date of the Closing (other than Seller’s rights under this Agreement and the Distribution Agreement), if any, including but not limited to the following (provided, however, that such assets shall not include intercompany accounts receivable in favor of the Seller):
(a)all accounts receivable;

(b)all tangible personal property, including all equipment, materials, prototypes, tools, supplies, vehicles, furniture, fixtures, improvements and other tangible assets of the Seller;

(c)all Intellectual Property (as defined below) of the Seller and rights with respect to Intellectual Property of the Seller;

(d)all rights and benefits of the Seller under Contracts (other than this Agreement and the Distribution Agreement), including without limitation the Material Contracts;

(e)all rights and benefits of the Seller under Licenses (as defined below);

(f)all claims and causes of action of the Seller against other Persons (regardless of whether or not such claims and causes of action have been asserted by the Seller), and all rights of indemnity, warranty rights, rights of contribution, rights to refunds, rights of reimbursement and other rights of recovery possessed by the Seller (regardless of whether such rights are currently exercisable); and

(g)any goodwill associated with any of the foregoing.

Section 2.02Purchase Consideration. The Parent and the Buyer will make or cause to be made the following distributions and payments of the Estimated Closing Purchase Consideration, according to the timing indicated below:
(a)At the Closing, the Buyer will pay the following amounts as detailed on Schedule 2.02(a):

i.the cash portion of the Escrow Amount to the Escrow Agent;

ii.
on behalf of and as an accommodation to the Seller, the Management Incentive Payments to the recipients thereof as set forth on Schedule IV; and

iii.
the amounts and to the respective persons set forth on the attached Schedule VI (which Schedule VI represents the known outstanding Indebtedness of the Target Entities as of the date hereof and which Schedule VI the parties agree may updated by mutual agreement as necessary immediately prior to Closing to reflect the final amount of

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Indebtedness of the Target Entities outstanding as of the Closing); and

iv.
an amount equal to the Base Purchase Consideration (as determined in the Estimated Closing Purchase Consideration Certificate) minus the amounts paid pursuant to clauses i., ii. and iii., above, and minus Seller’s Tax Obligations, as defined below, by wire transfer of immediately available funds to the Seller in accordance with such wire instructions as provided by the Seller pursuant to Section 2.03 hereof and the Seller shall apply such funds in accordance with the terms of the Distribution Agreement, which shall include payment of the Transaction Expenses, which will be disbursed by the Seller to its respective payees thereof.

(b) At an appropriate time as determined by Seller in its sole discretion (currently anticipated to be approximately three to six months after Closing), the Parent will issue and deliver to the Seller or to other Persons designated in writing by the Seller in its sole discretion (collectively, the “Warrant Recipients”), one or more duly executed warrant(s) (each, a “Warrant” and together, the “Warrants”) to purchase, subject to receipt of the Parent Shareholder Approval, (i) that number of shares of Parent Common Stock as is determined by Seller in its sole discretion, with such number of shares of Parent Common Stock and such Warrant Recipients currently anticipated to be as set forth on Schedule 2.02(b) attached hereto, but subject to change in Seller’s sole discretion, for a total of 5,750,000 shares (which number of shares of Parent Common Stock may be reduced in the aggregate by the Warrant portion of the Escrow Amount pursuant to the terms and conditions of such Warrant) and (ii) up to 500,000 shares of Parent Common Stock to management of the Target Entities, subject to customary vesting provisions relating to their continued service with the Target Entities, as mutually agreed to by the Parent and the Seller, each in its sole discretion, prior to the Closing (each such Warrant to purchase one share of Parent Common Stock, a “Warrant Share”), with each Warrant Recipient to pay as consideration for the exercise of such Warrant the Warrant Exercise Price. Moreover:

(A)subject to receipt of the Parent Shareholder Approval, if, during the period commencing on the Closing Date and ending on the fourth anniversary of the Closing Date, the closing price for the Parent Common Stock has not exceeded the sum of US$10.00 per share plus the Assumed Warrant Value for any fifteen (15) individual trading days (which may be non-consecutive) in any consecutive thirty (30) trading day period, then, at the sole election of the holder thereof, at 11:59 pm Pacific Time on the fourth anniversary of the Closing Date, in exchange for the Warrant the Parent will issue to the holder of the Warrant such number of shares of Parent Common Stock equal to (x) the number of Warrant Shares issuable upon exercise of the Warrant and payment of the Warrant Exercise Price per Warrant Share, multiplied by (y) fifty percent (50%) of the Assumed Warrant Value, divided by (z) the volume weighted average price of the Parent Common Stock for the thirty (30) trading days ending on the fourth anniversary of the Closing Date;


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(B)each Warrant shall include a customary cashless exercise mechanism, and subject to receipt of the Parent Shareholder Approval, will be exercisable, in part or in whole, for a period of seven (7) years after the Closing Date;

(C)Parent shall use commercially reasonable efforts to register the re-sale by each Warrant holder of the Warrant Shares under the Securities Act of 1933, as amended, and use commercially reasonable efforts to cause such registration to be effective with the SEC within 120 days of the Closing (the “Warrant Shares Registration”) and to maintain such Warrant Shares Registration until such time as the Warrant Shares are permitted to be sold by each Warrant holder without volume or manner-of-sale restrictions under Rule 144 promulgated by the SEC under the Securities Act of 1933, as amended; provided that (i) in the event the Parent is contemplating in good faith an underwritten public offering of Parent Common Stock, the Parent may suspend the Warrant Shares Registration during the period commencing thirty (30) days prior to the Parent's good faith estimate of the filing date of its registration statement in connection with such underwritten public offering and ending thirty (30) days after the effective date of the registration statement relating to such underwritten public offering; and (ii) Seller acknowledges and agrees that prior to the Warrant Shares Registration and during any period in which the Warrant Shares Registration is suspended pursuant to clause (i), above, or in which the Warrant Shares Registration may cease to be effective in accordance with applicable law, the Warrant Shares shall be “restricted securities” as defined under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and applicable states securities laws, and may only be transferred in accordance with clause (D), below;

(D)in connection with any Warrant Shares Registration, each Warrant holder shall, as a condition precedent to receiving the benefits of any Warrant Shares Registration, (i) truthfully, accurately and completely provide to the Parent any and all information concerning the applicable Warrant holder and/or its affiliates or controlling persons as the Parent may reasonably request in connection with the Warrant Shares Registration; and (ii) agree to indemnify, defend and hold harmless the Parent and its directors, officers, employees, control persons, legal counsel, accountants, financial advisors and other representatives (“Representatives”) from and against any and all against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any such registration statement, prospectus, offering circular or other document, or (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Parent by such Warrant holder and stated to be specifically for use therein; and each such Warrant holder will reimburse the Parent and its directors, officers, employees, control persons, legal counsel, accountants, financial advisors and other representatives for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action;

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(E)Seller acknowledges and agrees that each Warrant and, unless a Warrant Shares Registration is then effective, each of the Warrant Shares, have been issued in a private placement transaction exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended, and shall be deemed to be “restricted securities” as defined under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and applicable states securities laws; Seller further acknowledges and agrees that each Warrant and each of the Warrant Shares may only be offered, sold or otherwise transferred pursuant to an effective registration statement or an applicable exemption thereto; Seller further acknowledges and agrees that Parent may require each Warrant holder to make customary investor representations, warranties and certifications to Parent as a condition to the issuance to each such Warrant; and Seller further acknowledges and agrees that each Warrant and, unless a Warrant Shares Registration is then effective, each certificate evidencing Warrant Shares, may include the following legend (in addition to any other legends that Parent may determine to be required under applicable Laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE ISSUER OF SUCH SECURITIES HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO IT AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED;
(F)(i) the Warrants and Warrant Exercise Price shall be proportionately adjusted as appropriate in the event of any stock split, stock dividend (where it is in the form of Parent Common Stock) or similar event with respect to the Parent Common Stock, and (ii) in the case of any other dividend or similar event issued to the holders of Parent Common Stock, the Warrant Exercise Price shall concurrently be reduced by an amount equal to the per share value (as determined by the Board of Directors of Parent in its reasonable discretion, unless such dividend is cash (which would be at its actual value) or freely transferrable securities on a recognized securities exchange (which would be valued at the average closing price of such securities over the ten trading days immediately prior to such dividend)) of any economic benefit conveyed by such dividend or similar event to the holders of Parent Common Stock;

(G)Seller acknowledges and agrees that the Warrants shall provide that no Warrant may be sold, assigned, hypothecated or otherwise transferred prior to the exercise of such Warrant by a Warrant holder other than to an Affiliate of such Warrant holder; and

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(H)Notwithstanding anything to the contrary set forth above, Seller agrees that no Warrant may be exercised, and no Warrant may be exchanged for Parent Common Stock under subsection (A) above, unless and until Parent Shareholder Approval has been obtained.

Section 2.03Pre-Closing Deliveries. On or prior to the Closing Date, the Seller will furnish to the Buyer (i) a certificate signed by the Seller setting forth the Seller's estimate of the Closing Working Capital, including an itemization of the components of Closing Working Capital, (ii) a certificate signed by the Seller containing the Estimated Closing Purchase Consideration (the “Estimated Closing Purchase Consideration Certificate”), and (iii) a Schedule 2.03(iii), in form and substance reasonably satisfactory to the Buyer, (A) setting forth wire transfer instruction for the Seller (for amounts payable to the Seller), and (B) setting forth wire transfer instructions for the Escrow Agent.

Section 2.04Determination of Closing Purchase Consideration.
(1)Within one hundred twenty (120) days after the Closing Date, the Parent and the Buyer will deliver to the Seller a certificate (the “Closing Purchase Consideration Certificate”), executed by the Parent and the Buyer, setting forth an itemized statement of the Closing Working Capital and a statement setting forth in reasonable detail the calculation of the Closing Purchase Consideration.

(2)If the Seller delivers written notice (the “Disputed Items Notice”) to the Buyer within fifteen (15) days after receipt of the Closing Purchase Consideration Certificate, stating that the Seller objects to any items on the Closing Purchase Consideration Certificate, specifying the basis for such objection in reasonable detail and setting forth the Seller's proposed modifications to the Closing Purchase Consideration Certificate, the Seller and the Buyer will attempt to resolve and finally determine and agree upon the Closing Purchase Consideration as promptly as practicable.

(3)If the Seller and the Buyer are unable to agree upon the Closing Purchase Consideration within fifteen (15) days after delivery of the Disputed Items Notice, the Seller and the Buyer will refer the matter to an independent, nationally recognized independent accounting firm mutually selected by the Buyer and the Seller, to resolve the disputed items specified in the Disputed Items Notice. If the Buyer and the Seller are unable to agree on the selection of an accounting firm, the accounting firm will be chosen by the American Arbitration Association (“AAA”), with the expenses of the AAA to be borne fifty percent (50%) by the Seller and fifty percent (50%) by the Buyer. The accounting firm shall address only the disputed items set forth in the Disputed Items Notice and may not assign a value greater than the greatest value claimed for such item by either party in the Disputed Items Notice or smaller than the smallest value claimed for such item by either party in the Disputed Items Notice. The accounting firm will (i) resolve the disputed items specified in the Disputed Items Notice and (ii) determine the Closing Purchase Consideration, as modified only by the resolution of such items. The determination of the selected accounting firm will

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be made within thirty (30) days after being selected and will be final and binding upon the parties. The fees, costs and expenses of the accounting firm so selected will be borne by the party whose positions generally did not prevail in such determination, or if the accounting firm determines that neither party could be fairly found to be the prevailing party, then such fees, costs and expenses will be borne fifty percent (50%) by the Seller and fifty percent (50%) by the Buyer.

(4)If the Seller does not deliver the Disputed Items Notice to the Buyer within fifteen (15) days after the delivery of the Closing Purchase Consideration Certificate (or at such earlier time as the Seller delivers written notice to the Buyer stating that the Seller does not object to any item on the Closing Purchase Consideration Certificate), the calculation of the Closing Purchase Consideration specified in the Closing Purchase Consideration Certificate will be conclusively presumed to be true and correct in all respects and will be final and binding upon the parties, and the Seller shall be deemed to have agreed with the calculations of Closing Working Capital and Closing Purchase Consideration specified in the Closing Purchase Consideration Certificate.

(5)Within five (5) days after the Closing Purchase Consideration has been finally determined pursuant to this Section 2.04: (i) Seller shall pay to Buyer the amount, if any, by which the final Closing Working Capital as determined in the final Closing Purchase Consideration Certificate is lower than the lesser of (A) the Base Working Capital and (B) the Closing Working Capital as reflected in the Estimated Closing Purchase Consideration Certificate (the “Estimated Working Capital”); and (ii) Buyer shall pay to Seller the amount, if any, by which the final Closing Working Capital as determined in the final Closing Purchase Consideration Certificate is greater than the Estimated Working Capital, but in no event more than the amount of the Working Capital Adjustment as set forth in the Estimated Closing Purchase Consideration Certificate.

(6)Subject to Section 8.02(c), the final determination of the Closing Purchase Consideration under this Section 2.04 shall not impair any other rights of a party under this Agreement, including any rights to indemnification.

(7)After the Closing, the Parent and the Buyer shall, and shall cause its employees to, provide the Seller, its accountants and any accountant selected pursuant to Section 2.04(3) reasonable access to the personnel, properties, books and records of the Parent, the Buyer and the Target Entities in connection with any dispute under this Section 2.04.

Section 2.05 Escrow. The Escrow Amount will be deposited at the Closing with the Escrow Agent, and subject to the terms and conditions of the Escrow Agreement, shall remain in escrow until the fifteen (15) month anniversary of the Closing Date (not including any amounts previously distributed and less the aggregate amounts of any claims that have been asserted on or prior to such date (each, a “Post Survival Claim”)). At such time as any Post Survival Claim is finally resolved, the Buyer and the Seller will provide joint instructions to pay to the Buyer the amount to which it is entitled with

15


respect to such Post Survival Claim, if any, and to pay to the Seller the remaining amount, if any, in the escrow account after any such payment is made. If the Buyer or any of its Affiliates is entitled to indemnification under Article VIII, then the Buyer shall have the right to submit a claim in accordance with the terms of Article VIII and the Escrow Agreement.

ARTICLE III
CLOSING
Section 3.01.Closing. Subject to the terms and conditions of this Agreement, the consummation of the Transaction contemplated by this Agreement (the Closing) shall take place remotely via the exchange of documents and signatures on the second (2nd) Business Day after all of the conditions to Closing set forth in Section 7.01 are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or at such other time, date or place as Seller and Buyer may mutually agree upon in writing. The date on which the Closing is to occur is herein referred to as the Closing Date.

Section 3.02Closing Deliverables.
(a)At the Closing, in addition to any items the delivery of which is made an express condition to the Buyer's obligations at the Closing pursuant to Section 7.02, the Seller shall deliver to the Buyer the updated register of members of each Target Entity (or the equivalent in the applicable jurisdiction), certified by the registered agent of such Target Entity, reflecting the Target Equity being purchased by the Buyer at the Closing, and such other evidence of Buyer's vested ownership in the Target Entities that Buyer may reasonably request under applicable Laws; provided that the Seller shall not be obligated to deliver the updated, certified equivalent of a register of members of Fanstang (Shanghai) Entertainment Information Consulting Co. Ltd. because the sole shareholder will remain China SNS Group Limited after the Closing.
(b)At the Closing, in addition to any items the delivery of which is made an express condition to the Seller's obligations at the Closing pursuant to Section 7.03, the Buyer shall, and the Parent shall cause the Buyer to, deliver to Seller the Estimated Closing Purchase Consideration pursuant to Section 2.02.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER MANAGEMENT
Except as set forth in the Disclosure Schedules (it being agreed that disclosure of any item in any section or subsection of the Disclosure Schedule shall be deemed to be a disclosure with respect to any other section or subsection to which the relevance of such item is reasonably apparent from the express language of such disclosure), which Seller Management shall be entitled to update in writing prior to the Closing, at their sole discretion, with respect to any disclosures relating to third party consents and Material Contracts (any such update, the “Updated Disclosure Schedules”), the Seller Management (but, for the avoidance of doubt, not the Joint Official Liquidators who make no representations or

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warranties on behalf of the Seller except for the representations and warranties contained in Section 4.03(iii)) represent and warrant to Buyer that the statements contained in this Article IV are true and correct as of the date hereof, and as of the Closing Date (provided that the Seller Management (but, for the avoidance of doubt, not the Joint Official Liquidators who make no representations or warranties on behalf of the Seller except for the representations and warranties contained in Section 4.03(iii)) represent and warrant to Buyer that the statements contained in Sections 4.04 and 4.10 below are true and correct as of the Closing Date):
Section 4.01Organization, Good Standing and Qualification. The Seller, each of the Target Entities and their respective Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted in all material respects and is qualified to do business and is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification.
Section 4.02Target Equity.
(i)All presently outstanding Target Equity were duly and validly issued (or subscribed for) in compliance with all applicable Laws, preemptive rights of any Person, and applicable Contracts. No Target Equity was issued or subscribed to in material violation of the preemptive rights of any Person, terms of any Contract, or any Laws, by which each applicable Target Entity at the time of issuance or subscription was bound. Except as contemplated under this Agreement, there are no (a) resolutions pending to increase the share capital or registered capital of any Target Entity or cause the liquidation, winding up, or dissolution of any Target Entity, nor has any distress, execution or other process been levied against any Target Entity, (b) dividends which have accrued or been declared but are unpaid by any Target Entity, (c) obligations, contingent or otherwise, of any Target Entity to repurchase, redeem, or otherwise acquire any Target Equity, or (d) outstanding or authorized equity appreciation, phantom equity, equity plans or similar rights with respect to any Target Entity.

(ii)The Seller is the sole record and beneficial holder of all of the Target Equity, free and clear of all Liens of any kind.
Section 4.03Corporate Authority; Approval and Fairness.
(i)The Seller and each Target Entity has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Transaction in accordance with the terms hereof. This Agreement has been duly executed and delivered by the Seller and each Target Entity and constitutes a valid and binding agreement of the Seller and each Target Entity enforceable against such entity in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws

17


of general applicability relating to or affecting creditors' rights and to general equity principles (the “Bankruptcy and Equity Exception”).

(ii)The Seller Management has determined that the Transaction is fair to, and in the best interests of, the Seller, its creditors and its shareholders, and has approved and declared advisable this Agreement and the Transaction.

(iii)The following representations and warranties in this subparagraph (iii) are made solely by the Joint Official Liquidators (as agents and without personal liability): Pursuant to the terms of the order made by the Grand Court dated August 18, 2016 and filed August 22, 2016, the sanction of the Grand Court authorizing the Joint Official Liquidators to enter into this Agreement (“Sanction”) as a condition to the completion of the Transaction has been obtained, and no further action of the Grand Court in connection with the Transaction is required.

(iv)Upon receipt of the requisite corporate approvals referred to above, and on the granting of the Sanction, the completion of the Transactions contemplated hereby will be duly authorized as a matter of the laws of the Cayman Islands (Seller) and the laws applicable to the Target Entities.
Section 4.04Consents and Approvals; No Violations; Certain Contracts.
(i)Subject to the Sanction, no notices, reports or other filings are required to be made by the Seller or any Target Entity with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Seller or any Target Entity or from, any domestic, multinational or foreign governmental or regulatory authority, agency, commission, body, court or other legislative, executive or judicial governmental entity (each a “Governmental Entity”), in connection with the execution, delivery and performance of this Agreement by the Seller or any Target Entity and the consummation of the Transaction and the other Transaction contemplated hereby, except those that the failure to make or obtain are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent or materially impair the consummation of the Transaction.

(ii)The execution, delivery and performance of this Agreement by the Seller and each Target Entity does not, and the consummation of the Transaction will not, constitute or result in (A) a breach or violation of, or a default under, the memorandum and articles of association of the Seller or the comparable governing documents of the Target Entities or any of their Subsidiaries, (B) with or without notice, lapse of time or both, a material breach or violation of, assuming (solely with respect to performance of this Agreement and consummation of the Transaction and the other transactions contemplated hereby) compliance with the matters referred to in Section 4.04(i), any Law to which the Seller or any of its Subsidiaries is subject, (C) with or without notice, lapse of time or both, a breach or violation of, a termination, cancellation or modification (or right of termination, cancellation or modification) or default under, the payment of additional fees, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of the

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Seller or any of its Subsidiaries pursuant to any agreement, lease, license, contract, settlement, consent, note, mortgage or indenture (each, a “Contract”) binding upon the Seller or any of the Subsidiaries not otherwise terminable by the other party thereto on 60 days' or less notice, (D) a breach or violation of or a termination, cancellation or modification (or right of termination, cancellation or modification) or default or right of first refusal or similar right under any investment agreement, shareholders agreement or any other similar agreement to which the Seller or any of the Subsidiaries is a party or by which any of them are otherwise bound, or (E) any change in the rights or obligations of any party under any Contract binding upon the Seller or any of its Subsidiaries, except, for each of (A) through (E), for any such breach, violation, termination, default, creation, acceleration or change that is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent or materially impair the consummation of the Transaction contemplated by this Agreement.
Section 4.05Target Entity Reports; Financial Statements. Section 4.05 of the Disclosure Schedule sets forth true, complete and correct copies of the respective unaudited management accounts for the Seller, each of the Target Entities and their respective Subsidiaries as of December 31, 2015 and the related statements of income for the period then ended, together with the notes thereto (“Financial Statements”). The Financial Statements were prepared from the books and records of the Seller and the Target Entities, are accurate and complete in all material respects, fairly present, in all material respects, the financial position of the Seller, the Target Entities and their Subsidiaries as of the date thereof and for the periods covered thereby, and the results of operations and cash flows of the Seller, the Target Entities and their Subsidiaries as of the date thereof or for the respective period set forth therein, in conformity with GAAP, all as consistently applied during the periods involved.
Section 4.06Absence of Certain Changes. Since December 31, 2015, (i) the Seller and the Target Entities have conducted their respective businesses in all material respects in the ordinary course of business consistent with past practice, and (ii) there has not been:
(i)any change in the financial condition, business or results of their operations or any circumstance, occurrence or development of which the Seller Management or the Target Entities have Knowledge which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect;

(ii)any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Seller, any Target Entity or any of their Subsidiaries (except for dividends or other distributions by any Subsidiary to the applicable Target Entity);

(iii)any material change in any method of accounting or accounting practice by the Seller or the Target Entities;

(iv)(1) any increase in the compensation or benefits payable or to become payable

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to its officers or employees (except for increases in the ordinary course of business and consistent with past practice) or (2) any establishment, adoption, entry into or amendment of any collective bargaining, bonus, profit sharing, equity, thrift, compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except to the extent required by applicable Law;

(v)any Material Adverse Effect;

(vi)any amendment, modification, or supplement to the charter documents of the Seller or the Target Entities;

(vii)any issuance, sale, grant, or other disposition of any equity or debt securities of the Seller or any Target Entity;

(viii)any capital expenditure (or series of related capital expenditures) outside the ordinary course of business in excess of $50,000 in the aggregate that was not contemplated by its capital expenditure budget;

(ix)settlement or compromise of any pending or threatened Actions against the Seller or any Target Entity;

(x)sale, assignment, license or transfer of any material portion of the assets of the Seller or the Target Entities, except in the ordinary course of business;

(xi)sale assignment, license or transfer of any Target IP to any third party, except in the ordinary course of business;

(xii)any loans or advances to, or guarantees for the benefit of, any Persons (except to employees in the ordinary course of business);

(xiii)any failure to pay when due any indebtedness or other amounts owed to creditors of any Target Entity; or

(xiv)any agreement to do any of the foregoing.
Section 4.07Litigation and Liabilities. Other than the Official Liquidation and any proceedings in connection therewith, there are no civil, criminal, administrative or other actions, suits, claims, oppositions, litigations, hearings, arbitrations, investigations or other proceedings (“Actions”) pending or, to the Knowledge of the Seller Management or the Target Entities, threatened against the Seller or any Target Entity or any of their respective Subsidiaries, or obligations or liabilities of the Seller and any Target Entity, whether or not accrued, contingent or otherwise, that would be required to be reflected or reserved against in a consolidated balance sheet of the Seller and the Target Entities prepared in accordance with GAAP (“Liabilities”) or the notes thereto if such balance sheet were prepared as of the date hereof, except (i) as accurately reflected or reserved against in the Seller's and the

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Target Entities' consolidated balance sheets (and the notes thereto) included in the Financial Statements filed after the applicable date of the Financial Statements but prior to the date of this Agreement, (ii) for Liabilities incurred in the ordinary course of business since the date of the most recent balance sheet included in the Financial Statements, or (iii) for Liabilities incurred pursuant to the Transaction contemplated by this Agreement. No Target Entity is a party to or subject to the provisions of any judgment, order, writ, injunction, decree, award, stipulation or settlement (“Judgment”) of any Governmental Entity.
Section 4.08Employee Benefits.
(i)(i) All benefit and compensation plans, employment agreements, contracts, policies or arrangements covering current or former employees of the Target Entities and current or former directors of any Target Entity, and severance, stock option, stock purchase, stock appreciation rights, Seller or any Target Entity stock-based, incentive and bonus plans (the “Target Benefit Plans”), including Target Benefit Plans maintained outside of the United States primarily for the benefit of Employees working outside of the United States, are listed in Section 4.08(i) of the Disclosure Schedule. True and complete copies of all Target Benefit Plans listed in Section 4.08(i) of the Disclosure Schedule, including any trust instruments, insurance contracts, actuarial reports and, with respect to any employee stock ownership plan, loan agreements forming a part of any Target Benefit Plan, and all amendments thereto have been provided or made available to the Buyer.

(ii)Except for any acceleration of vesting specifically provided for or contemplated by this Agreement, neither the execution and delivery of this Agreement nor the consummation of the Transaction contemplated hereby (either alone or in conjunction with another event, such as a termination of employment) will (i) result in any payment becoming due to any current or former director or current or former employee of any Target Entity under any of the Target Benefit Plan or otherwise; (ii) increase any benefits otherwise payable under any of the Target Benefit Plans; or (iii) result in any acceleration of the time of payment or vesting of any such benefits.

(iii)There is no outstanding order against the Target Benefit Plans that has, or would reasonably be expected to have, a Material Adverse Effect.

(iv)Neither the Seller nor any Target Entity is obligated, pursuant to any of the Target Benefit Plans or otherwise, to grant any options to purchase equity interest of any Target Entity to any Employees, consultants or directors of the Seller or the Target Entities after the date hereof.
Section 4.09Compliance with Laws; Licenses.
(i)The businesses of the Seller and each Target Entity has not been, and are not being conducted in material violation of any applicable United States federal, state or local, non-United States national, provincial or local, or multinational law, statute or ordinance, common law, or any rule, regulation, directive, treaty provision legally binding on the Seller

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and its Subsidiaries, Judgment, agency requirement, license or permit of any Governmental Entity (collectively, “Laws”). As of the date hereof, neither the Seller nor any Target Entity has received any written notice or communication of any material noncompliance with any applicable Laws that has not been cured as of the date of this Agreement.

(ii)The Seller and each Target Entity has made application or obtained and is in material compliance with all material permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity (“Licenses”) necessary to conduct its business as presently conducted.
(iii)None of the Seller, any Target Entity, and no director or officer of the Seller or any Target Entity, and to the Knowledge of the Target Entities, no agent, employee or affiliate of the Seller or any Target Entity, has taken any action, directly or indirectly, that would result in a violation of the United States Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA. The Seller and the Target Entities have conducted their businesses in compliance with the FCPA in all respects and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued material compliance therewith.
Section 4.10Material Contracts.
(i)    Except for this Agreement, as of the date of this Agreement, none of the Seller nor the Target Entities is a party to or bound by:
(a)any Contract that contains a put, call or similar right pursuant to which the Target Entities could be required to purchase or sell, as applicable, any equity interests of any Person or assets;

(b)any Contract relating to the formation, creation, operation, management or control of any joint venture;

(c)any non-competition Contract or other Contract that limits or purports to limit in any material respect the type of business in which the Seller or the Target Entities may engage, the type of goods or services which the Seller or the Target Entities may manufacture, produce, import, export, offer for sale, sell or distribute or the manner or locations in which any of them may so engage in any business or use their assets.

(d)Any employment or consulting Contract with any current employee or consultant and any Contract to grant any severance or termination pay to any Person,

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other than offer letters, applications, employee manuals or handbooks in the standard form that do not contain severance, change in control or similar payments;

(e)Any Contract or commitment relating to capital expenditures requiring payment in excess of $75,000;

(f)Any lease (including any master lease covering multiple items of personal property) of any item or items of tangible personal property;

(g)Any profits interest plan, equity incentive plan, equity appreciation rights plan or similar equity purchase plan or incentive plan;

(h)Any Contract requiring any Target Entity or any Affiliate thereof to indemnify any Person against any charge of infringement of any Target IP;

(i)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;

(j)Any Contract granting any Person any most favored nation pricing, exclusive sales, distribution, marketing or other exclusive rights, rights of refusal, rights of first negotiation, or similar rights or otherwise restricting the ability of the business to compete with any other Person, or to acquire any product or other asset or any services from any other Person, or to sell any product or other asset or to perform any services for any other Person, or to transact business or deal in any other manner with any other Person;

(k)Any Contract relating to any partnership, joint venture or limited liability company agreement or concerning any equity or partnership interest in any other Person;

(l)(1) Any Contract for the acquisition or disposition of the assets of the Target Entities with a value in excess of $100,000 in the aggregate (whether by merger, sale of stock, sale of assets or otherwise);

(m)Any Contract that is a confidentiality, secrecy, non-disclosure or similar agreement pursuant to which the Seller or any of the Target Entities thereof has disclosed to any third party any confidential information of any such entity; provided, however, that the foregoing shall not apply to commercial Contracts entered into in the ordinary course of business;

(n)All licenses, sublicenses and other Contracts pursuant to which any Person is authorized to use the Target IP;

(o)Any Contract not otherwise described above which involves the expenditure or receipt by any Target Entity of more than US$25,000 in the aggregate; or

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(p)Any Contract not otherwise set forth above that would reasonably be expected to have a Material Adverse Effect if breached by the applicable Seller or Target Entity.

Each such Contract described in clauses (a) through (o) above is referred to herein as a “Material Contract”.
(ii) Each Material Contract is valid and binding on the Seller or applicable Target Entity with ongoing obligations as of the date hereof, and, to the Knowledge of the Seller Management or the Target Entities, each other party thereto, and is in full force and effect in all material respects. There is no material breach or default under any Material Contracts and no event has occurred that with the lapse of time or the giving of notice or both would constitute a material breach or default thereunder.
Section 4.11Properties.
(i)With respect to real property leased, subleased or licensed to the Seller or Target Entities (the “Leased Real Property”), the lease, sublease or license for such property is valid, legally binding, enforceable and in full force and effect, except in each case, for such invalidity, failure to be binding or unenforceability that is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect.

(ii)The Target Entities, in all material respects, have good and marketable title to, or a valid and binding leasehold interest in, all other properties and assets (excluding Leased Real Property and Intellectual Property), in each case free and clear of all Encumbrances.

(iii) For purposes of this Section 4.11 only, “Encumbrance” means any Lien, mortgage, easement, covenant, or other restriction or title matter or encumbrance of any kind in respect of such asset, but specifically excludes: (a) specified encumbrances described in Section 4.11(iii) of the Disclosure Schedule; (b) encumbrances for current Taxes or other governmental charges not yet due and payable and for which adequate reserves have been made; and (c) mechanics', carriers', workmen's, repairmen's or other like encumbrances arising or incurred in the ordinary course of business as to which there is no default on the part of the Seller or any of its Subsidiaries and reflected on or specifically reserved against or otherwise disclosed in the Seller's consolidated balance sheets (and the notes thereto) included in the Financial Statements filed prior to the date of this Agreement.
Section 4.12Taxes and Tax Returns. The Seller and the Target Entities (i) have timely filed (taking into account any extension of time within which to file) all income, franchise, and similar Tax Returns and all other material Tax Returns required to be filed by any of them and all such filed Tax Returns are complete and accurate in all material respects; and (ii) have paid all Taxes owed with respect to such Tax Returns (whether or not shown as due and owing on the Tax Returns). Seller and each of the Target Entities has

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withheld and remitted to the appropriate Governmental Entity any Taxes or other amounts that they were obligated to withhold from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith. As of the date of this Agreement, there are not pending or, to the Knowledge of the Seller Management or the Target Entities, threatened, any audits, examinations, investigations or other proceedings in respect of Taxes or Tax matters with respect to Seller or any of the Target Entities. There are no unresolved questions or claims concerning the Seller or any Target Entity's Tax liabilities that may, individually or in the aggregate, have a Material Adverse Effect and are not disclosed or provided for in the Financial Statements. Neither the Seller nor any of the Target Entities has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency. Neither the Seller nor any of the Target Entities is a party to any tax allocation or sharing agreement. No claim has ever been made with respect to Seller or any of the Target Entities by any authority in a jurisdiction where Seller and the Target Entities do not file Tax Returns that Seller or any of the Target Entities is or may be subject to taxation by that jurisdiction. As of the date of this Agreement, there are no Liens with respect to any Taxes upon any of the assets of the Target Entities, other than Permitted Liens for Taxes not yet due and payable or not yet delinquent or that are being contested in good faith and by appropriate proceedings.
Section 4.13Labor Matters. (i) There is no pending or, to the Knowledge of the Target Entities, threatened dispute with the directors of the Seller or any Target Entity or with any of the employees or former employees of the Seller or any Target Entity, and none of the Seller, Seller Management or any Target Entity has Knowledge of any facts or circumstances which may result in such a dispute, (ii) the Seller and each Target Entity is in compliance in all material respects with all applicable Laws of the PRC, respecting employment, employment practices, labor, terms and conditions of employment and wages and hours, in each case, with respect to each of their current (including those on layoff, disability or leave of absence, whether paid or unpaid), former, or retired employees, officers, consultants, independent contractors providing individual services, agents or directors of the Seller or any Target Entity (collectively, “Employees”); and (iii) neither the Seller nor Target Entity is liable for any payment to any trust or other fund or to any governmental or administrative authority, with respect to unemployment compensation benefits, social security or other benefits for Employees.
Section 4.14Intellectual Property.
(i)(A) The Target Entities own or have sufficient rights to use all Intellectual Property that is used in their respective businesses as currently conducted (the “Target IP”) in all material respects; and (B) all of the registrations and applications included in the Target IP owned by, and to the Knowledge of the Target Entities, the Target IP exclusively licensed by the Target Entities, are subsisting.

(ii)(A) Neither the conduct of the business of the Seller or any Target Entity nor the Target IP infringes, dilutes, misappropriates or otherwise violates any Intellectual Property rights of any third party; and (B) to the Knowledge of the Seller Management and

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Target Entities, no third party is infringing, diluting, misappropriating or otherwise violating any Target IP owned or exclusively licensed by the Target Entities.

(iii)The Seller and its Subsidiaries (including the Target Entities) take and have taken commercially reasonable measures to maintain, preserve and protect the confidentiality of all Trade Secrets, and to the Seller Management's and Target Entities' Knowledge, such Trade Secrets have not been used, disclosed or discovered by any Person except pursuant to valid and appropriate non-disclosure and/or license agreements or pursuant to obligations to maintain confidentiality arising by operation of law.

For purposes of this Agreement: “Intellectual Property” means all United States, PRC, other jurisdictional and/or multinational: (A) trademarks, service marks, brand names, corporate names, Internet domain names, logos, symbols, trade dress, trade names, and all other source indicators and all goodwill associated therewith and symbolized thereby; (B) patents and proprietary inventions and discoveries; (C) confidential and proprietary information, trade secrets and know-how, (including confidential and proprietary processes, technology, research, recipes, schematics, business methods, formulae, drawings, prototypes, models, designs, customer lists and supplier lists) (collectively, “Trade Secrets”); and (D) all applications and registrations, invention disclosures, and extensions, revisions, restorations, substitutions, modifications, renewals, divisions, continuations, continuations-in-part, reissues and re-examinations related to any of the foregoing; and (E) all copyrights and copyright applications, and all copyrightable material whether or not registered.
Section 4.15Insurance. The Seller and the Target Entities have made available to the Buyer accurate and complete copies of all material insurance policies and all material self-insurance programs and arrangements relating to the business, assets, liabilities and operations of the Seller and the Target Entities. All such insurance is in full force and effect in all material respects. The Seller Management and the Target Entities have no reason to believe that it or any Subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted at a comparable cost. Neither the Seller nor any Subsidiary (including the Target Entities) has been denied any insurance coverage which it has sought or for which it has applied.
Section 4.16Brokers and Finders. Neither the Seller, any Target Entity nor any of their officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the Transaction or the other Transaction contemplated in this Agreement, except that the Seller has employed the Financial Advisor. The Seller has made available to the Buyer a complete and accurate copy of all agreements pursuant to which any advisor to the Seller or the Target Entities is entitled to any fees and expenses in connection with any of the Transaction contemplated by this Agreement.

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Section 4.17Solvency. The Seller and each Target Entity is not entering into the Transaction contemplated hereby with the intent to hinder, delay or defraud either present or future creditors. Immediately after giving effect to all of the Transaction contemplated hereby, including the payment of the Closing Purchase Consideration and payment of all related fees and expenses, assuming (i) satisfaction of the conditions to the obligation of the Seller and each Target Entity to consummate the Transaction as set forth herein, or the waiver of such conditions, and (ii) the accuracy of the representations and warranties of the Buyer set forth in Article V (for such purposes, such representations and warranties shall be true and correct in all material respects), and each Target Entity will be Solvent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Each of Parent and Buyer represents and warrants to Seller that the statements contained in this Article V are true and correct as of the date hereof and as of the Closing.
Section 5.01Organization, Good Standing and Qualification. Each of the Parent and the Buyer is a legal entity duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in such good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to prevent or materially impair the ability of the Buyer to consummate the Transaction and the other transactions contemplated by this Agreement. Each of the Parent and Buyer has made available to the Seller complete and correct copies the Parent's and Buyer's articles of organization, bylaws, or similar governing documents, as currently in effect.
Section 5.02Corporate Authority. Each of the Parent and the Buyer has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Transaction and the other transactions contemplated hereby in accordance with the terms hereof. This Agreement has been duly executed and delivered by the Parent and the Buyer and is a valid and binding agreement of the Parent and the Buyer, enforceable against the Parent and the Buyer in accordance with its terms, subject to the Bankruptcy and Equity Exception.
Section 5.03Consents and Approvals; No Violations.
(i)Other than applicable securities filings or reports of the Parent and Parent Shareholder Approval, no notices, reports or other filings are required to be made by the Parent or Buyer with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Parent or Buyer from, any Governmental Entity in connection with the execution, delivery and performance of this Agreement by the Parent and Buyer

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and the consummation by the Parent and Buyer of the Transaction, except those that the failure to make or obtain are not, individually or in the aggregate, reasonably likely to prevent or materially impair the ability of the Parent and Buyer to consummate the Transaction.

(ii)Other than the requirement to receive Parent Shareholder Approval and consent of the Buyer's Lender, the execution, delivery and performance of this Agreement by the Parent and Buyer do not, and the consummation by the Parent and Buyer of the Transaction will not, constitute or result in (A) a breach or violation of, or a default under, the certificate of incorporation or bylaws, or similar governing documents, of the Parent or Buyer, (B) with or without notice, lapse of time or both, a material breach or violation of, assuming (solely with respect to performance of this Agreement and consummation of the Transaction and the other transactions contemplated hereby) compliance with the matters referred to in Section 5.03(i), any Law to which the Parent or Buyer is subject or (C) with or without notice, lapse of time or both, a breach or violation of, a termination, cancellation or modification (or right of termination, cancellation or modification) or default under, the payment of additional fees, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of the Parent, Buyer or any of Parent's Subsidiaries pursuant to any Contract binding upon the Parent or any of its Subsidiaries, except in the case of clause (C) for any such breach, violation, termination, default, creation or acceleration that would not, individually or in the aggregate, reasonably be likely to prevent or materially impair the ability of the Parent and the Buyer to consummate the Transaction.
Section 5.04Warrant. Following receipt of Parent Shareholder Approval, the Parent Common Stock underlying the Warrants will, when issued, be duly authorized, validly issued upon the valid exercise of the Warrants, fully paid and non-assessable, free and clear of any and all Liens.
Section 5.05Brokers and Finders. No broker, finder or investment banker is entitled to any brokerage, finders' or other fee or commission in connection with the Transaction contemplated hereby based upon arrangements made by or on behalf of the Buyer.
Section 5.06Solvency. Parent is not entering into the Transaction contemplated hereby with the intent to hinder, delay or defraud either present or future creditors. Immediately after giving effect to all of the Transaction contemplated hereby, including the payment of the Closing Purchase Consideration and payment of all related fees and expenses, assuming (i) satisfaction of the conditions to the obligation of the Buyer to consummate the Transaction as set forth herein, or the waiver of such conditions, and (ii) the accuracy of the representations and warranties of the Seller set forth in Article IV (for such purposes, such representations and warranties shall be true and correct in all material respects), the Parent will be Solvent.
Section 5.07Litigation. There are no Actions pending or threatened in writing against the Parent or Buyer, which would reasonably be expected to materially affect the

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legality, validity or enforceability of this Agreement or to materially interfere with the Parent's or Buyer's ability to consummate the Transaction contemplated hereby.
ARTICLE VI
COVENANTS
Section 6.01Conduct of Business Prior to the Closing.
(i)Operation of the Target Entities’ Business. Except as required by applicable Law or as expressly contemplated by this Agreement, the Target Entities covenant and agree that, from the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with Article IX, their business and that of their Subsidiaries shall be conducted only in the ordinary course and, to the extent consistent therewith, they and their Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain its existing relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates. Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with Article IX, except (A) as otherwise expressly required or permitted by this Agreement or as required by Law, (B) as the Buyer may approve in advance in writing; or (C) as set forth in Schedule 6.01, the Target Entities will not and will not permit their Subsidiaries to:
(a)adopt or propose any change in its memorandum and articles of association or other applicable governing instruments;

(b)effect any scheme of arrangement, merge or consolidate the Seller or any of its Subsidiaries (including the Target Entities) with any other Person, except for any such transaction among the Target Entities and wholly owned Subsidiaries of the Target Entities that are not obligors or guarantors of third party indebtedness, or other than in the ordinary course, restructure, reorganize or completely or partially liquidate or otherwise enter into any Contracts imposing material changes or material restrictions on its assets, operations or businesses;

(c)acquire, directly or indirectly, whether by purchase, merger, consolidation, scheme of arrangement or acquisition of stock or assets or otherwise, any assets, securities, properties, interests, or businesses or make any investment (whether by purchase of stock or securities, contributions to capital, loans to, or property transfers), in each case, other than in the ordinary course of business, (it being understood and agreed that the acquisition of all or substantially all of the assets or outstanding shares or other equity securities of any Person is not in the ordinary course of business), or

(d)issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, or redeem, purchase or otherwise acquire, any shares of capital stock of the any Target Entity or any of their Subsidiaries, or securities convertible or exchangeable

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into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;

(e)create or incur (A) any Lien or other security interest on any Target IP owned or exclusively licensed or that is material and non-exclusively licensed by the Seller, the Target Entities or any other Subsidiaries outside the ordinary course of business or (B) any Lien on any other assets of the Seller, the Target Entities or any other Subsidiaries having an aggregate value in excess of $20,000, in each case, other than Permitted Liens;

(f)make any loans, advances, guarantees or capital contributions to or investments in any Person (other than any direct or indirect wholly owned Subsidiary of the Target Entities) in excess of $20,000 in the aggregate except pursuant to Contracts in effect as of the date of this Agreement which have been identified in the Disclosure Schedule;

(g)declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for dividends paid by a Target Entity or any Subsidiary of a Target Entity to any other Target Entity or Subsidiary), or enter into any Contract with respect to the voting of its capital stock;

(h)reclassify, split, combine, subdivide, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;

(i)incur, alter, amend or modify, any indebtedness or guarantee such indebtedness of another Person, or permit any Subsidiary of any Target Entity to guarantee any such indebtedness, other than the incurrence or guarantee of indebtedness in the ordinary course of business not to exceed $20,000 in the aggregate, including any borrowings under the existing credit facilities of the Target Entities to fund working capital needs, and such other actions taken in the ordinary course of business consistent with past practice;

(j)     issue or sell any debt securities or warrants or other rights to acquire any debt security of the Target Entities or any of their Subsidiaries;
(k)make any changes with respect to accounting policies or procedures materially affecting the reported consolidated assets, liabilities or results of operations of the Target Entities, except as required by changes in applicable generally accepted accounting principles or Law;
(l)settle any Action before a Governmental Entity by or against the Target Entities or relating to any of their business, properties or assets, other than settlements entered into in the ordinary course of business consistent with past practice and not involving the admission of any wrongdoing by the Target Entities or the Subsidiaries;

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(m)engage in the conduct of any new line of business material to the Target Entities, taken as a whole;

(n)create any new Subsidiaries;

(o)(A) with regard to material Intellectual Property owned or licensed by the Seller or the Target Entities, transfer, sell, license, mortgage, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material Intellectual Property, other than licenses or other Contracts granted in the ordinary course of business, or cancellation, abandonment, allowing to lapse or expire such Intellectual Property that is no longer used or useful in the Seller or any of the Target Entities' respective businesses or pursuant to Contracts in effect prior to the date of this Agreement; and (B) with regard to other assets, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets, licenses, operations, rights, product lines, businesses or interests therein of the Seller or Target Entities, including capital stock of any of its Subsidiaries, except in connection with services provided in the ordinary course of business, sales of products in the ordinary course of business and sales of obsolete assets and except for sales, leases, licenses or other dispositions of assets with a fair market value not in excess of $20,000 in the aggregate, other than pursuant to Contracts in effect as of the date of this Agreement; or

(p)agree, authorize or commit to do any of the foregoing.

(ii) No Control of Other Party's Business. Nothing contained in this Agreement is intended to give the Parent or the Buyer, directly or indirectly, the right to control or direct the Seller's or its Subsidiaries' operations prior to the Closing Date, and nothing contained in this Agreement is intended to give the Seller, directly or indirectly, the right to control or direct the Parent's or the Buyer's operations. Prior to the Closing Date, each of the Parent, the Buyer and the Target Entities shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries' respective operations.
(iii) Sanction. The Seller will take, in accordance with applicable Law, all appropriate steps to defend before the Grand Court the Transaction as approved by the Sanction.
Section 6.02Filings; Other Actions; Notification.
(i)Cooperation. Subject to the terms and conditions set forth in this Agreement, solely to the extent consistent with applicable law and providing it does not conflict with the Joint Official Liquidators' obligations under Cayman Islands law, the Parent and the Buyer and their respective directors and officers and Representatives, and the Seller and the Joint Official Liquidators (with no personal liability), shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under this Agreement and applicable Laws to

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consummate and make effective the Transaction as soon as reasonably practicable, including preparing, execution and filing as promptly as reasonably practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Entity in order to consummate the Transaction.

(ii)Information. Solely to the extent consistent with applicable law and providing it does not conflict with the Joint Official Liquidators' obligations under Cayman Islands law, the Seller, the Parent and the Buyer each shall, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the statement, filing, notice or application made by or on behalf of the Parent, the Buyer, the Seller or any of their respective Subsidiaries to any third party and/or any Governmental Entity in connection with the Transaction.

(iii)Status. Subject to applicable Laws and as required by any Governmental Entity, and providing it does not conflict with the Joint Official Liquidators' obligations under Cayman Islands law, the Parent, the Seller and the Buyer each shall keep the other apprised of the status of matters relating to completion of the Transaction contemplated hereby, including promptly furnishing the other with copies of notices or other communications received by the Parent, the Buyer or the Seller, as the case may be, or any of its Subsidiaries, from any Governmental Entity with respect to the Transaction and the other transactions contemplated by this Agreement, provided always that the Seller's obligations pursuant to this Section 6.02(iii) shall extend only to such notices and communications received by the Joint Official Liquidators in the period following their appointment. The Seller shall give reasonably prompt notice to the Buyer of any change, fact or condition that is reasonably expected to result in a Material Adverse Effect or of any failure of any condition to the Buyer's obligations to effect the Transaction. The Parent and the Buyer shall give reasonably prompt notice to the Seller of any change, fact or condition that is reasonably expected to prevent or materially impair the consummation of the Transaction contemplated by this Agreement or of any failure of any condition to the Seller's obligations to effect the Transaction.
Section 6.03Parent Shareholder Approval. The Parent shall, in accordance with applicable Laws and its corporate charter, notice a meeting of its shareholders (the “Special Shareholder Meeting”), and use its reasonable best efforts to obtain approval by its shareholders of the issuance of the Warrant Shares upon exercise of the outstanding Warrants and any other actions of the Parent that it deems necessary and appropriate in connection with the transactions contemplated by this Agreement (collectively, the “Parent Shareholder Approval”) within one hundred twenty (120) days following the Closing. Moreover, Parent and Buyer shall use their commercially reasonable best efforts to obtain, as promptly as practicable after the execution hereof and in any event prior to the Special Shareholder Meeting, an executed agreement by Kai-Shing Tao, on behalf of himself and

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all relevant holding companies over which he exercises control, to vote all shares of the Parent over which he has beneficial ownership in favor of Parent Shareholder Approval.
Section 6.04Access and Reports. Subject to applicable Law, upon reasonable advance notice from the Buyer, the Seller Management shall (and shall cause the Seller's Subsidiaries to) afford the Buyer's officers and other authorized Representatives reasonable access, during normal business hours throughout the period prior to the earlier of the Closing Date or the termination of this Agreement in accordance with Article IX, to its employees, properties, books, contracts and records and, during such period, the Seller (to the extent it is able) and Seller Management shall (and shall cause the Seller's Subsidiaries to) furnish as promptly as reasonably practicable the Buyer and its authorized Representatives all information concerning its business, properties and personnel as may reasonably be requested. Notwithstanding the foregoing, none of the Buyer or its Representatives shall have access to any books, records, documents or other information (i) to the extent that such books, records, documents or other information is subject to the terms of a confidentiality agreement with a third party (provided that at the request of the Buyer, the Seller shall use its commercially reasonably efforts to obtain waivers from such third parties), (ii) to the extent that the disclosure of such books, records, documents or other information would result in the loss of attorney-client privilege, (iii) to the extent the disclosure of such books, records, documents or other information is prohibited by applicable Law, or (iv) to the extent disclosure of such books, records, documents or other information, as reasonably determined by the Seller's counsel, would be reasonably likely to result in antitrust difficulties for the Seller (or any of its Affiliates) and provided further that the Joint Official Liquidators shall be under no obligation to disclose copies of their books and records pursuant to this Section 6.04. All information provided or made available pursuant to this Section 6.04 is subject to the confidentiality agreement dated December 10, 2015, among the Buyer and the Seller (the “Confidentiality Agreement”). The Buyer shall be responsible for any unauthorized disclosure of any such information provided or made available pursuant to this Section 6.04 by its Representatives.
Section 6.05Publicity. The initial press release regarding the execution of this Agreement, if any, shall be a joint press release, mutually agreed upon by the Seller and the Buyer. After the initial press release, so long as this Agreement is in effect, the Seller and the Buyer each shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Transaction and prior to making any filings with any third party and/or any Governmental Entity with respect thereto, except as may be required by Law or by obligations pursuant to any listing agreement with or rules of any national securities exchange or interdealer quotation service or by the request of any Governmental Entity.
Section 6.06Expenses. Except as otherwise provided in Section 9.05 or elsewhere in this Agreement, whether or not the Transaction is consummated, all costs and expenses incurred in connection with this Agreement and the Transaction and the other transactions contemplated by this Agreement shall be paid by the party incurring such expense.

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Section 6.07Indemnification Agreements. Seller acknowledges that the indemnification agreements that may be outstanding between certain directors, officers and other agents of the Seller and/or any of the Target Entities, on the one hand, and one or more of the Target Entities, on the other hand (the “Seller Indemnification Agreements”) as at the date of this Agreement, may be terminated by the Buyer or any of the Target Entities following the Closing in the Buyer's sole and absolute discretion; provided that the Parent will use its commercially reasonable best efforts to obtain insurance coverage following the Closing relating to the acts and omissions of the individual parties to the Seller Indemnification Agreements and, if and to the extent insurance coverage is available to the Parent on commercially reasonable terms (provided that the parties have agreed that insurance coverage with respect to entities organized under the laws of the PRC and activities governed by the laws of the PRC is not available to the Parent on commercially reasonable terms), the Parent will obtain such coverage for a period of no less than six (6) consecutive years following the Closing, and costs associated with such coverage shall be paid by the Parent in their entirety.
Section 6.08Resignations. On the Closing Date, the Target Entities shall cause to be delivered to the Buyer duly signed resignations, effective as of the Closing Date, of the directors of each Target Entity.
Section 6.09Confidentiality Agreement. Each of the Parent and the Buyer acknowledges, on its own behalf and on behalf of each of its Affiliates, that it and its Affiliates continues to be bound by the Confidentiality Agreement, and the parties hereto acknowledge and agree that this Agreement does not in any manner modify or limit the Seller's rights thereunder.
Section 6.10Tax Matters.
(i)Tax Cooperation and Exchange of Information. Parent, Buyer and Seller agree to furnish or cause to be furnished to the other, upon the reasonable request, of the other, and as promptly as reasonably practicable, such information and assistance relating to the Target Equity, including access to books and records, as is reasonably necessary for the filing of all Tax Returns by the Buyer or the Seller, the making of any election relating to Taxes, the preparation for any audit by any Tax authority and the prosecution or defense of any claim, suit or proceeding relating to any Tax. Each of Parent, Buyer and the Seller shall retain, or cause to be retained, all books and records with respect to Taxes pertaining to the Target as required under all Laws. The Buyer and the Seller shall reasonably cooperate with each other in the conduct of any audit, litigation or other proceeding relating to Taxes involving the Target Equity or any allocation of the purchase consideration hereunder, provided always that the Buyer shall be solely responsible for the payment of Buyer’s costs incurred in respect of such proceedings.
For the avoidance of doubt, the Joint Official Liquidators shall have no further obligation to comply with any requests for information and assistance pursuant to this Section 6.10(i) with effect from the date upon which they are discharged from office by Order of the

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Grand Court, following which the Target Entities shall, as far as possible, comply with such requests for information and assistance.
(ii)Conveyance Taxes. Each of (A) the Seller, on the one hand, and the (B) the Parent and the Buyer, on the other hand, shall be liable for, and agree to pay, half of any and all sales, use, transfer, stamp, stock transfer, recording, registration, documentary, filing, real property transfer and similar Taxes, fees or charges (together with any interest, penalties or additions in respect thereof) imposed by any Governmental Entity in respect of the Target Equity that become payable as a result of the transactions contemplated by this Agreement (collectively, “Conveyance Taxes”).

(iii)Tax Deficiencies. Neither the Buyer nor the Target Entities shall assume hereunder or be liable for any Tax deficiencies (including penalties and interest) assessed against or relating to the Seller or the Target Entities with respect to taxable periods ending on or before, or including, the Closing Date of a character or nature, including Tax deficiencies that could reasonably be expected to result in Liens or claims on the Target Equity or any of the assets of any Target Entity following the Closing Date or that would reasonably be expected to result in any claim against Buyer.
(iv)Tax Apportionment. Except for Conveyance Taxes (the entirety of which shall be divided between the Buyer and Seller, as provided above), all real property Taxes, personal property Taxes, and similar ad valorem obligations levied with respect to the Target Equity or Target Entities (if any) for a taxable period that includes (but does not end on) the Closing Date (collectively, the “Apportioned Obligations”) shall be apportioned between the Seller, the Parent and Buyer as of the Closing Date based on the number of days of such taxable period ending on and including the Closing Date (“Pre-Closing Apportioned Period”) and the number of days of such taxable period beginning the day after the Closing Date through the end of such taxable period (the “Post-Closing Apportioned Period”). The Seller shall be liable for the proportionate amount of Apportioned Obligations that is attributable to the Pre-Closing Apportioned Period. The Parent and Buyer shall be liable for proportionate amount of the Apportioned Obligations that is attributable to the Post-Closing Apportioned Period.

(v)Seller’s Apportioned Tax Obligations. Prior to the Closing Date, Buyer shall, in cooperation with Seller, estimate in good faith Seller’s portion of the Conveyance Taxes, as calculated above, and the amount of the Apportioned Obligations for the Pre-Closing Apportioned Period (collectively, the “Seller’s Tax Obligations”), which amount shall reduce the amount otherwise payable by Buyer under Section 2.02(a)(iii), above. Within sixty (60) days of final calculation and reconciliation of the Conveyance Taxes and Apportioned Obligations, if it is determined that the estimated amount of the Seller’s Tax Obligations is greater than the finally calculated and reconciled amount of the Seller’s Tax Obligations, the Buyer shall pay to the Contributories (as defined in the Distribution Agreement), pro rata in accordance with the amounts owed to the Contributories, the difference between the estimated amount of the Seller’s Tax Obligations and the finally calculated and reconciled amount of the Seller’s Tax Obligations. In the

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event it is determined that the estimated amount of the Seller’s Tax Obligations is less than the finally calculated and reconciled amount of the Seller’s Tax Obligations, the Seller Indemnitors shall pay to the Buyer the amount of such difference within ten (10) days of receipt of written demand for payment therefor, and the Buyer shall be entitled to be paid the amount of such difference in accordance with the Escrow Agreement.

(vi)Section 338(g) Election. The parties to this Agreement agree that Buyer may make an election under Section 338(g) of the U.S. Internal Revenue Code (the “338(g) Election”) with respect to the acquisition of the shares of China SNS Group Limited and Fanstang (Shanghai) Entertainment after the close of the acquisition.  If Buyer makes such an election with respect to either company, Buyer shall inform Sellers in writing within thirty (30) days of having made such election. If and to the extent it is shown that the 338(g) Election by the Buyer shall increase the U.S. taxes owed by Seller, the Buyer will reimburse Seller the amount of such increase up to a maximum of Twenty Thousand U.S. Dollars (US$20,000.00). Moreover, each of Buyer and Parent agrees that, notwithstanding anything to the contrary in this Agreement, any increased U.S. tax attributable to any of the Target Entities as a result of the 338(g) Election shall not constitute any of (i) the breach of any representation and warranty of the Seller Management or Target Entities contained in this Agreement, (ii) the breach of any agreement of the Seller or the Target Entities contained in this Agreement or (iii) a “Seller Tax Obligation” as defined herein.
Section 6.11Management. Subject to Section 6.01, in no event shall the Parent, the Buyer, or any of their Affiliates, enter into, or seek to enter into, any arrangements that are effective prior to the Closing with any member of the Seller's management or any other Seller employee that contain any terms that prohibit or restrict such member of management or such employee from discussing, negotiating or entering into any arrangements with any third party in connection with a transaction relating to the Seller or its Subsidiaries. The Parent and Buyer shall cause each of their Affiliates to comply with the foregoing covenant.
Section 6.12Assigned Contracts. At the Closing and effective as of the Closing Date, the Seller shall assign to the Buyer all rights and benefits (but not any duties or obligations without the express assumption thereof by the Buyer in its sole discretion) under all Contracts to which Seller is a party. Notwithstanding the foregoing, no Contract shall be assigned contrary to law or the terms of such Contract and, with respect to Contracts that cannot be assigned to the Buyer at the Closing Date, the performance obligations of the Seller thereunder shall, unless not permitted by such Contract, be deemed to be subleased or subcontracted to the Buyer until such Contract has been assigned. The Buyer shall reasonably assist the Seller in obtaining any necessary consents to such subleases and subcontracts. The Seller shall use commercially reasonable efforts to obtain all necessary consents to the assignment of its rights and benefits under such Contracts, and the Buyer shall take all necessary actions to perform and complete all Contracts assumed by Buyer in accordance with their terms if neither assignment, subleasing nor subcontracting is permitted by the other party, and the Seller shall cause to be paid over to the Buyer any amounts received by the Seller after the Closing Date as a result of performance by the Buyer under any such Contracts.

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ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01Conditions to Obligations of All Parties. The obligations of each party to consummate the Transaction contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:
(a)Sanction. This Agreement and the Transaction shall have been duly sanctioned by the Grand Court (as defined in Sections 4.03(iii) and 6.01(iii) above) in accordance with applicable Law pursuant to the Sanction, the applicable time period to appeal the Sanction shall have expired without any appeal having been filed, lodged or served within such time period, no application for an extension of time to appeal or for leave to appeal out of time shall have been filed, lodged or served during such period, and the Sanction shall have become final, binding and non-appealable.
(b)No Litigation. Aside from the Official Liquidation and any matters currently pending or contemplated with respect thereto, there shall not be pending or threatened any legal proceeding in which a Governmental Entity or third party is, or is threatening to become, a party, and none of the Joint Official Liquidators, Buyer, Seller or, Seller Management shall have received any communication from any Governmental Entity or third party in which such Governmental Entity or third party indicates the probability or consideration of commencing any legal proceeding or appeal: (i) challenging the Sanction or seeking to restrain or prohibit the consummation of the Transactions or (ii) that would materially and adversely affect the right of the Buyer to own the Target Entities or operate the business of the Target Entities after the Closing, and any such communication shall be promptly disclosed to the Parties to this Agreement.
(c)No Injunction. No court or other Governmental Entity of competent jurisdiction shall have issued any Order or enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) that is in effect which restrains, enjoins or otherwise prohibits consummation of the Transaction (collectively, an “Injunction”).
Section 7.02Conditions to Obligations of Buyer and Parent. The obligations of Buyer and Parent to consummate the Transaction contemplated by this Agreement shall be subject to the fulfillment or Buyer's and Parent’s waiver, at or prior to the Closing, of each of the following conditions:
(a)Representations and Warranties. The representations and warranties of the Seller Management set forth in this Agreement (as qualified by the Disclosure Schedule) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date).

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(b)Performance of Obligations of the Seller. The Seller, the Target Entities and Seller Management shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date, and the Buyer shall have received a certificate signed on behalf of the Seller Management to such effect.
(c)RAAD Productions. As of immediately prior to the Closing, Seller shall own 100% of the outstanding equity securities of RAAD Productions, LLC, a California limited liability company, and shall have transferred such securities to the Parent as of the Closing.
(d)Trademarks. As of the Closing, the applications for the transfer registration of the Trademarks set forth on Schedule 7.02(d) to the Target Entities set forth thereon shall have been submitted to the applicable Trademark registration authority in the jurisdictions where such Trademarks are currently registered.
(e)Certificate of Executive Officers. Buyer shall have received a certificate executed by the Seller Management and each of the Target Entities by the most senior executive officer of each of the Target Entities certifying that the conditions set forth in this Section 7.02 have been satisfied.
(f)Secretary's Certificate. Buyer shall have received from the Corporate Secretary or equivalent officer of each Target Entity, a certificate having attached thereto (i) the corporate charter, bylaws and other organizational documents of each Target Entity, and (ii) resolutions approved by each Target Entity's (A) board of directors or similar governing body (if applicable) and (B) shareholders (if applicable), in each case authorizing the transactions contemplated hereby.
(g)Third Party Consents. All consents of any Governmental Entity and any third party under any Material Contract that are required or reasonably requested by Buyer in connection with the transactions contemplated hereby shall have been obtained in writing, and copies thereof delivered to the Buyer in a form reasonably satisfactory to the Buyer.
(h)Lender Consent. Buyer shall have received the written consent of Buyer's Lender to the transactions contemplated hereby.
(i)Opinion of Counsel to the Target Entities. Buyer shall have received a legal opinion of counsel to the Target Entities, addressed to the Buyer, in the substantially the forms attached hereto as Schedule 7.02(i).
(j)Advice of Counsel to the Parent and Buyer. Parent and Buyer shall have been advised by its Cayman Islands counsel that the Sanction is final, binding and non-appealable, and that by virtue of the Sanction, Buyer shall receive marketable title to the Target Equity free and clear of Liens.
(i)Acquisition Financing. The Acquisition Financing shall have been obtained, and Buyer shall have been advanced funds by its lender in an amount sufficient to pay the amounts required pursuant to Section 2.02(a), below.

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(k)Waiver of Management Incentive Plan. In consideration of their right to receive the Management Incentive Payments hereunder, the participants in the Seller's outstanding management incentive plan shall have waived their rights to receive payment from the Seller under such management incentive plan.
(l)No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any change, event, circumstance or development that has had or is reasonably likely to have, a Material Adverse Effect.
(m)Encumbrances. Each Encumbrance set forth on Section 4.11(iii) shall have been released, and evidence satisfactory to the Buyer shall have been delivered to the Buyer.
(n)Updated Disclosure Schedules. The Buyer shall be satisfied in its sole discretion with any disclosures contained on any Updated Disclosure Schedules.
(o)Joinders. Any Joinders, as defined below, reasonably requested by the Buyer shall have been executed and delivered by the applicable Seller Indemnitors and/or Seller Releasing Parties thereto.
Section 7.03Conditions to Obligations of Seller. The obligations of Seller to consummate the Transaction contemplated by this Agreement shall be subject to the fulfillment or Seller's waiver, at or prior to the Closing, of each of the following conditions:
(a)Representations and Warranties. (i) The representations and warranties of the Parent and the Buyer set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), and (ii) the Seller shall have received at the Closing certificates signed on behalf of the Parent and the Buyer by a designated director of the Parent to the effect that such Person has read this Section 7.03 and the conditions set forth in this Section 7.03 have been satisfied

(b)Performance of Obligations. The Parent and Buyer shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and the Seller shall have received certificates signed on behalf of the Parent and the Buyer by a designated officer of the Parent and the Buyer to such effect.

ARTICLE VIII
INDEMNIFICATION
Section 8.01Survival. All representations and warranties contained in this Agreement shall survive the Closing for a period of fifteen (15) months after the Closing; provided that the Fundamental Representations shall survive in perpetuity and Section 4.12 shall survive until the expiration of the applicable statute(s) of limitations. The covenants

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and agreements of the parties shall survive the Closing until fully performed in accordance with their terms.
Section 8.02Indemnification
(a) Indemnification by the Contributories. Pursuant to clause 5.2(b) of the Distribution Agreement, the Contributories (as that term is defined therein and modified by clause 5.2(b)) other than the Employees (as defined in the recitals to the Distribution Agreement), shall, on behalf of the Seller (the “Seller Indemnitors”), severally but not jointly and on a pro rata basis, indemnify and defend Buyer and its Affiliates and their respective stockholders, officers, directors, employees, successors and assigns (the “Buyer Indemnitees”) against, and shall hold them harmless from, any and all Losses resulting from, based on, arising out of, or incurred by any Buyer Indemnitee in connection with (i) the breach of any representation and warranty of the Seller Management or Target Entities contained in this Agreement, (ii) the breach of any agreement of the Seller contained in this Agreement, (iii) any failure to satisfy in cash pursuant to the Distribution Agreement all amounts finally adjudicated by the Official Liquidators as owing to trade creditors of the Seller, and (iv) the positive difference, if any, between the finally calculated and reconciled amount of Seller Tax Obligations and the estimated Seller Tax Obligations referenced in Section 2.02(a)(iii), above and it is acknowledged by Buyer that Seller shall incur no liability pursuant to this Section 8.02.
By signing the Distribution Agreement and by signing a separate Joinder to this Agreement, each of the Seller Indemnitors agrees to indemnify and defend the Buyer Indemnitees as provided in this Section 8.02.
(b)Indemnification by Parent and Buyer. Each of the Parent and the Buyer shall indemnify and defend the Seller and its Affiliates, and such respective stockholders, officers, directors, employees, successors and assigns (the “Seller Indemnitees”, and together with the Buyer Indemnitees, the “Indemnitees”) against, and shall hold them harmless from, any and all Losses resulting from, based on, arising out of, or incurred by any Seller Indemnitee in connection with (i) the breach of any representation and warranty of the Parent, the Buyer or its Affiliates contained in this Agreement, and (ii) the breach of any covenant or agreement of the Parent, the Buyer or its Affiliates contained in this Agreement.
(c)Limitations on Indemnification.
(i)Other than in instances of fraud, intentional misrepresentation, or willful misconduct or breach of any of the Fundamental Representations, no Indemnitee shall be entitled to recover any Losses for breach of the representations and warranties of any party contained herein, unless such Indemnified Party's cumulative aggregate claims therefor exceed two hundred thousand dollars ($200,000) (the “Basket”)), in which case the Indemnitee shall be entitled to recover all Losses. Further, other than in instances of fraud, intentional misrepresentation, or willful misconduct or breach of any of the Fundamental Representations, in no event shall either one of the following conditions take place: (A) the cumulative aggregate liability of the Seller Indemnitors under this Agreement

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exceed five percent (5%) of the Total Purchase Consideration, allocated between cash and Warrants in the same proportion as the form of consideration paid for the Delivered Purchase Consideration, or (B) the liability of any Seller Indemnitor under this Agreement exceed five percent (5%) of the pro rata portion (calculated based on the proportion of Delivered Purchase Consideration finally determined to be payable (without the possibility of appeal) to or received by such Seller Indemnitor) of the Total Purchase Consideration, allocated between cash and Warrants in the same proportion as the form of consideration paid for the Delivered Purchase Consideration. For each Seller Indemnitor, in the event of a breach of any of the Seller’s Fundamental Representations, or in instances of fraud, intentional misrepresentation, or willful misconduct that are not directly attributable to such Seller Indemnitor, including without limitation, any indemnification obligations of the Seller Indemnitors under clause (iv) of Section 8.02(a) of this Agreement or any indemnification due to a breach of Section 2.04(5) of this Agreement, then the liability of such Seller Indemnitor shall in no event exceed 100% of the consideration that it has received pursuant to the terms of this Agreement and/or the Distribution Agreement. However, in instances of fraud, intentional misrepresentation, or willful misconduct on the part of a Seller Indemnitor that are the direct and proximate cause of Losses to Buyer Indemnitees, then the foregoing limitations on indemnification shall not apply to the liability of only such Seller Indemnitor(s) that are the direct and proximate cause of such Losses of the Buyer Indemnitees. Buyer Indemnitees shall first seek indemnification from the Escrow Fund (as defined in the Escrow Agreement), and shall not seek indemnification from the Seller Indemnitors until the Escrow Fund is exhausted.
(ii)Other than in instances of fraud, intentional misrepresentation, or willful misconduct or breach of any of the Fundamental Representations, in no event shall the cumulative aggregate liability of the Parent and the Buyer under this Agreement or otherwise exceed five percent (5%) of the Total Purchase Consideration.
(iii)The amount of any Loss for which indemnification is provided pursuant to this Section 8.02 shall be net of (i) any amounts actually recovered by the Indemnitee under any insurance policy with respect to such Loss, and (ii) any reserves used in connection with the calculation of Closing Working Capital pursuant to Section 2.04.
(iv)Upon making any payment to an Indemnitee for any indemnification claim pursuant to this Agreement, the Indemnifying Party shall be subrogated, to the extent of such payment, to any rights which the Indemnitee may have against any third parties with respect to the subject matter underlying such indemnification claim and the Indemnitee shall assign any such rights to the Indemnifying Party.
(iv) Notwithstanding anything to the contrary contained in this Agreement, no Buyer Indemnitee shall have any right to indemnification under this Section 8.02 to the extent on a dollar for dollar basis such Losses are included in the calculation of Closing Working Capital. In addition, no party shall be entitled to recover Losses relating to any matter arising under any provision of this Agreement solely to the extent and in the amount

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dollar for dollar such party has actually already recovered the same Losses with respect to the same matters underlying such Losses pursuant to another provision of this Agreement.
(v) For the avoidance of doubt, the Seller will not incur any liability after completion of the Transaction.
(d)     Indemnification Procedure.
(i)Notice of Claim. Any Person making a claim for indemnification pursuant to this Agreement (i.e. an Indemnitee) must give the party from whom indemnification is sought (the “Indemnifying Party”) written notice of such claim (an “Indemnification Claim Notice”) promptly after the Indemnitee suffers, sustains or becomes subject to any Loss or receives any written notice of any action, lawsuit, proceeding, investigation or other claim (a “Proceeding”) against or involving the Indemnitee by any third party or otherwise discovers the liability, obligation or facts giving rise to such claim for indemnification. Such notice must contain, in reasonable detail, a description of the claim and the nature and amount (including the calculation) of such Loss. The failure to promptly give any such notice shall not relieve the Indemnifying Party from any liability hereunder with respect to the subject matter of such claim except to the extent that the Indemnifying Party has actually been damaged by such failure.
(ii)Control of Defense, Conditions. The obligations of an Indemnifying Party under this Section 8.02 with respect to Losses arising from claims of any third party that are subject to the indemnification provided in Sections 8.02(a) and 8.02(b) above shall be governed by the following additional terms and conditions:
(a)At its option, an Indemnifying Party shall be entitled to assume control of the defense of any claim and may appoint as lead counsel of such defense any legal counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnitee; provided, however, that the Indemnifying Party shall have assumed control of such defense within thirty (30) days of the delivery of the Indemnification Claim Notice;
(b)If the Indemnifying Party has assumed control of the defense in accordance with the terms of this Agreement, then the Indemnifying Party shall have the right to settle, compromise or defend such claim at the Indemnifying Party's sole expense, provided that in conducting such defense, settlement and compromise: (x) the Indemnifying Party shall cause its counsel to consult with the Indemnitee and, if applicable, its counsel, and keep them reasonably advised of the progress of the defense, settlement and compromise; (y) such settlement shall involve only monetary damages and provide for a release of the Indemnitee, and (z) the Indemnifying Party shall promptly pay the full amount of any Losses resulting from such claim. Except in accordance with the above terms, any settlement or compromise relating to the defense of a claim shall require the written consent of the Indemnitee, which consent shall not be unreasonably withheld, conditioned or delayed;
(c)Notwithstanding the above, the Indemnitee shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose;

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provided, however, that such employment shall be at the Indemnitee's own expense, unless the Indemnifying Party has failed to assume the defense and employ counsel in accordance with this Section 8.02(c), in which case the fees and expenses of the Indemnitee's counsel shall be paid when and as incurred by the Indemnifying Party; and
(d)So long as the Indemnifying Party is contesting any such claim in good faith in an active and diligent manner in accordance with the foregoing requirements, the Indemnitee shall not pay or settle any such claim. Notwithstanding the foregoing, the Indemnitee may pay or settle any such claim at any time, provided that the Indemnitee waives any right to indemnity in relation thereto by the Indemnifying Party.
(iii)     Manner of Payment. Any indemnification obligations pursuant to this Agreement shall be paid within fifteen (15) Business Days after the final determination thereof. Any payments required to be paid to Buyer or a Buyer Indemnitee under this Agreement, shall first be satisfied from the Escrow Fund and paid in accordance with the Escrow Agreement. Any payments required to be paid to an Indemnified Party under this Agreement shall be paid in cash, by wire transfer of immediately available funds, to an account designated by the Indemnified Party.
Section 8.03Exclusive Remedy. Except as set forth in Section 10.11 of this Agreement and except in the event of fraud, willful misconduct, or intentional or grossly negligent misrepresentation, the indemnification provisions of this Agreement shall constitute the sole and exclusive remedy of the parties with respect to any claim arising out of or relating to a breach of a representation, warranty, covenant or agreement set forth in this Agreement or in connection with the Transaction or otherwise relating to this Agreement.
ARTICLE IX
TERMINATION
Section 9.01Termination by Mutual Consent. This Agreement may be terminated and the Transaction may be abandoned at any time prior to the Closing Date, whether before or after the Sanction referred to in Sections 4.03(iii), 6.01(iii) and 7.01(a), by mutual written consent of the Seller and the Buyer.
Section 9.02Termination by Either the Buyer or the Seller. This Agreement may be terminated and the Transaction may be abandoned at any time prior to the Closing Date, by the Buyer, or by the Seller, if: (a) the Sanction shall not have been obtained; (b) whether before or after the Sanction, any Injunction permanently restraining, enjoining or otherwise prohibiting consummation of the Transaction shall become final and non-appealable or (c) the Closing has not occurred on or prior to September 22, 2016; provided, that the right to terminate this Agreement pursuant to Section 9.02(a) shall not be available to any party if the circumstances described in Section 9.02 (a) were caused by, such party's failure to comply with its obligations under this Agreement.

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Section 9.03Termination by the Seller. This Agreement may be terminated and the Transaction may be abandoned at any time, by action of the Joint Official Liquidators if there has been a material breach of any representations, warranties, covenants or agreements made by the Buyer in this Agreement, or any such representations and warranties shall have become untrue or incorrect after the execution of this Agreement, such that (i) the condition set forth in either Section 7.03(a) or 7.03(b) would not be satisfied and (ii) such material breach or failure is not cured within 30 Business Days following receipt of written notice of such breach or failure from the Seller; provided, however, that the failure of any such condition to be capable of satisfaction is not the result of a material breach of this Agreement by the Seller.
Section 9.04Termination by the Buyer. This Agreement may be terminated and the Transaction may be abandoned at any time prior to the Closing Date by action of the board of directors of the Buyer if there has been a material breach of any other representation, warranty, covenant or agreement made by the Seller Management or Target Entities in this Agreement, or any such representation and warranty shall have become untrue or incorrect after the execution of this Agreement, such that (i) the condition set forth in either Section 7.02(a) or 7.02(b) would not be satisfied and (ii) such material breach or failure to be true or correct is not cured within 30 Business Days following receipt of written notice of such breach or failure from the Buyer; provided, however, that the failure of any such condition to be capable of satisfaction is not the result of a material breach of this Agreement by the Buyer.
Section 9.05Effect of Termination and Abandonment. In the event of termination of this Agreement and the abandonment of the Transaction pursuant to this Article IX, this Agreement shall become void and of no effect with no liability to any Person on the part of any party hereto (or of any of its Representatives or Affiliates); provided, however, and notwithstanding anything in the foregoing to the contrary, that (i) no such termination shall relieve any party hereto of any liability or damages to the other party hereto resulting from any willful or intentional material breach by a party of its representations, warranties, covenants or other agreements set forth in this Agreement and (ii) the provisions set forth in this Section 9.05 and Section 8.02 shall survive the termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 10.01Seller Release. Effective as of the Closing, Seller, for itself, its Affiliates, and for its successors and assigns (the “Seller Releasing Parties”), hereby releases, acquits and absolutely forever discharges each of Parent, Buyer and their Affiliates, successors and assigns and their respective past, present and future employees, officers, directors, stockholders, licensees, agents, administrators, insurers and attorneys (the “Buyer Released Parties”) from and against, and covenants not to sue upon, all Seller Released Matters. “Seller Released Matters” means any and all claims, suits, demands, damages, losses, debts, liabilities, judgments, obligations, costs, expenses (including reasonable attorneys' and accountants' fees and expenses), actions and causes of action of any nature whatsoever (including any claims based on or relating to infringement, misappropriation of

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trade secrets, breach of contract, breach of the covenant of good faith and fair dealing, misappropriation of confidential information or any other nondisclosure obligation that may exist between the parties prior to the Closing), whether now known or unknown, suspected or unsuspected, that the Seller Releasing Parties now have, or at any time previously had, or shall or may have in the future, in whatever capacity, against the Buyer Released Parties, (i) arising or accruing on or before the Closing Date, including any unpaid Transaction Expenses, in connection with or otherwise in relation to the transactions contemplated by this Agreement or (ii) arising, accruing, or that could have accrued from or in connection with any asset owned by or licensed to Seller, any of the Target Entities or their Affiliates in each case that is being acquired by the Buyer, prior to or as of the Closing Date; provided that, notwithstanding the foregoing or any other provision in this Article X, Seller Released Matters shall in no manner prevent Seller from enforcing any right of Seller contained in this Agreement. It is the intention of Seller, for itself and behalf of the Seller Releasing Parties, in executing this Agreement, and in giving and receiving the consideration called for herein, that the release contained in this Section 10.01 shall be effective as a full and final accord and satisfaction and general release of and from all Seller Released Matters and the final resolution by the Seller Releasing Parties and the Buyer Released Parties of all Seller Released Matters. Seller, for itself and on behalf of the other Seller Releasing Parties, acknowledges that it has consulted with legal counsel and shall be deemed to have waived, and shall have expressly, knowingly and intentionally waived and relinquished, but only as to the Seller Released Matters, to the fullest extent permitted by law, the provisions, rights and benefits of Section 1542 of the California Civil Code, which provides that:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
Seller, for itself and on behalf of the other Seller Releasing Parties, also shall be deemed to have waived, and shall have waived and relinquished, to the fullest extent permitted by applicable Laws, any and all provisions, rights and benefits conferred by any applicable Laws which is similar, comparable or equivalent to Section 1542 of the California Civil Code, but only as to the Seller Released Matters. Seller, for itself and on behalf of the other Seller Releasing Parties, further agrees and acknowledges that each may hereafter discover facts in addition to or different from those which are known or believed to be true with respect to the subject matter of this release, but that each separately intends to, and does, hereby fully, finally and forever settle and release any and all claims as described above, but only as to the Seller Released Matters, known or unknown, suspected or unsuspected, which now exist, or heretofore existed, or may hereafter exist, and without regard to the subsequent discovery or existence of such additional or different facts. Seller hereby represents to Buyer that the Seller Releasing Parties have not voluntarily or involuntarily assigned or transferred or purported to assign or transfer, and covenants that it will not voluntarily or involuntarily assign or transfer or purport to assign or transfer, to any Person any Seller Released Matters and that no Person other than Seller has any interest in any Seller Released Matter by law or contract. The

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invalidity or unenforceability of any part of this Section 10.01 shall not affect the validity or enforceability of the remainder of this Section 10.01, which shall remain in full force and effect.
Section 10.02Joinder/Assumption Agreements. On or prior to the Closing, each of the Seller Indemnitors and any Seller Releasing Parties identified by Buyer prior to the Closing shall sign a joinder or assumption agreement, in a form satisfactory to the Buyer in its reasonable discretion, pursuant to which such Seller Indemnitors and such Seller Releasing Parties shall agree to the covenants and/or waivers applicable to such Seller Indemnitors and/or Seller Releasing Parties set forth in Section 6.10(iv), Section 8.02(a) and Section 10.01 (collectively, the “Joinders”).
Section 10.03Modification or Amendment. This Agreement may be amended with the approval of the board of directors of the Buyer and of the Joint Official Liquidators at any time prior to the Sanction of this Agreement by the Grand Court. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.
Section 10.04Waiver of Conditions. The conditions to each of the parties' obligations to consummate the Transaction are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Laws.
Section 10.05Counterparts; Signatures. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. This Agreement may be executed and delivered by facsimile transmission or by e-mail delivery of a “.pdf ' format data file, and in the event this Agreement is so executed and delivered, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf ' signature page were an original thereof.
Section 10.06Governing Law and Venue; Waiver of Jury Trial.
(1) This agreement shall be deemed to be made in and in all respects shall be interpreted, construed and governed by and in accordance with the Laws of Delaware without regard to the conflicts of law principles thereof.
(i)EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.
(ii)Except for claims seeking injunctive or other equitable relief, any controversy or claim arising out of or relating to this Agreement or a breach thereof, shall be settled by binding, confidential arbitration in Los Angeles, California (or such other

46


location as may be agreed to by the parties) to be administered by the AAA in accordance with its then-prevailing Commercial Rules of Arbitration. Buyer and Seller shall select an arbitrator from a list provided by the AAA that is mutually satisfactory to them. If Buyer, on the one hand, and Seller, on the other, are unable to agree on an arbitrator, then each shall choose an arbitrator from a list provided by the AAA. The two arbitrators so selected shall then select a third arbitrator mutually satisfactory to them from the list provided by the AAA. The single arbitrator so selected by the aforesaid procedure shall hear the dispute and decide it. The arbitrator selected shall not be a present or former officer, employee, consultant or representative of any of the parties or any of their Affiliates. The arbitrator shall have a background and training in the general areas of law covered by this Agreement. The arbitrator shall have the right to award costs, fees and expenses including, without limitation, the arbitrator's fees and reasonable attorneys' fees, to the prevailing party. A party shall be entitled to have a judgment entered on the determination or decision of the arbitrator in any court of competent jurisdiction. The award of the arbitrator shall be binding and final on all parties.
Section 10.07Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, by facsimile or electronic mail or overnight courier:
If to the Buyer:
Remark Media, Inc.
Six Concourse Parkway, Suite 1500 Atlanta, GA 30328
Attn: Mr. Douglas M. Osrow
E-mail: dosrow@remarkmedia.com
 
with a copy to (which shall not constitute notice):
Eisner Jaffe, a professional corporation
9601 Wilshire Blvd, Suite 700
Beverly Hills, CA 90210
Attn: Michael Eisner, Esq. and Sander C. Zagzebski, Esq.
E-mail: meisner@eisnerlaw.com and szagzebski@eisnerlaw.com


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If to the Seller:
Attn: mailto:
China Branding Group (in Official Liquidation)
c/o Grant Thornton Specialist Services Ltd,
10 Market Street #765, Camana Bay,
Grand Cayman, Cayman Islands KY1 9006
Attn: Hugh Dickson and David Bennett (Joint Official Liquidators)

Email: hugh.dickson@uk.gt.com
Email: mike.saville@uk.gt.com
Email: david.bennett@cn.gt.com

with a copy to (which shall not constitute notice):

Sheppard Mullin Richter & Hampton Wheelock Square
1717 West Nanjing Road, Suite 2601 Shanghai, China 200040
Attn: Don Williams
Email: dwilliams@smrh.com

Walkers
190 Elgin Avenue
George Town
Grand Cayman KY1-9001
Cayman Islands
Attn: Chris Keefe
Email: chris.keefe@walkersglobal.com


If to the Seller Management:

Adam Roseman
11400 West Olympic Boulevard,
Suite 400,
Los Angeles
CA 9064
United States of America
Email: adam@chinabrandinggroup.com

or to such other address, electronic mail address, or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices,

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requests and other communications shall be deemed properly delivered, given and received (i) upon receipt when delivered by hand, (ii) one business day after being sent by courier or express delivery service or by facsimile or electronic mail, or (iii) three business days after being sent by first-class certified mail, return receipt requested, provided that in each case the notice or other communication is sent to the address or facsimile number set forth beneath the name of such party above (or to such other address or facsimile number as such party shall have specified in a written notice given to the other parties hereto).
Section 10.08Entire Agreement. Except as set forth in Section 6.09 (Confidentiality Agreement), this Agreement (including any schedules and exhibits hereto), constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof, including without limitation the Original Agreement and the Prior Agreement.
Section 10.09No Third Party Beneficiaries. Except as expressly set forth in Section 6.07 (Indemnification; Directors' and Officers' Insurance) of this Agreement, this Agreement is not intended to, and does not, confer upon any Person other than the parties who are signatories hereto any rights or remedies hereunder.
Section 10.10Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable the remaining provisions hereof, shall, subject to the following sentence, remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the Transaction contemplated hereby is not affected in any manner adverse to either party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.
Section 10.11Interpretation; Absence of Presumption.
(1) For the purposes hereof, (1) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (2) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including the schedules and annexes hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph, and clause references are to the Articles, Sections, paragraphs, and clauses to this Agreement unless otherwise specified; (3) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation” unless the context otherwise requires or unless otherwise specified; (4) the word “or” shall not be exclusive; (5) provisions shall apply, when appropriate, to successive events and Transaction; (6) all references to any period of days shall be deemed

49


to be to the relevant number of calendar days unless otherwise specified; and (7) the “$”sign shall each mean the lawful currency of the United States of America.
(i)The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
Section 10.12Assignment. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that this Agreement shall not be assignable by any party hereto without the express written consent of the other parties hereto; provided that the Buyer may assign its rights to any Affiliate of the Parent without the prior consent of any other party hereto. Any purported assignment in violation of this Agreement will be void ab initio.
Section 10.13Attorneys' Fees. In any action at law or suit in equity to enforce this Agreement or the rights of any of the parties hereunder, the prevailing party in such action or suit shall be entitled to receive a reasonable sum for its attorneys' fees and all other reasonable costs and expenses incurred in such action or suit.
Section 10.14Remedies. Notwithstanding any other provision of this Agreement (other than Sections 9.05 and 10.15), the parties hereto agree that irreparable damage would occur, damages would be difficult to determine and would be an insufficient remedy and no other adequate remedy would exist at law or in equity, in each case in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached (or any party hereto threatens such a breach). It is accordingly agreed that in the event of a breach or threatened breach of this Agreement, the other parties hereto shall be entitled, subject to applicable Law, to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement. Each party hereto irrevocably waives any defenses based on adequacy of any other remedy, whether at law or in equity, that might be asserted as a bar to the remedy of specific performance of any of the terms or provisions hereof or injunctive relief in any action brought therefor by any other party hereto.
Section 10.15Exclusion of Liability. Notwithstanding any other term in this Agreement (whether express or implied) it is irrevocably agreed and acknowledged by the Buyer and the Parent and each of them that; (a) neither the Joint Official Liquidators, their agents, employees, firm, partners, members, advisers nor representatives shall incur any personal liability whatsoever under this Agreement or under any deed, instrument or document entered into under or in connection with it; (b) they do not enter into this Agreement on the basis of and do not rely, and has not relied, upon any statement, representation or warranty (in any case whether oral or written, and including, without limitation, warranties, conditions as to title, rights to dispose, quiet possession, freedom from encumbrances, merchantable or satisfactory quality, fitness for purpose and description) made or given by the Seller or the Joint Official Liquidators or by any of their employees, advisers or agents,

50


or, by any other person (whether a party to this Agreement or not) except those expressly set forth or referred to in this Agreement; (c) except as otherwise required by law (and then only to that extent) the Seller and the Joint Official Liquidators and each of them shall not be liable for any loss or damage of any kind whatsoever, consequential or otherwise, arising out of or due to or caused by any defects or deficiencies in any of the Target Equity and (d) the terms and conditions of this Agreement and the exclusions contained in it are fair and reasonable in the context of a sale of the assets of a company in official liquidation, and in circumstances where it is usual that no representations and/or warranties are given by the Joint Official Liquidators and/or the Seller.


[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
CHINA BRANDING GROUP LTD (IN OFFICIAL LIQUIDATION)

By:
/s/ Hugh Dickson
acting by Hugh Dickson, for and on behalf of the Joint Official Liquidators, as agent of and with no personal liability

THE JOINT OFFICIAL LIQUIDATORS

/s/ Hugh Dickson
Name: Hugh Dickson, for and on behalf of the Joint Official Liquidators

KANKAN LIMITED

/s/ Kai-Shing Tao
Acting By Kai-Shing Tao

REMARK MEDIA, INC

/s/ Douglas Osrow
Acting By Douglas Osrow


[Signature Page to Asset and Securities Purchase Agreement]


RAAD PRODUCTIONS, LLC

/s/ Adam Roseman
Acting By Adam Roseman, Director

CHINA SNS GROUP LIMITED

/s/ Adam Roseman
Acting By Adam Roseman

FANSTANG (SHANGHAI) ENTERTAINMENT INFORMATION CONSULTING CO. LTD.

/s/ Adam Roseman
Acting By Legal Representative




[Signature Page to Asset and Securities Purchase Agreement]
Exhibit


THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAW AND, ACCORDINGLY, MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
REMARK MEDIA, INC.
WARRANT TO PURCHASE COMMON STOCK
[ISSUANCE DATE]
FOR VALUE RECEIVED, REMARK MEDIA, Inc., a Delaware corporation (the “Company”), hereby certifies that, subject to the terms and conditions hereof, [HOLDER] (the “Holder”), its designees or permitted assigns, is entitled to purchase from the Company [SHARES] ([SHARE NUMBER]) fully paid and nonassessable shares (as adjusted pursuant to the terms hereof, the “Warrant Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”), at a price per Warrant Share of $10.00, subject to adjustment as further set forth herein (the “Warrant Price”), payable in accordance with Section 1(c) hereof.
This Warrant is issued by the Company in connection with that certain Second Amended and Restated Asset and Securities Purchase Agreement, dated as of September 20, 2016 (together with the schedules and exhibits thereto, the “Purchase Agreement”), by and among the Company, KanKan Limited, a company organized under the laws of the British Virgin Islands, China Branding Group Limited (In Provisional Liquidation), an exempted company organized under the laws of the Cayman Islands, by and through its Joint Provisional Liquidators (“CBG”), Adam Roseman, an individual, the Target Entities and the other parties listed on the signature page thereto, pursuant to which the Company has agreed to purchase certain assets and securities of CBG and the Target Entities. Except as otherwise specified herein, capitalized terms in this Warrant shall have the meanings set forth in the Purchase Agreement.
This Warrant is issued subject to the following terms and conditions:
1.Term and Exercise of Warrants; Issuance of Certificates.
(a)Subject to the Company’s prior receipt of Shareholder Approval (as defined below) in accordance with Section 5, the Holder may exercise this Warrant at any time or from time to time, for all or any part of the Warrant Shares (but not for a fraction of a share) that may be purchased hereunder, as that number may be adjusted pursuant to Section 3 below, prior to 5:00 p.m. Eastern Time on [7 YEAR ANNIVERSARY OF THE CLOSING DATE] (the “Expiration Date”). The Company agrees that the Warrant Shares purchased under this Warrant shall be and are deemed to be issued to the Holder as the record owner of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered, properly endorsed, the

1



completed and executed Form of Subscription in the form attached hereto delivered, and payment made for such Warrant Shares made in accordance with Section 1(c) below (the “Date of Exercise”). Certificates for the Warrant Shares so purchased, together with any other securities or property to which the Holder is entitled upon such exercise, shall be delivered to the Holder by the Company at the Company’s expense as soon as practicable after the rights represented by this Warrant have been so exercised, but in any event not later than ten (10) days following the Date of Exercise. Each stock certificate so delivered shall be registered in the name of the Holder and issued with legends in substantially the form placed on the front of this Warrant. In case of a purchase of less than all the Warrant Shares that may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver to the Holder within a reasonable time a new Warrant or Warrants of like tenor for the balance of the Warrant Shares purchasable under this Warrant.
(b)The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same. Nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Warrant Shares upon exercise of this Warrant as required pursuant to the terms hereof.
(c)The Holder shall pay the Warrant Price by instructing the Company to issue Warrant Shares then issuable upon exercise of all or any part of this Warrant on a net basis only, such that, without payment of any cash consideration or other immediately available funds, the Holder shall surrender this Warrant in exchange for the number of Warrant Shares as is computed using the following formula:
https://cdn.kscope.io/acc2b72d5562694d162ccd024a302001-cbgwarrantformula.jpg
Where
X = the number of Warrant Shares to be issued to the Holder;
Y = the total number of Warrant Shares for which the Holder has elected to exercise this Warrant pursuant to Section 1(a);
A = the Fair Market Value (as defined below) of one Warrant Share as of the applicable Date of Exercise; and
B = the Warrant Price.
For purposes of this Warrant, “Fair Market Value” means (a) the closing price of the Common Stock on the applicable date reported on The Nasdaq Stock Market LLC or such other principal national securities exchange in the United States on which it is then listed, or, if such date is not a trading day, the last prior day on which the Common Stock was so traded; (b) if the Common Stock is not so listed, the mean between the highest bid and lowest asked prices per share of the Common Stock reported on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or

2



association on the applicable date; or (c) if such bid and asked prices are not available, such value determined by the Company’s Board of Directors (the “Board”) in good faith.
2.Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that, subject to the Company’s prior receipt of Shareholder Approval in accordance with Section 5, all Warrant Shares will, upon issuance and payment of the Warrant Price in accordance with Section 1(c), be duly authorized, validly issued, fully paid and nonassessable, and free of all preemptive rights, liens and encumbrances, except for restrictions on transfer provided for herein. The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of providing for the exercise of the rights to purchase all Warrant Shares granted pursuant to this Warrant, such number of shares of Common Stock as shall, from time to time, be sufficient therefor.
3.Adjustment of Warrant Price and Number of Shares. The Warrant Price and the total number of Warrant Shares shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3.
(a)Merger, Sale of Assets, Etc. If at any time while this Warrant, or any portion hereof, is outstanding and unexpired there shall be (i) a reorganization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation, partnership, limited liability company, or other entity in which the Company is not the surviving entity, or a merger in which the Company is the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Warrant Price, the number of shares of stock or other securities or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the Warrant Shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 3. If the per share consideration payable to the Holder for securities in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Board. In all events, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.
(b)Reclassification, Etc. If the Company, at any time while this Warrant or any portion hereof remains outstanding and unexpired, by reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same

3



or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Warrant Price shall be appropriately adjusted, all subject to further adjustment as provided in this Section 3.
(c)Split, Subdivision or Combination of Securities. If the Company, at any time while this Warrant or any portion hereof remains outstanding and unexpired, shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, (i) the number of securities as to which purchase rights under this Warrant exist shall be proportionately increased and the Warrant Price for such securities shall be proportionately decreased in the case of a split or subdivision or (ii) the number of securities as to which purchase rights under this Warrant exist shall be proportionately decreased and the Warrant Price for such securities shall be proportionately increased in the case of a reverse split or combination.
(d)Adjustments for Dividends in Stock or Other Securities or Property. If, while this Warrant or any portion hereof remains outstanding and unexpired, the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible holders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 3.
4.Exchange.
(a)Subject to the limitations provided in this Section 4 and subject to the Company’s prior receipt of Shareholder Approval in accordance with Section 5, if the closing price of the Common Stock does not equal or exceed $10.70 (to be adjusted in the event of any split, subdivision or combination of the Common Stock, or any similar corporate event, in order to prevent dilution or enlargement of the Holder’s rights) (the “Limit”) for any 15 trading days (which may be non-consecutive) during a period of 30 consecutive trading days at any time on or prior to the [Fourth Anniversary of the Closing Date](the “Exchange Date”), on the Exchange Date this Warrant may be exchanged for shares of Common Stock on the terms set forth in Section 4(b) below (the “Exchange”) by the Holder providing written notice of its election to consummate the Exchange to the Company on or prior to the Exchange Date. For the avoidance of doubt, if the closing price of the Common Stock equals or exceeds the Limit for the period described above at any time on or prior to the Exchange Date, the Exchange shall not be permitted hereunder.

4



(b)Upon the occurrence of the Exchange in accordance with the terms hereof (i) this Warrant shall be null and void, (ii) the Holder shall promptly surrender this Warrant to the Company and (iii) the Company shall issue to the Holder such number of shares of Common Stock equal to (x) the Warrant Shares otherwise issuable under this Warrant, multiplied by (y) $0.35 (to be adjusted in the event of any split, subdivision or combination of the Common Stock, or any similar corporate event, in order to prevent dilution or enlargement of the Holder’s rights), divided by (z) the volume weighted average price (“VWAP”) of the Common Stock during the thirty (30) trading days ending on the Exchange Date, rounded up to the next whole share. Certificates for such shares of Common Stock shall be delivered to the Holder by the Company at the Company’s expense as soon as practicable after the Exchange Date, but in any event not later than ten (10) days thereafter.
(c)Notwithstanding the foregoing, in the event that, prior to the Exchange Date, there occurs (i) a reorganization, (ii) a merger or consolidation of the Company with or into another entity in which the Company is not the surviving entity, or a merger in which the Company is the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other person (each, a “Corporate Action”), and if the Exchange were deemed to have been occurred immediately prior to such Corporate Action the Holder would have received a greater number or amount of securities or other property than what the Holder would be entitled to receive under Section 3(a) hereof, then the Exchange shall be deemed to have occurred immediately prior to such Corporate Action without any further action by the Holder.
5.Shareholder Approval Requirement. This Warrant shall not be exercisable, the Exchange shall not occur, and the Company shall not otherwise issue to the Holder any securities of the Company in accordance with the terms of this Warrant, unless and until the Company obtains Parent Shareholder Approval as defined in Section 6.03 of the Purchase Agreement (“Shareholder Approval”). For avoidance of doubt, the limitations contained in this Section 5 shall apply to any successor Holder of this Warrant.
6.No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder the right to vote or to consent to receive notice as a stockholder of the Company on any other matters or any rights whatsoever as a stockholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the Warrant Shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised.
7.Compliance with the Securities Act. The Holder, by acceptance of this Warrant, agrees that this Warrant is being acquired for its own account and not for any other person or persons, for investment purposes and that it will not offer, sell, or otherwise dispose of this Warrant except under circumstances that will not result in a violation of the Securities Act or any applicable state securities laws.
8.Transferability. The Holder, by acceptance of this Warrant, acknowledges that this Warrant and any securities obtainable upon exercise of this Warrant have not been registered for

5



sale under federal or state securities laws and are being offered and sold to the Holder pursuant to one or more exemptions from the registration requirements of such securities laws. In the absence of an effective registration of such securities or an exemption therefrom, any certificates for such securities shall bear the applicable legend set forth on the first page hereof. The Holder understands that it may bear the economic risk of its investment in this Warrant and any securities obtainable upon exercise of this Warrant for an indefinite period of time. The Holder may not assign or transfer any of its rights or obligations under this Warrant except to any of its Affiliates (as defined in the Purchase Agreement) upon written notice to the Company and in accordance with all applicable securities laws, including but not limited to the Securities Act. To the extent permitted hereunder, this Warrant shall be deemed transferred upon surrender of this Warrant at the principal office of the Company, together with a written Form of Assignment and Assumption in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any applicable transfer taxes. The Company agrees that it shall execute, or cause to be executed, such documents, instruments and agreements as the Holder shall reasonably deem necessary to effect the foregoing. In addition, at the request of the Holder and any Assignee (as defined below), the Company shall issue one or more new Warrants, as applicable, to any such Assignee and, if the Holder has retained any of its rights and obligations under this Warrant following such assignment, to the Holder, which new Warrants shall reflect the rights held by such Assignee and the Holder after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation and any other documentation reasonably requested by the Company in connection with such assignment, and the payment by the Assignee of the purchase price agreed to by the Holder and such Assignee, such Assignee shall be a holder of this Warrant shall have all of the rights and obligations of the Holder hereunder to the extent that such rights and obligations have been assigned by the Holder pursuant to the assignment documentation between the Holder and such Assignee, and the Holder shall be released from any obligations it may have hereunder to a corresponding extent.
9.Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of this Warrant and any transfers thereof. The Company may deem and treat the holder in whose name this Warrant is registered on such register as the Holder and absolute owner hereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.
10.Notices. All notices and other communications hereunder (except payment) shall be in writing and shall be deemed given (a) when delivered personally, (b) one business day after being delivered to a nationally recognized overnight courier or (c) on the business day received (or the next business day if received after 5:00 p.m. local time or on a weekend or day on which banks are closed) when sent via facsimile (with a confirmatory copy sent by overnight courier), to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

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To the Holder:
________________
________________
________________
Fax: ___________
To the Company:
Remark Media, Inc.
3960 Howard Hughes Parkway, Suite 900
Las Vegas, Nevada 89169
Attn: Chief Financial Officer
With a copy to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, New York 10019
Attn: Robert H. Friedman, Esq.
Fax: (212) 451-2222
11.Governing Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed in such State, without reference to conflict of law rules that would require the application of the laws of another jurisdiction. Except for claims seeking injunctive or other equitable relief, any controversy or claim arising out of or relating to this Warrant or a breach thereof, shall be settled by binding, confidential arbitration in Los Angeles, California (or such other location as may be agreed to by the parties) to be administered by the American Arbitration Association (“AAA”) in accordance with its then-prevailing Commercial Rules of Arbitration. Company and Holder shall select an arbitrator from a list provided by the AAA that is mutually satisfactory to them. If Company, on the one hand, and Holder, on the other, are unable to agree on an arbitrator, then each shall choose an arbitrator from a list provided by the AAA. The two arbitrators so selected shall then select a third arbitrator mutually satisfactory to them from the list provided by the AAA. The single arbitrator so selected by the aforesaid procedure shall hear the dispute and decide it. The arbitrator selected shall not be a present or former officer, employee, consultant or representative of any of the parties or any of their Affiliates. The arbitrator shall have a background and training in the general areas of law covered by this Agreement. The arbitrator shall have the right to award costs, fees and expenses including, without limitation, the arbitrator's fees and reasonable attorneys' fees, to the prevailing party. A party shall be entitled to have a judgment entered on the determination or decision of the arbitrator in any court of competent jurisdiction. The award of the arbitrator shall be binding and final on all parties.
12.Lost or Stolen Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.

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13.Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction (calculated to the nearest 1/100th of a share) multiplied by the then effective Warrant Price on the date the Form of Subscription is received by the Company.
14.No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other party any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.
15.Entire Agreement; Amendments and Waivers. This Warrant, together with the Purchase Agreement, constitute the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Warrant and the Purchase Agreement, the statements in the body of this Warrant shall control. Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
16.Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of the Holder, including subsequent holders hereof (collectively, “Assignees”). The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant, and shall be enforceable by any such Holder.
17.Severability. In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
18.Counterparts. This Warrant may be executed in two or more counterparts, each of which shall be deemed to be an original copy of this Warrant and all of which, when taken together, shall be deemed to constitute one and the same agreement, and photostatic, .pdf or facsimile copies of fully-executed counterparts of this Warrant shall be given the same effect as originals.

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19.No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.
20.Remedies. Notwithstanding any other provision herein, the parties hereto agree that irreparable damage would occur, damages would be difficult to determine and would be an insufficient remedy and no other adequate remedy would exist at law or in equity, in each case in the event that any of the provisions of this Warrant were not performed in accordance with their specific terms or were otherwise breached (or any party hereto threatens such a breach). It is accordingly agreed that in the event of a breach or threatened breach of this Warrant, the other parties hereto shall be entitled, subject to applicable Law, to an injunction or injunctions to prevent breaches of this Warrant and to enforce specifically the terms and provisions of this Warrant. Each party hereto irrevocably waives any defenses based on adequacy of any other remedy, whether at law or in equity, that might be asserted as a bar to the remedy of specific performance of any of the terms or provisions hereof or injunctive relief in any action brought therefor by any other party hereto.

[Signature Page Follows]


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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officer, thereunto duly authorized, as of the date first indicated above.
 
REMARK MEDIA, INC.
 
By:
 
 
Name:
 
 
Title:
 



[SIGNATURE PAGES CONTINUE ON THE FOLLOWING PAGE]


Signature Page - Warrant to Purchase Common Stock




ACCEPTED AND AGREED:
 
 
 
[HOLDER]
 
By:
 
 
Name:
 
 
Title:
 
 



[END OF SIGNATURE PAGES]

Signature Page - Warrant to Purchase Common Stock



FORM OF SUBSCRIPTION
The undersigned, the Holder of the attached Warrant, hereby elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, ____________ Warrant Shares and such Holder directs the Company to accept payment of the Warrant Price by net exercise of the Warrant, as set forth in Section 1(c) of such Warrant.
The undersigned requests that certificates for such shares be issued in the name of, and delivered to:
 
 
 
 
whose address is:
 
.
DATED:
 
 
 
 
 
 
 
HOLDER
 
 
 
 
 
(Signature must conform in all respects to name of the Holder as specified on the face of the Warrant)
 
 
Name:
 
 
 
Title:
 




FORM OF ASSIGNMENT AND ASSUMPTION
FOR VALUE RECEIVED, the right to purchase _______________ Warrant Shares under the attached Warrant and all rights evidenced thereby are hereby assigned to:
 
 
 
(the “Assignee”)
 
whose address is:
 
 
.
The Assignee, by executing this Assignment and Assumption, hereby agrees to comply with all of the provisions of the Warrant, with the same force and effect as if the Assignee were originally the Holder thereunder.
DATED:
 
 
 
 
 
 
 
HOLDER
 
 
 
 
 
(Signature must conform in all respects to name of the Holder as specified on the face of the Warrant)
 
 
Name:
 
 
 
Title:
 
 
 
 
 
 
 
 
 
 
 
ASSIGNEE
 
 
 
 
 
Name:
 
 
 
Title:
 


Exhibit





NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
REMARK MEDIA, INC.
WARRANT TO PURCHASE COMMON STOCK
September 20, 2016 (the “Issuance Date”)
FOR VALUE RECEIVED, REMARK MEDIA, INC., a Delaware corporation (the “Company”), hereby certifies that, subject to the terms and conditions hereof [______] (the “Holder”), its designees or permitted assigns, is entitled to purchase from the Company [______] fully paid and nonassessable shares (as adjusted pursuant to the terms hereof, the “Warrant Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”), at a price per Warrant Share of $5.50 (the “Warrant Price”), payable in accordance with Section 1(c) hereof.
This Warrant is issued by the Company in connection with that certain Subscription Agreement, dated as of September 20, 2016 (the “Subscription Date”) (together with the schedules and exhibits thereto, the “Purchase Agreement”), by and among the Company and the subscribers listed on the signature page thereto (the “Subscribers”), pursuant to which the Company has agreed to issue to the Subscribers warrants in order to induce the Subscribers to enter into that certain Amendment No. 1 to Financing Agreement (“Amendment No. 1”) amending that certain Financing Agreement dated as of September 24, 2015, by and among the Company and certain of its subsidiaries, as borrowers, certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, and MGG Investment Group LP (“MGG”), as administrative agent for the lenders thereunder, and as collateral agent for the lenders thereunder (as amended, amended and restated, supplemented or otherwise modified from time to time, including, without limitation, pursuant to Amendment No. 1, the “Financing Agreement”). Except as otherwise specified herein, capitalized terms in this Warrant shall have the meanings set forth in the Subscription Agreement.
This Warrant is issued subject to the following terms and conditions:





1.Term and Exercise of Warrants; Issuance of Warrant Shares.
(a)The Holder may exercise this Warrant at any time or from time to time, for all or any part of the Warrant Shares (but not for a fraction of a share) that may be purchased hereunder, as that number may be adjusted pursuant to Section 3 below, prior to 5:00 p.m. Eastern Time on September 24, 2020 (the “Expiration Date”). The Company agrees that the Warrant Shares purchased under this Warrant shall be and are deemed to be issued to the Holder as the record owner of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered, properly endorsed, the completed and executed Form of Subscription in the form attached hereto delivered, and payment made for such Warrant Shares made in accordance with Section 1(c) below (a “Date of Exercise”). The Company shall as soon as practicable after the rights represented by this Warrant have been so exercised, but in any event not later than three (3) Trading Days following the Date of Exercise (X) provided that the Company’s transfer agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program and the Warrant Shares are subject to an effective resale registration statement in favor of the Holder or at a time when Rule 144 would be available for immediate resale of the Warrant Shares by the Holder, credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program or if the Warrant Shares are not subject to an effective resale registration statement in favor of the Holder or at a time when Rule 144 would not be exercisable for immediate resale of the Warrant Shares by the Holder, issue and dispatch by overnight courier to the address as specified in the Form of Subscription, at the Company’s expense, certificates for the Warrant Shares so purchased, in each case, together with any other securities or property to which the Holder is entitled upon such exercise. In case the Company delivers a stock certificate to the Holder upon exercise of this Warrant pursuant to the immediately preceding sentence, each stock certificate so delivered shall be registered in the name of the Holder and issued with legends in substantially the form placed on the front of this Warrant. The Company shall be responsible for all fees and expenses of its transfer agent and all fees and expenses with respect to the issuance of Warrant Shares via DTC, if any. In case of a purchase of less than all the Warrant Shares that may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver to the Holder within a reasonable time a new Warrant or Warrants of like tenor for the balance of the Warrant Shares purchasable under this Warrant.
(b)The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same. Nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Warrant Shares upon exercise of this Warrant as required pursuant to the terms hereof.
(c)The Holder shall pay the Warrant Price by instructing the Company to issue Warrant Shares then issuable upon exercise of all or any part of this Warrant on a net basis only, such that, without payment of any cash consideration or other immediately available funds, the

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Holder shall surrender this Warrant in exchange for the number of Warrant Shares as is computed using the following formula:
https://cdn.kscope.io/acc2b72d5562694d162ccd024a302001-cbgwarrantformula.jpg

Where
X = the number of Warrant Shares to be issued to the Holder;
Y = the total number of Warrant Shares for which the Holder has elected to exercise this Warrant pursuant to Section 1(a);
A = the Fair Market Value (as defined below) of one Warrant Share as of the applicable Date of Exercise; and
B = the Warrant Price.
For purposes of this Warrant, “Fair Market Value” means (a) the closing price of the Common Stock on the applicable date reported on The Nasdaq Stock Market LLC or such other principal national securities exchange in the United States on which it is then listed, or, if such date is not a Trading Day, the last prior day on which the Common Stock was so traded; (b) if the Common Stock is not so listed, the mean between the highest bid and lowest asked prices per share of the Common Stock reported on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on the applicable date; or (c) if such bid and asked prices are not available, such value determined by the Company’s Board of Directors (the “Board”) in good faith.
2.Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all Warrant Shares, will, upon issuance and payment of the Warrant Price in accordance with Section 1(c), be duly authorized, validly issued, fully paid and nonassessable, and free of all preemptive rights, liens and encumbrances. The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of providing for the exercise of the rights to purchase all Warrant Shares granted pursuant to this Warrant, 130% of such number of shares of Common Stock as shall, from time to time, be sufficient therefor.
3.Adjustment of Warrant Price and Number of Shares. The Warrant Price and the total number of Warrant Shares shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3.
(a)Merger, Sale of Assets, Etc. If at any time while this Warrant, or any portion hereof, is outstanding and unexpired there shall be directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions (i) a reorganization, recapitalization or reclassification of the Common Stock, (ii) consolidation or merger of the Company with or into (whether or not the Company is the surviving corporation) another Person or Persons, if the holders of the Voting Stock of the Company immediately prior to such consolidation

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or merger shall hold or have the right to direct the voting of less than 50% of the Voting Stock of such other surviving Person immediately following such transaction, (iii) a sale, transfer or other disposition of the Company’s properties and assets as, or substantially as, an entirety to any other Person, (iv) a Person makes a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Voting Stock of the Company or (v) consummation of a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) by the Company with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Voting Stock of the Company (each, a “Fundamental Transaction”), then, as a part of such Fundamental Transaction, lawful provision shall be made so that the Successor Entity shall assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(a) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, an adjusted exercise price equal to the value for the shares of Common Stock reflected by the terms of such Fundamental Transaction, and exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and reasonably satisfactory to the Required Holders. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. As a part of such Fundamental Transaction, lawful provision shall also be made so that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Warrant Price pursuant to Section 1(c), the number of shares of stock or other securities or property of the successor corporation resulting from such Fundamental Transaction that a holder of the Warrant Shares deliverable upon exercise of this Warrant would have been entitled to receive in such Fundamental Transaction if this Warrant had been exercised immediately before such Fundamental Transaction, all subject to further adjustment as provided in this Section 3. If the per share consideration payable to the Holder for securities in connection with any such Fundamental Transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Board. In all events, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after such Fundamental Transaction, to the end that the provisions of this Warrant shall be applicable after that Fundamental Transaction, as near as reasonably may be, in relation to any shares or other property deliverable after that Fundamental Transaction upon exercise of this Warrant. To the extent that the Holder’s right to receive any shares of publicly traded common stock (or their equivalent) of the Successor Entity would result in the Holder and its other Attribution Parties (as defined in Section 4(b)) exceeding the Maximum Percentage (as defined in Section 4(b)), then the Holder shall not be entitled to receive such shares to such extent (and shall not be entitled to beneficial ownership of such shares of publicly traded common stock (or their equivalent)

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of the Successor Entity as a result of such consideration to such extent) and the portion of such shares shall be held in abeyance for the Holder until such time or times, as its right thereto would not result in the Holder and its other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be delivered such shares to the extent as if there had been no such limitation. As used herein, (i) “Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency), (ii) “Successor Entity” means the Person (or, if so elected by the Required Holders, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Required Holders, the Parent Entity) with which such Fundamental Transaction shall have been entered into and (iii) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(b)Reclassification, Etc. If the Company, at any time while this Warrant or any portion hereof remains outstanding and unexpired, by reclassification, reorganization, recapitalization of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification, reorganization or recapitalization or other change and the Warrant Price shall be appropriately adjusted, all subject to further adjustment as provided in this Section 3.
(c)Split, Subdivision or Combination of Securities. If the Company, at any time while this Warrant or any portion hereof remains outstanding and unexpired, shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, (i) the number of securities as to which purchase rights under this Warrant exist shall be proportionately increased and the Warrant Price for such securities shall be proportionately decreased in the case of a split or subdivision or (ii) the number of securities as to which purchase rights under this Warrant exist shall be proportionately decreased and the Warrant Price for such securities shall be proportionately increased in the case of a reverse split or combination.
(d)Adjustments for Dividends in Stock or Other Securities or Property. If, while this Warrant or any portion hereof remains outstanding and unexpired, the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible holders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend (a “Distribution”), then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon

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exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 3; provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation.
(e)Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the Subscription Date, the Company issues or sells, or in accordance with this Section 3(e) is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities) for a consideration per share (the “New Issuance Price”) less than the Applicable Price (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Warrant Price then in effect shall be reduced (but in no event increased) to an amount equal to: (x) in the event the Applicable Price is determined by clause (I)(A) or (II) of such definition, the product of (A) the Warrant Price in effect immediately prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Warrant Price in effect immediately prior to such Dilutive Issuance and the number of shares of Common Stock Deemed Outstanding immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by multiplying (I) the Warrant Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of Common Stock Deemed Outstanding immediately after such Dilutive Issuance and (y) in the event the Applicable Price is determined by clause (I)(B) of such definition, the product of (A) the Warrant Price in effect immediately prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the number of shares of Common Stock Deemed Outstanding immediately prior to such Dilutive Issuance and (II) the number of shares of Common Stock which the aggregate consideration received by the Company, if any, upon such Dilutive Issuance would purchase at the Market Price, by (2) the number of shares of Common Stock Deemed Outstanding immediately after such Dilutive Issuance. Upon each such adjustment of the Warrant Price hereunder, the number of Warrant Shares shall be adjusted to the number of shares of Common Stock determined by multiplying the Warrant Price in effect immediately prior to such adjustment by the number of Warrant Shares acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Warrant Price resulting from such

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adjustment. For purposes of determining the adjusted Warrant Price under this Section 3(e), the following shall be applicable:
(i)    Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 3(e)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Warrant Price or Warrant Shares shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
(ii)    Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 3(e)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the issuance or sale of such Convertible Security and upon conversion, exercise or exchange of such Convertible Security. No further adjustment of the Warrant Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 3(e), no further adjustment of the Warrant Price or number of Warrant Shares shall be made by reason of such issue or sale.

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(iii)    Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Warrant Price and the number of Warrant Shares in effect at the time of such increase or decrease shall be adjusted to the Warrant Price and the number of Warrant Shares, which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(e)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Subscription Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(e) shall be made if such adjustment would result in an increase of the Warrant Price then in effect or a decrease in the number of Warrant Shares.
(iv)    Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Options will be deemed to have been issued for the fair value of such portion of the aggregate consideration received by the Company as is attributable to such Option (the “Option Value”) and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value of such Options. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration other than cash received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the Fair Market Value of such publicly traded securities on the date of receipt of such publicly traded securities. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by

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the Company and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v)    Treatment of Expired or Terminated Options or Convertible Securities. Upon the expiration or termination of any unexercised Option (or portion thereof) or any unconverted or unexchanged Convertible Security (or portion thereof) for which any adjustment was made pursuant to this Section 3, the Warrant Price with respect to the unexercised portion of this Warrant that remains outstanding at the time of the expiration or termination of such unexercised Option (or portion thereof) or any unconverted or unexchanged Convertible Securities (or portion thereof) then in effect shall be adjusted to such Warrant Price that would have been in effect at the time of such expiration or termination had such unexercised Option (or portion thereof) or unconverted or unexchanged Convertible Security (or portion thereof), to the extent outstanding immediately prior to such expiration or termination, never been issued. For the avoidance of doubt, any portion of this Warrant that has been exercised after Options or Convertible Securities have been issued or sold, or are deemed issued or sold pursuant to this Section 3(e), but prior to such the time of the expiration or termination of such unexercised Option (or portion thereof) or any unconverted or unexchanged Convertible Securities (or portion thereof), the Warrant Price with respect to the portion of this Warrant that has so been exercised shall not be re-adjusted pursuant to this Section 3(e)(v).
(vi)    Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.
(vi)    Definitions. As used herein:
(1)    “Applicable Price” means (I) in the case of an Insider Issuance, the greater of (A) the Warrant Price in effect immediately prior to such Dilutive Issuance, or (B) the Market Price immediately prior to such Dilutive Issuance and (II) in all other cases, the Warrant Price in effect immediately prior to such Dilutive Issuance.
(2)    “Approved Stock Plan” means any employee benefit plan, agreement or arrangement which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer, director, consultant or advisor for services provided to the Company and/or its wholly-owned Subsidiaries.
(3)    “Common Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of

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Common Stock deemed to be outstanding pursuant to Sections 3(e)(i) and 3(e)(ii) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock owned or held by or for the account of the Company or issuable upon exercise of the Warrants issued pursuant to the Subscription Agreement.
(4)    “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.
(5)    “Excluded Securities” means any Common Stock issued or issuable or deemed issued or issuable: (i) in connection with any Approved Stock Plan; (ii) upon exercise of the Warrants; provided, that the terms of such Warrants are not amended, modified or changed on or after the Subscription Date; (iii) upon conversion, exercise or exchange of any Options or Convertible Securities which are outstanding on the day immediately preceding the Subscription Date; provided, that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the Subscription Date; or (iv) under the terms of, or as required by, the Acquisition Agreement and the Acquisition Warrants; provided, that the terms of the Acquisition Agreement and the Acquisition Warrants are not amended, modified or changed on or after the Subscription Date.
(6)    “Insider Issuance” means any issuance or sale, or deemed issuance or sale pursuant to this Section 3(e), of shares of Common Stock (including the issuance or sale, or deemed issuance or sale pursuant to this Section 3(e), of shares of Common Stock owned or held by or for the account of the Company) in an offering at least twenty-five percent (25%) of which is being issued or sold to one or more officers, directors or Affiliates of the Company or “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act) of 10% or more of the Company’s outstanding Common Stock.
(7)    “Market Price” means the arithmetic average of the volume weighted average price of the Common Stock for the ten (10) consecutive Trading Days immediately preceding the date of the applicable Dilutive Issuance.
(8)    “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(f)Other Events. If any event occurs of the type contemplated by the provisions of this Section 3 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Board will make an appropriate adjustment in the Warrant Price and the number of Warrant Shares, reasonably acceptable to the Required Holders, so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 3(f) will increase the Warrant Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 3.
4.Limitation on Number of Shares Issuable.

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(a)Exchange Cap. Notwithstanding anything herein to the contrary, the Company shall not issue to the Holder any Warrant Shares to the extent that the issuance of such Warrant Shares would cause the Company to exceed the aggregate number of shares of Common Stock that the Company is permitted to issue without breaching the Company’s obligations under Nasdaq Listing Rule 5635 (the “Exchange Cap”), except that such limitation shall not apply in the event that the Company obtains the approval of its stockholders as required under Nasdaq Listing Rule 5635 for issuances in excess of the Exchange Cap. For avoidance of doubt, the limitations contained in this Section 4(a) shall apply to any successor Holder of this Warrant.
(b)Beneficial Ownership. Notwithstanding anything to the contrary contained herein, the Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder together with the other Attribution Parties collectively would beneficially own in excess of 9.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 4(b). For purposes of this Section 4(b), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”). For purposes of this Warrant, in determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission (the “SEC”), as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 4(b), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be purchased pursuant to such Exercise Notice (the number of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time,

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upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of Warrants issued pursuant to the Subscription Agreement that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(b) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 4(b) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Warrant. As used herein: (x) “Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act; and (y) “Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
5.No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder the right to vote or to consent to receive notice as a stockholder of

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the Company on any other matters or any rights whatsoever as a stockholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the Warrant Shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised.
6.Registration Rights Agreement. All Warrant Shares issuable upon exercise of this Warrant are and shall become subject to, and have the benefit of, the Registration Rights Agreement, subject to compliance with the terms thereof, including but not limited to Section 3.1(b) thereof.
7.Transferability. The Holder may not assign or transfer any of its rights or obligations under this Warrant except in accordance with all applicable securities laws, including but not limited to the Securities Act. To the extent permitted hereunder, this Warrant shall be deemed transferred upon surrender of this Warrant at the principal office of the Company, together with a written Form of Assignment and Assumption in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any applicable transfer taxes. The Company agrees that it shall execute, or cause to be executed, such documents, instruments and agreements as the Holder shall reasonably deem necessary to effect the foregoing. In addition, at the request of the Holder and any Assignee (as defined in Section 15), the Company shall issue one or more new Warrants, as applicable, to any such Assignee and, if the Holder has retained any of its rights and obligations under this Warrant following such assignment, to the Holder, which new Warrants shall reflect the rights held by such Assignee and the Holder after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation and any other documentation reasonably requested by the Company in connection with such assignment, and the payment by the Assignee of the purchase price agreed to by the Holder and such Assignee, such Assignee shall be a holder of this Warrant shall have all of the rights and obligations of the Holder hereunder to the extent that such rights and obligations have been assigned by the Holder pursuant to the assignment documentation between the Holder and such Assignee, and the Holder shall be released from any obligations it may have hereunder to a corresponding extent. Notwithstanding anything herein to the contrary, without the prior written consent of the Company, this Warrant shall only be transferred in connection with a transfer or assignment of the Loans (as defined in the Financing Agreement) or if at least a number of shares of Common Stock equal to twenty-five percent (25%) of the number of shares of Common Stock for which this Warrant was exercisable on the Issuance Date (or such lesser number of shares of Common Stock that then remains outstanding under this Warrant) are issuable upon exercise of the portion of the Warrant that is being transferred (where the number of shares issuable upon exercise of Warrants held by transferees that are Affiliates of each other shall be aggregated for such purpose).
8.Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of this Warrant and any transfers thereof. Absent manifest error, the Company may deem and treat the holder in whose name this Warrant is registered on such register as the Holder and absolute owner hereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

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9.Notices. All notices and other communications hereunder (except payment) shall be in writing and shall be deemed given (a) when delivered personally, (b) one business day after being delivered to a nationally recognized overnight courier or (c) on the business day received (or the next business day if received after 5:00 p.m. local time or on a weekend or day on which banks are closed) when sent via facsimile (with a confirmatory copy sent by overnight courier) or electronic mail, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
To the Holder:
[_______] c/o MGG Investment Group LP
888 Seventh Avenue, 43rd Floor
New York NY 10106
Attn: Kevin F. Griffin
Telephone: 212-356-6100
Email: creditagreementnotices@mgginv.com
 
 
 
With a copy (for informational purposes only) to:
 
 
 
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attn: Frederic Ragucci, Esq.
Fax: (212) 593-5955
Telephone: (212) 756-2000
Email: frederic.ragucci@srz.com
 
 
To the Company:
Remark Media, Inc.
3960 Howard Hughes Parkway, Suite 900
Las Vegas, Nevada 89169
Attn: Douglas Osrow
Email: dosrow@remarkmedia.com
 
 
 
With a copy (for informational purposes only) to:
 
 
 
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, New York 10019
Attn: Robert H. Friedman, Esq.
Fax: (212) 451-2222
Email: rfriedman@olshanlaw.com
10.Governing Law. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction

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contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 6.3 of the Subscription Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
11.Lost or Stolen Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.
12.Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction (calculated to the nearest 1/100th of a share) multiplied by the then effective Warrant Price on the date the Form of Subscription is received by the Company.
13.No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other party any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.
14.Entire Agreement; Amendments and Waivers. This Warrant, together with the Purchase Agreement and the Registration Rights Agreement, constitute the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Warrant, the Purchase Agreement and the Registration Rights Agreement, the statements in the body of this Warrant shall control. Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by the Company and the Holder. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party

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shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
15.Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of the Holder, including subsequent holders hereof (collectively, “Assignees”). The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant, and shall be enforceable by any such Holder.
16.Severability. In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
17.Counterparts. This Warrant may be executed in two or more counterparts, each of which shall be deemed to be an original copy of this Warrant and all of which, when taken together, shall be deemed to constitute one and the same agreement, and photostatic, .pdf or facsimile copies of fully-executed counterparts of this Warrant shall be given the same effect as originals.
18.No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

[Signature Page Follows]


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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officer, thereunto duly authorized, as of the date first indicated above.
 
REMARK MEDIA, INC.
 
By:
 
 
Name:
Douglas Osrow
 
Title:
Chief Financial Officer
 
 
ACCEPTED AND AGREED:
 
 
 
[______]
 
By:
 
 
Name:
Kevin Griffin
 
Title:
Chief Executive Officer and Chief Investment Officer
 
 
 


Signature Page - Warrant to Purchase Common Stock



FORM OF SUBSCRIPTION
The undersigned, the Holder of the attached Warrant, hereby elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, ____________ Warrant Shares and such Holder directs the Company to accept payment of the Warrant Price by net exercise of the Warrant, as set forth in Section 1(c) of such Warrant.
The undersigned requests that Warrant Shares be issued and delivered to:
If the Warrant Shares are being issued in the form of a stock certificate:
Name:
 
 
 
whose address is:
 
.
If the Warrant Shares are being issued electronically:
DWAC Instructions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DATED:
 
 
 
 
 
 
 
HOLDER
 
 
 
 
 
(Signature must conform in all respects to name of the Holder as specified on the face of the Warrant)
 
 
Name:
 
 
 
Title:
 

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FORM OF ASSIGNMENT AND ASSUMPTION
FOR VALUE RECEIVED, the right to purchase _______________ Warrant Shares under the attached Warrant and all rights evidenced thereby are hereby assigned to:
 
 
 
(the “Assignee”)
 
whose address is:
 
 
.
The Assignee, by executing this Assignment and Assumption, hereby agrees to comply with all of the provisions of the Warrant, with the same force and effect as if the Assignee were originally the Holder thereunder.
DATED:
 
 
 
 
 
 
 
HOLDER
 
 
 
 
 
(Signature must conform in all respects to name of the Holder as specified on the face of the Warrant)
 
 
Name:
 
 
 
Title:
 
 
 
 
 
 
 
 
 
 
 
ASSIGNEE
 
 
 
 
 
Name:
 
 
 
Title:
 

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Exhibit




AMENDMENT NO. 1
TO FINANCING AGREEMENT
AMENDMENT NO. 1 TO FINANCING AGREEMENT, dated as of September 20, 2016 (this “Amendment”), amends the Financing Agreement, dated as of September 24, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), by and among Remark Media, Inc., a Delaware corporation (the “Parent”), each subsidiary of the Parent listed as a “U.S. Borrower” on the signature pages thereto (together with the Parent and each other Person that executes a Joinder Agreement (as defined therein) and becomes a “U.S. Borrower” thereunder, each a “U.S. Borrower” and, collectively, jointly and severally, the “U.S. Borrowers”), KanKan Limited, a company organized under the laws of the British Virgin Islands (the “BVI Borrower” and together with the U.S. Borrowers, each, a “Borrower” and, collectively, the “Borrowers”), each subsidiary of the Parent listed as a “Guarantor” on the signature pages thereto (together with each other Person that executes a joinder agreement and becomes a “Guarantor” thereunder or otherwise guaranties all or any part of the Obligations (as defined therein), each a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party thereto (each a “Lender” and, collectively, the “Lenders”), MGG Investment Group LP (“MGG”), as collateral agent for the, Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and MGG, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and together with the Collateral Agent, each an “Agent” and, collectively, the “Agents”).
WHEREAS, the Lenders made a term loan to the U.S. Borrowers on the Effective Date in the aggregate principal amount of $27,500,000;
WHEREAS, the Loan Parties have requested that the Agents and the Lenders (a) make a term loan to the BVI Borrower on the First Amendment Effective Date in the aggregate principal amount of $8,000,000, (b) consent to a proposed acquisition, and (c) amend certain other terms and conditions of the Financing Agreement; and
WHEREAS, the Agents and the Lenders are willing to (a) make such additional term loan, (b) consent to such acquisition, and (c) amend such terms and conditions of the Financing Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Financing Agreement.






2. Amendments.

(a) Preamble. The preamble to the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“Financing Agreement, dated as of September 24, 2015, by and among Remark Media, Inc., a Delaware corporation (the “Parent”), each subsidiary of the Parent listed as a “U.S. Borrower” on the signature pages hereto (together with the Parent and each other Person that executes a joinder agreement and becomes a “U.S. Borrower” hereunder, each a “U.S. Borrower” and, collectively, the “U.S. Borrowers”), KanKan Limited, a company organized under the laws of the British Virgin Islands (the “BVI Borrower”, and together with the U.S. Borrowers, each a “Borrower” and, collectively, the “Borrowers”), each subsidiary of the Parent listed as a “Guarantor” on the signature pages hereto (together with each other Person that executes a joinder agreement and becomes a “Guarantor” hereunder or otherwise guaranties all or any part of the Obligations (as hereinafter defined), each a “Guarantor” and, collectively, the “Guarantors”), the lenders from time to time party hereto (each a “Lender” and collectively, the “Lenders”), MGG Investment Group LP (“MGG”), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and MGG, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent” and together with the Collateral Agent, each an “Agent” and, collectively, the “Agents”).”
(b) Recitals. The first paragraph of the recitals to the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“On the Effective Date (as hereinafter defined), the Lenders extended credit to the U.S. Borrowers consisting of (a) an Initial Loan (as hereinafter defined) in the aggregate principal amount of $27,500,000, the proceeds of which were used to finance a portion of the cash consideration for the Vegas.com Acquisition (as hereinafter defined), for general working capital purposes of the U.S. Borrowers and to pay fees and expenses related to this Agreement and the Vegas.com Acquisition.
On the First Amendment Effective Date (as hereinafter defined), the BVI Borrower has asked the Lenders to make an Additional Loan (as hereinafter defined) to the BVI Borrower in the aggregate principal amount of $8,000,000, the proceeds of which shall be used to finance a portion of the cash consideration for the CBG Acquisition (as hereinafter defined), for general working capital purposes of the BVI Borrower and the CBG Subsidiaries (as hereinafter defined) and to pay fees and expenses related to the First Amendment (as hereinafter defined) and the CBG Acquisition.
The Lenders are severally, and not jointly, willing to extend such credit to the applicable Borrowers subject to the terms and conditions hereinafter set forth.”

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(c) New Definitions. Section 1.01 of the Financing Agreement is hereby amended by adding the following defined terms thereto in appropriate alphabetical order:

Additional Loan” means the loans made by the Lenders to the BVI Borrower on the First Amendment Effective Date pursuant to Article II hereof.
Additional Loan Commitment” means, with respect to each Lender, the commitment of such Lender to make the Additional Loan to the BVI Borrower on the First Amendment Effective Date in the amount set forth opposite such Lender’s name under the heading “Additional Loan Commitment” on Schedule 1.01(A) hereto, or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as the same may be terminated or reduced from time to time in accordance with the terms of this Agreement.
Additional Loan Make-Whole Amount” means, as of any date of determination, an amount equal to (i) the difference between (A) the aggregate amount of interest (including, without limitation, interest payable in cash, in kind or deferred) which would have otherwise been payable on the principal amount of the Additional Loan paid on such date (or in the case of an Applicable Premium Trigger Event specified in clauses (b), (c) or (d) of the definition thereof, the principal amount of the Additional Loan outstanding on such date) from the date of the occurrence of the Applicable Premium Trigger Event until the twenty-four (24) month anniversary of the First Amendment Effective Date, minus (B) the aggregate amount of interest the Lenders would earn if the principal amount of the Additional Loan paid on such date (or in the case of an Applicable Premium Trigger Event specified in clauses (b), (c) or (d) of the definition thereof, the principal amount of the Additional Loan outstanding on such date) were reinvested for the period from the date of the occurrence of the Applicable Premium Trigger Event until the twenty-four (24) month anniversary of the First Amendment Effective Date at the Treasury Rate plus (ii) an amount equal to 3% times the aggregate amount of all Obligations in respect of the Additional Loan paid on such date (or, in the case of an Applicable Premium Trigger Event specified in clauses (b), (c) or (d) of the definition thereof, the aggregate amount of all Obligations in respect of the Additional Loan outstanding on such date).
BVI Borrower” has the meaning specified therefor in the preamble hereto.
BVI Collateral” means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by the BVI Borrower or any of its Subsidiaries upon which a Lien is granted or purported to be granted by the BVI Borrower or any of its Subsidiaries as security for all or any part of the BVI Obligations.
BVI Loan Party” means the BVI Borrower.

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BVI Obligations” means (a) the Obligations of the BVI Borrower with respect to the Additional Loan and all other amounts from time to time owing by any BVI Loan Party with respect to the Additional Loan under any of the Loan Documents, and (b) all Obligations to the extent incurred by or related to the BVI Borrower and/or its Subsidiaries; provided that for the avoidance of doubt, the term “BVI Obligations” shall not include any U.S. Obligations.
CBG” means China Branding Group Ltd, an exempted company incorporated under the laws of the Cayman Islands.
CBG Acquisition” means the acquisition by the BVI Borrower of 100% of the Equity Interests of the CBG Subsidiaries pursuant to the CBG Acquisition Documents.
CBG Acquisition Agreement” means the Second Amended and Restated Asset and Securities Purchase Agreement, dated as of September 20, 2016, by and among CBG, the Joint Official Liquidators, Seller Management, the CBG Subsidiaries, the BVI Borrower and the Parent.
CBG Acquisition Documents” means the CBG Acquisition Agreement and all other agreements, instruments and other documents related thereto or executed in connection therewith.
CBG Registration Rights Agreement” means the Registration Rights Agreement, dated as of the First Amendment Effective Date, in form and substance satisfactory to the Agents, by and between the Parent and the CBG Warrant Recipients, with respect to the registration rights of the CBG Warrant Recipients with respect to the CBG Warrant Stock that the CBG Warrant Recipients may acquire and the anti-dilution and tag-along provisions applicable thereto.
CBG Subsidiaries” means (a) Fanstang (Shanghai) Entertainment Information Consulting Co. Ltd., a company incorporated under the laws of Hong Kong and (b) China SNS Group Limited, a company incorporated under the laws of Hong Kong.
CBG Warrant Recipients” means, collectively, MGG Specialty Finance Fund LP, MGG SF Evergreen Fund LP and MGG SF Evergreen Master Fund (Cayman) LP.
CBG Warrants” means the warrants issued to the CBG Warrant Recipients on the First Amendment Effective Date to purchase Equity Interests of the Parent, which warrants shall be in form and substance satisfactory to the CBG Warrant Recipients.
CBG Warrant Stock” has the meaning assigned to the term “Warrant Stock” in the CBG Warrants.

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First Amendment” means Amendment No. 1 to Financing Agreement, dated as of September 20, 2016, among the Borrowers, the Guarantors, the Lenders, and the Agents.
First Amendment Disbursement Agreement” shall mean the Disbursement Agreement, dated as of the First Amendment Effective Date, by and among the Loan Parties, the Agents and the Lenders, and the related funds flow memorandum describing the sources and uses of all cash payments in connection with the making of the Additional Loan on the First Amendment Effective Date.
First Amendment Effective Date” shall have the meaning specified therefor in Section 5 of the First Amendment.
Foreign Sovereign Immunities Act” means the US Foreign Sovereign Immunities Act of 1976 (28 U.S.C. Sections 1602-1611), as amended.
Initial Loan” means the loans made by the Lenders to the U.S. Borrowers on the Effective Date pursuant to Article II hereof.
Initial Loan Commitment” means, with respect to each Lender, the commitment of such Lender to make the Initial Loan on the Effective Date in the amount set forth opposite such Lender’s name under the heading “Initial Loan Commitment” on Schedule 1.01(A) hereto, or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as the same may be terminated or reduced from time to time in accordance with the terms of this Agreement.
Initial Loan Make-Whole Amount” means, as of any date of determination, an amount equal to (i) the difference between (A) the aggregate amount of interest (including, without limitation, interest payable in cash, in kind or deferred) which would have otherwise been payable on the principal amount of the Initial Loan paid on such date (or in the case of an Applicable Premium Trigger Event specified in clauses (b), (c) or (d) of the definition thereof, the principal amount of the Initial Loan outstanding on such date) from the date of the occurrence of the Applicable Premium Trigger Event until the twenty-four (24) month anniversary of the Effective Date, minus (B) the aggregate amount of interest the Lenders would earn if the principal amount of the Initial Loan paid on such date (or in the case of an Applicable Premium Trigger Event specified in clauses (b), (c) or (d) of the definition thereof, the principal amount of the Initial Loan outstanding on such date) were reinvested for the period from the date of the occurrence of the Applicable Premium Trigger Event until the twenty-four (24) month anniversary of the Effective Date at the Treasury Rate plus (ii) an amount equal to 3% times the aggregate amount of all Obligations in respect of the Initial Loan paid on such date (or, in the case of an Applicable Premium Trigger Event specified in clauses (b), (c) or (d) of the definition thereof, the aggregate amount of all Obligations in respect of the Initial Loan outstanding on such date).

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Process Agent” has the meaning specified therefor in Section 12.10(b).
RAAD” means RAAD Productions, LLC, a California limited liability company.
Total Additional Loan Commitment” means the sum of the amounts of the Lenders’ Additional Loan Commitments.
Total Initial Loan Commitment” means the sum of the amounts of the Lenders’ Initial Loan Commitments.
U.S. Borrower” has the meaning specified therefor in the preamble hereto.
U.S. Loan Party” means each Loan Party, other than the BVI Loan Parties.
U.S. Obligations” means (a) the Obligations of any of the U.S. Borrowers with respect to the Initial Loan and all other amounts from time to time owing by any U.S. Loan Party with respect to the Initial Loan under any of the Loan Documents, and (b) all Obligations to the extent incurred by or related to a U.S. Loan Party or any of its Subsidiaries (other than the BVI Borrower and its Subsidiaries).
(d) Amendment and Restatement of Certain Definitions. Section 1.01 of the Financing Agreement is hereby amended by amending and restating the definitions of the following terms, to read in their entirety as follows:

Applicable Premium” means, as of the date of the occurrence of an Applicable Premium Trigger Event:
(a)    during the period of time from and after the Effective Date up to and including the First Amendment Effective Date (the “First Period”), an amount equal to the Initial Loan Make-Whole Amount,
(b)    during the period of time after the First Period up to and including September 24, 2017 (the “Second Period”), an amount equal to the sum of (A) the Initial Loan Make-Whole Amount, plus (B) the Additional Loan Make-Whole Amount,
(c)    during the period of time after the Second Period up to and including March 24, 2018 (the “Third Period”), an amount equal to the sum of (A) 3.00% times the aggregate amount of all Obligations in respect of the Initial Loan outstanding on (or, in the case of an Applicable Premium Trigger Event described in clause (a) of the definition thereof, paid on) the date of such Applicable Premium Trigger Event (other than the Applicable Premium), plus (B) the Additional Loan Make-Whole Amount,
(d)    during the period of time after the Third Period up to and including the second anniversary of the First Amendment Effective Date (the “Fourth Period”), an amount equal to the Additional Loan Make-Whole Amount, and

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(e)    after the Fourth Period, zero.
Commitment” means with respect to each Lender, collectively, (a) the Initial Loan Commitment of such Lender, and (b) the Additional Loan Commitment of such Lender.
Debtor Relief Law” means (a) the Bankruptcy Code, (b) with respect to the BVI Borrower, the Insolvency Act, 2003 (British Virgin Islands) and the Insolvency Rules, 2005 (British Virgin Islands) and (c) any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief law of the United States or other applicable jurisdiction from time to time in effect.
Equity Documents” means each of the following:
(a)    the Registration Rights Agreement, duly executed by the Parent;
(b)    the Warrants, duly executed by the Parent;
(c)    the CBG Registration Rights Agreement, duly executed by the Parent; and
(d)    the CBG Warrants, duly executed by the Parent.
Fee Letter” means the fee letter, dated as of the date hereof, as amended and restated as of the First Amendment Effective Date, among the Borrowers and the Agents.
Loan” means the Initial Loan made by the Lenders to the U.S. Borrowers on the Effective Date and the Additional Loan made by the Lenders to the BVI Borrower on the First Amendment Effective Date, in each case pursuant to Article II hereof.
Loan Account” means an account maintained hereunder by the Administrative Agent on its books of account at the Payment Office, and with respect to the U.S. Borrowers, in which the U.S. Borrowers will be charged with all U.S. Loans made to, and all other Obligations incurred by, the U.S. Borrowers, and with respect to the BVI Borrower, in which the BVI Borrower will be charged with all BVI Loans made to, and all other Obligations incurred by, the BVI Borrower.
Make-Whole Amount” means the Initial Loan Make-Whole Amount and/or the Additional Loan Make-Whole Amount, as applicable.
Permitted Intercompany Investments” means Investments made by (a) a U.S. Loan Party to or in another U.S. Loan Party, (b) a Subsidiary that is not a U.S. Loan Party to or in another Subsidiary that is not a Loan Party, (c) a Subsidiary that is not a U.S. Loan Party to or in a Loan Party, so long as, in the case of a loan or advance, the parties thereto are party to the Intercompany Subordination Agreement and (d) a U.S. Loan Party to or in a Subsidiary that is not a U.S. Loan Party so long as (i) the

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aggregate amount of all such Investments outstanding at any time made by the U.S. Loan Parties to or in Subsidiaries that are not U.S. Loan Parties does not exceed (A) the aggregate amount of $4,100,000 in the case of (x) Subsidiaries of the Parent that are not U.S. Loan Parties, and whose primary business is the operation of the KanKan social media channel; provided, that the proceeds of such Investment are applied directly to the KanKan social media channel project, and (y) the CBG Subsidiaries and (B) $350,000 in the case of all other Subsidiaries of the Parent that are not U.S. Loan Parties (not including any Subsidiary covered by subclause (A)), and (ii) no Default or Event of Default has occurred and is continuing either before or after giving effect to such Investment.
Pro Rata Share” means, with respect to:
(a) a Lender’s obligation to make the Initial Loan and the right to receive original issue discount amounts and/or Applicable Premium payments in respect thereof, the percentage obtained by dividing (i) such Lender’s Initial Loan Commitment, by (ii) the Total Initial Loan Commitment, provided that, if the Total Initial Loan Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender’s portion of the Initial Loan and the denominator shall be the aggregate unpaid principal amount of the Initial Loan,
(b) a Lender’s obligation to make the Additional Loan and the right to receive original issue discount amounts and/or Applicable Premium payments, the percentage obtained by dividing (i) such Lender’s Additional Loan Commitment, by (ii) the Total Additional Loan Commitment, provided that if the Total Additional Loan Commitment has been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender’s portion of the Additional Loan and the denominator shall be the aggregate unpaid principal amount of the Additional Loan, and
(c) a Lender’s right to receive payments of interest, fees (other than original issue discount amounts and Applicable Premium payments) and principal with respect to the Loan, and, except as set forth in clauses (a) and (b) above, all other matters (including, without limitation, the indemnification obligations arising under Section 10.05), the percentage obtained by dividing (i) the aggregate unpaid principal amount of such Lender’s portion of the Loan by (ii) the aggregate unpaid principal amount of the Loan.
Required Lenders” means Lenders whose Pro Rata Shares (calculated in accordance with clause (c) of the definition thereof, and subject to the last sentence of Section 12.02(a)) aggregate more than 50%.

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Shareholder Letter” means the side letter, dated as of the Effective Date, by and between the Collateral Agent, the Administrative Borrower and DigiPac, as amended on the First Amendment Effective Date.
Side Letter” means the side letter, dated as of the Effective Date and amended and restated as of the First Amendment Effective Date, by and between the Collateral Agent and the Administrative Borrower, setting forth, among other things, the Required Asset Values.
Total Commitment” means the sum of the Lenders’ Commitments.
(e)Section 1.01. Section 1.01 of the Financing Agreement is hereby amending and restating the final sentence of the definition of the term “Obligations” to read in its entirety as follows:

“For the avoidance of doubt, (i) except to the extent otherwise provided in any other Loan Document, “Obligations” shall not include any obligations under the Equity Documents, and (ii) with respect to the obligation of any BVI Loan Party to pay the Obligations, the term “Obligations” shall not include the U.S. Obligations.”
(f)Section 1.01. Section 1.01 of the Financing Agreement is hereby amended by deleting “and” at the end of clause (b)(vii) of the definition of the term “Consolidated EBITDA”, adding “and” at the end of clause (b)(viii) at the end of the term “Consolidated EBITDA” and adding a new clause (ix) to read as follows:

“any fees or expenses incurred in connection with the CBG Acquisition, and/or in connection with the First Amendment, in each case, to the extent accrued during such period, in an aggregate amount not to exceed the amount approved in writing by the Collateral Agent prior to the date on which the financial statements for such period are required to be delivered to the Agents and the Lenders pursuant to Section 7.01(a)(i), (ii) or (iii) hereof, as applicable,”
(g)Article I. Article I of the Financing Agreement is hereby amended by adding a new clause to the end thereof to read in its entirety as follows:

“Section 1.06 Obligation to Make Payments in Dollars. All payments to be made by any Loan Party of principal, interest, fees and other Obligations under any Loan Document shall be made in Dollars in same day funds, and no obligation of any Loan Party to make any such payment shall be discharged or satisfied by any payment other than payments made in Dollars in same day funds.”
(h)Section 2.01. Section 2.01 of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“Section 2.01 Commitments. (a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth:

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(i)    each Lender with an Initial Loan Commitment made an Initial Loan to the U.S. Borrowers on the Effective Date, in an aggregate principal amount equal to such Lender’s Initial Loan Commitment; and
(ii)    each Lender with an Additional Loan Commitment severally agrees to make its Pro Rata Share of the Additional Loan to the BVI Borrower on the First Amendment Effective Date, in an aggregate principal amount not to exceed the amount of such Lender’s Additional Loan Commitment.
(b)    Notwithstanding the foregoing:
(i)    the aggregate principal amount of the Additional Loans made on the First Amendment Effective Date shall not exceed the Total Additional Loan Commitment;
(ii)    Any principal amount of any Loan which is repaid or prepaid may not be reborrowed;
(iii)    Each of the Initial Loan and the Additional Loan shall be considered part of the Loan for all purposes of this Agreement and the other Loan Documents and upon and following the First Amendment Effective Date, all Loan Documents and any reference to the ‘Loan’ in this Agreement or in any other Loan Document shall be deemed to include the Initial Loan and the Additional Loan; and
(iv)    Immediately following the funding of the Additional Loan on the First Amendment Effective Date, the aggregate outstanding principal amount of the Loan will be $35,500,000.”
(i)Section 2.02(a). The second sentence of Section 2.02(a) is hereby amended and restated to read in its entirety as follows:

“Such Notice of Borrowing shall be irrevocable and shall specify (i) the principal amount of the proposed Loan, and (ii) the proposed borrowing date, which, in the case of the Initial Loan, must be the Effective Date and, in the case of the Additional Loan, must be the First Amendment Effective Date.”
(j)Section 2.02(b). Clause (b) of Section 2.02 of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(b)    Each Notice of Borrowing pursuant to this Section 2.02 shall be irrevocable and the U.S. Borrowers (in the case of the Initial Loan) and the BVI Borrower (in the case of the Additional Loan) shall be bound to make a borrowing in accordance therewith.”

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(k)Section 2.02(c). Section 2.02(c) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(c) The Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares of (i) the Total Initial Loan Commitment, in the case of the Initial Loan and (y) the Total Additional Loan Commitment, in the case of the Additional Loan, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender’s obligations to make a Loan requested hereunder, nor shall the Commitment of any Lender be increased or decreased as a result of the default by any other Lender in that other Lender’s obligation to make a Loan requested hereunder, and each Lender shall be obligated to make the Loans required to be made by it by the terms of this Agreement regardless of the failure by any other Lender.”
(l)Section 2.03. Clauses (b) and (c) of Section 2.03 of the Financing Agreement are  hereby amended and restated to read in their entirety as follows:

“(b)    Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the U.S. Borrowers, on the one hand, and the BVI Borrower, on the other hand, to such Lender resulting from the Loans made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c)    The Administrative Agent shall maintain accounts in which it shall record (i) the amount of the Initial Loan and the Additional Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the U.S. Borrowers and the BVI Borrower, respectively, to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.”
(m)Section 2.03(e). Clause (e) of Section 2.03 of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(e)    Any Lender may request that any Loan made by it be evidenced by a promissory note. In such event, the U.S. Borrowers and/or the BVI Borrower, as applicable, shall execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in a form furnished by the Collateral Agent and reasonably acceptable to the Administrative Borrower. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 12.07) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).”

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(n)Section 2.05(a). Section 2.05(a) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(a)    Reduction of Commitments. The Total Initial Loan Commitment terminated on September 24, 2015 upon the making of the Initial Loan. The Total Additional Loan Commitment shall terminate on the earlier to occur of (i) the making of the Additional Loan, and (ii) 5:00 p.m. (New York City time) on September 20, 2016.”
(o)Section 2.05(b). Clause (i) of Section 2.05(b) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(i)    At any time and from time to time, upon at least 5 Business Days’ prior written notice to the Administrative Agent, the U.S. Borrowers may prepay the principal of the Initial Loan, in whole or in part and/or the BVI Borrower may prepay the principal of the Additional Loan, in whole or in part; provided, that no portion of the Additional Loan may be prepaid pursuant to this Section 2.05(b) unless an equivalent percentage of the Initial Loan is simultaneously being prepaid at such time. Each prepayment made pursuant to this Section 2.05(b)(i) shall be accompanied by the payment of (A) accrued interest to the date of such payment on the amount prepaid and (B) the Applicable Premium payable in connection with such prepayment of the Loan.”
(p)Sections 2.05(c) and (d). Sections 2.05(c) and (d) of the Financing Agreement are hereby amended and restated to read in their entirety as follows:

“(c)    Mandatory Prepayment.

(i)    Contemporaneously with the delivery to the Agents and the Lenders of audited annual financial statements pursuant to Section 7.01(a)(iii), commencing with the delivery to the Agents and the Lenders of the financial statements for the Fiscal Year ended December 31, 2016 or, if such financial statements are not delivered to the Agents and the Lenders on the date such statements are required to be delivered pursuant to Section 7.01(a)(iii), on the date such statements are required to be delivered to the Agents and the Lenders pursuant to Section 7.01(a)(iii), the U.S. Borrowers shall prepay the outstanding principal amount of the Loans in accordance with Section 2.05(d) in an amount equal to the lesser of $5,000,000 and an amount equal to 50% of the Excess Cash Flow of the Parent and its Subsidiaries for such Fiscal Year.

(ii)    Immediately upon any Disposition (excluding Dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (d), (e), (f), (g) or (h) of the definition of Permitted Disposition) by (A) any U.S. Loan Party or its Subsidiaries (other than BVI Borrower and its Subsidiaries), the U.S. Borrowers shall prepay the outstanding principal amount of the Loans in

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accordance with Section 2.05(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such Disposition, and (B) BVI Borrower or its Subsidiaries, the BVI Borrower shall prepay the outstanding principal amount of the Additional Loans in accordance with Section 2.05(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such Disposition, to the extent that the aggregate amount of Net Cash Proceeds received by all Loan Parties and their Subsidiaries (and not paid to the Administrative Agent as a prepayment of the Loans) shall exceed for all such Dispositions $250,000 in any Fiscal Year.  Nothing contained in this Section 2.05(c)(ii) shall permit any Loan Party or any of its Subsidiaries to make a Disposition of any property other than in accordance with Section 7.02(c)(ii).

(iii)    Upon the issuance or incurrence by any Loan Party or any of its Subsidiaries of any Indebtedness (other than Permitted Indebtedness), (1) if such issuance or incurrence is made by a U.S. Loan Party or its Subsidiaries (other than the BVI Borrower and its Subsidiaries), the U.S. Borrowers shall prepay the outstanding amount of the Loans in accordance with Section 2.05(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith, and (2) if such issuance or incurrence is made by the BVI Borrower or its Subsidiaries, the BVI Borrower shall prepay the outstanding amount of the Additional Loans in accordance with Section 2.05(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith.  The provisions of this Section 2.05(c)(iii) shall not be deemed to be implied consent to any such issuance, incurrence or sale otherwise prohibited by the terms and conditions of this Agreement.

(iv)    Upon the receipt by (A) any U.S. Loan Party or any of its Subsidiaries (other than the BVI Borrower or any of its Subsidiaries) of any Insurance Receipts, the U.S. Borrowers shall prepay the outstanding principal of the Loans in accordance with Section 2.05(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith, and (B) BVI Borrower or any of its Subsidiaries of any Insurance Receipts, the BVI Borrower shall prepay the outstanding principal of the Additional Loans in accordance with Section 2.05(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith

(v)    Notwithstanding the foregoing, with respect to Net Cash Proceeds received by any Loan Party or any of its Subsidiaries in connection with a Disposition or the receipt of Insurance Receipts that are required to be used to prepay the Obligations pursuant to Section 2.05(c)(ii) or Section 2.05(c)(iv), as the case may be, up to $500,000 in the aggregate in any Fiscal Year of the Net Cash Proceeds from all such Dispositions and up to $1,500,000 in the aggregate in any Fiscal Year of the Net Cash Proceeds from all such Insurance Receipts shall not be required to be so used to prepay the

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Obligations to the extent that such Net Cash Proceeds are used to replace, repair or restore properties or assets (other than current assets) used in such Person’s business, provided that (A) no Default or Event of Default has occurred and is continuing on the date such Person receives such Net Cash Proceeds, (B) the Administrative Borrower delivers a certificate to the Administrative Agent within 5 days after such Disposition or loss, destruction or taking, as the case may be, stating that such Net Cash Proceeds shall be used to replace, repair or restore properties or assets used in such Person’s business within a period specified in such certificate not to exceed 270 days after the date of receipt of such Net Cash Proceeds (which certificate shall set forth estimates of the Net Cash Proceeds to be so expended), (C) such Net Cash Proceeds are deposited in an account subject to a Control Agreement, and (D) upon the earlier of (1) the expiration of the period specified in the relevant certificate furnished to the Administrative Agent pursuant to clause (B) above or (2) the occurrence of a Default or an Event of Default, such Net Cash Proceeds, if not theretofore so used, shall be used to prepay the Obligations in accordance with Section 2.05(c)(ii) or Section 2.05(c)(iv) as applicable.

(d)    Application of Payments. Each prepayment pursuant to subsections (c)(i), (c)(ii), (c)(iii), (c)(iv) above shall be applied (i) in the case of such prepayments made by the U.S. Borrowers, to the outstanding principal amount of the Initial Loan, until paid in full, and then to the outstanding principal amount of the Additional Loan until paid in full, and (ii) in the case of such prepayments made by the BVI Borrower, to the outstanding principal amount of the Additional Loan, until paid in full. Notwithstanding the foregoing, after the occurrence and during the continuance of an Event of Default, if the Administrative Agent has elected, or has been directed by the Collateral Agent or the Required Lenders, to apply payments in respect of any Obligations in accordance with Section 4.03(b), prepayments required under Section 2.05(c) shall be applied in the manner set forth in Section 4.03(b).  For the avoidance of doubt, no prepayments made by the BVI Borrower shall be applied to the Initial Loan or any other U.S. Obligations.”
(q)Section 2.06(a)(i). Section 2.06(a)(i) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(i)    Upon the occurrence of an Applicable Premium Trigger Event, (A) the U.S. Borrowers shall pay to the Administrative Agent, for the account of the Lenders in accordance with their Pro Rata Shares, the Applicable Premium payable in connection with the Initial Loan, and (B) the BVI Borrower shall pay to the Administrative Agent, for the account of the Lenders in accordance with their Pro Rata Shares, the Applicable Premium payable in connection with the Additional Loan.”

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(r)Sections 2.06(b) and (c). Sections 2.06(b) and (c) of the Financing Agreement are hereby amended and restated to read in their entirety as follows:

“(b)    Audit and Collateral Monitoring Fees. The Borrowers acknowledge that pursuant to Section 7.01(f), representatives of the Agents may visit any or all of the Loan Parties and/or conduct inspections, audits, physical counts, valuations, appraisals, environmental site assessments and/or examinations of any or all of the Loan Parties at any time and from time to time. The Borrowers agree to pay (i) $1,500 per day per examiner plus the examiner’s out-of-pocket costs and reasonable expenses incurred in connection with all such visits, inspections, audits, physical counts, valuations, appraisals, environmental site assessments and/or examinations and (ii) the cost of all visits, inspections, audits, physical counts, valuations, appraisals, environmental site assessments and/or examinations conducted by a third party on behalf of the Agents; provided, that the BVI Borrower shall not be required to pay any such costs and expenses to the extent such costs and expenses relate to the U.S. Borrowers and their Subsidiaries (other than the BVI Borrower and its Subsidiaries).
(c)    Fee Letter. As and when due and payable under the terms of the Fee Letter, the U.S. Borrowers shall pay the fees set forth in the Fee Letter required to be paid by the U.S. Borrowers, and the BVI Borrower shall pay the fees set forth in the Fee Letter required to be paid by the BVI Borrower.”
(s)Sections 2.08(a), 2.09(i), 2.10(d) and 2.11(c). Sections 2.08(a), 2.09(i), 2.10(d) and 2.11(c) are hereby amended by adding the following phrase to the end of each such section:

“Notwithstanding anything to the contrary contained herein, no BVI Loan Party shall be required to make any payment under this Section to the extent the obligation to make such payment constitutes a U.S. Obligation.”
(t)Sections 4.03(b) and (c). Sections 4.03(b) and (c) of the Financing Agreement are hereby amended and restated to read in their entirety as follows:

“(b)    After the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and upon the direction of the Collateral Agent or the Required Lenders shall:
(i) apply all payments in respect of any U.S. Obligations and all proceeds of the Collateral owned by the U.S. Loan Parties as follows: (A) first, ratably to pay the U.S. Obligations in respect of any fees, expense reimbursements, indemnities and other amounts then due and payable to the Agents until paid in full; (B) second, to pay interest then due and payable in respect of the Collateral Agent Advances (other than Collateral Agent Advances made in respect of the BVI Borrower and its Subsidiaries) until paid in full; (C) third, to pay principal of the Collateral Agent Advances (other than Collateral Agent Advances made in respect of the BVI

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Borrower and its Subsidiaries) until paid in full; (D) fourth, ratably to pay the U.S. Obligations in respect of any fees, expense reimbursements, indemnities and other amounts then due and payable to the Lenders until paid in full; (E) fifth, ratably to pay interest then due and payable in respect of the Initial Loan until paid in full; (F) sixth, ratably to pay principal of the Initial Loan until paid in full; (G) seventh, to the ratable payment of all other U.S. Obligations then due and payable; and (H) eighth, at the election of the Administrative Agent, to be held as cash collateral and/or applied to the ratable payment of any other Obligations, in such order as the Administrative Agent may elect; and
(ii) apply all payments in respect of any BVI Obligations and all proceeds of the Collateral owned by the BVI Loan Parties as follows: (A) first, ratably to pay the BVI Obligations in respect of any fees, expense reimbursements, indemnities and other amounts then due and payable to the Agents until paid in full; (B) second, to pay interest then due and payable in respect of the Collateral Agent Advances made in respect of the BVI Borrower and its Subsidiaries until paid in full; (C) third, to pay principal of the Collateral Agent Advances made in respect of the BVI Borrower and its Subsidiaries until paid in full; (D) fourth, ratably to pay the BVI Obligations in respect of any fees, expense reimbursements, indemnities and other amounts then due and payable to the Lenders until paid in full; (E) fifth, ratably to pay interest then due and payable in respect of the Additional Loan until paid in full; (F) sixth, ratably to pay principal of the Additional Loan until paid in full; (G) seventh, to the ratable payment of all other BVI Obligations then due and payable; and (H) eighth, to be held as cash collateral.
(iii)    Notwithstanding anything to the contrary set forth in this Section 4.03(b), no payments from or proceeds of BVI Collateral pledged by the BVI Borrower or any of its Subsidiaries shall be applied to pay any U.S. Obligation.
(c)    For purposes of Section 4.03(b), “paid in full” means payment in cash of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.”
(u)Sections 4.05(b) and (c). Sections 4.05(b) and (c) of the Financing Agreement are hereby amended and restated to read in their entirety as follows:

“(b)    Each U.S. Borrower hereby accepts joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Agents and the Lenders under this Agreement and the other Loan Documents, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of the other U.S. Borrowers to accept joint and several liability for the Obligations. Each of the U.S. Borrowers,

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jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other U.S. Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 4.05), it being the intention of the parties hereto that all of the Obligations shall be the joint and several obligations of each of the U.S. Borrowers without preferences or distinction among them. If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event, the other Borrowers that are U.S. Borrowers will make such payment with respect to, or perform, such Obligation. Subject to the terms and conditions hereof, the Obligations of each of the U.S. Borrowers under the provisions of this Section 4.05 constitute the absolute and unconditional, full recourse Obligations of each of the U.S. Borrowers, enforceable against each such Person to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement, the other Loan Documents or any other circumstances whatsoever. Notwithstanding anything to the contrary contained herein (i) the BVI Borrower shall not be liable to pay or otherwise be liable, in whole or in part, for any U.S. Obligations and (ii) no Collateral granted by the BVI Borrower as security for all or any part of the BVI Obligations or any other credit enhancement provided by the BVI Borrower hereunder or any Loan Document shall secure any U.S. Obligations.”
(c)    The provisions of this Section 4.05 are made for the benefit of the Agents, the Lenders and their successors and assigns, and may be enforced by them from time to time against any or all of the U.S. Borrowers as often as occasion therefor may arise and without requirement on the part of the Agents, the Lenders or such successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any of the other Borrowers or to exhaust any remedies available to it or them against any of the other Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 4.05 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied.”
(v)Section 6.01(s). Section 6.01(s) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(s)    Use of Proceeds.
(i)    The proceeds of the Initial Loan were used (A) to finance a portion of the cash consideration for the Vegas.com Acquisition, (B) to repay a portion of the Existing Indebtedness, (C) for general working capital purposes of the Borrowers and (D) to pay fees and expenses related to this Agreement and the Vegas.com Acquisition.

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(ii)    The proceeds of the Additional Loan shall be used (A) to finance a portion of the cash consideration for the CBG Acquisition, (B) for general working capital purposes of the CBG Subsidiaries and (C) to pay fees and expenses related to the First Amendment and the CBG Acquisition.”
(w)Consummation of Acquisition. Section 6.01(z) of the Financing Agreement is hereby amended by adding the following language to the end thereof to read in its entirety as follows:

“The Parent has delivered to the Agents complete and correct copies of the CBG Acquisition Documents, including all schedules and exhibits thereto. The CBG Acquisition Documents set forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby. The execution, delivery and performance of the CBG Acquisition Documents has been duly authorized by all necessary action (including, without limitation, the obtaining of any consent of stockholders or other holders of Equity Interests required by law or by any applicable corporate or other organizational documents) on the part of the Parent and the BVI Borrower and, to the knowledge of the Parent and the BVI Borrower, on the part of each other Person party thereto. No authorization or approval or other action by, and no notice to filing with or license from, any Governmental Authority on behalf of the Parent or the BVI Borrower and, to the knowledge of the Parent and the BVI Borrower, on behalf of any other Person party thereto is required for the consummation of such sale other than such as have been obtained on or prior to the First Amendment Effective Date. Each CBG Acquisition Document is the legal, valid and binding obligation of the Parent and the BVI Borrower and, to the knowledge of the Parent and the BVI Borrower, each other Person party thereto, enforceable against each such Person in accordance with its terms. All conditions precedent to the CBG Acquisition Agreement have been fulfilled (or with the prior written consent of the Agents, waived), no CBG Acquisition Document has been amended or otherwise modified in a manner adverse to the Parent or the BVI Borrower, any other Loan Party, the Agents or the Lenders, and there has been no breach of any material term or condition of any CBG Acquisition Document.”
(x)Section 6.01. Section 6.01 of the Financing Agreement is hereby amended by adding a new clause to the end thereof to read in its entirety as follows:

“(dd) Exchange Controls. Each Loan Party has the ability to lawfully pay solely and exclusively in Dollars the total amount which is, or may become, payable by it to the Lenders under the Loan Documents.”

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(y)Section 7.01(b). The final paragraph of Section 7.01(b) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“Notwithstanding the foregoing, no Foreign Subsidiary shall be required to become a Guarantor of the U.S. Obligations hereunder (and, as such, shall not be required to deliver the documents required by clause (i) above in respect of any U.S. Obligations); provided, however, that if the Equity Interests of a Foreign Subsidiary are directly owned by a U.S. Loan Party, such U.S. Loan Party shall deliver all such documents, instruments, agreements (including, without limitation, at the reasonable request of the Collateral Agent, a pledge agreement governed by the laws of the jurisdiction of the organization of such Foreign Subsidiary) and certificates described in clause (ii) above to the Collateral Agent, and take all commercially reasonable actions reasonably requested by the Collateral Agent or otherwise necessary to grant and to perfect a first-priority Lien (subject to Permitted Specified Liens) in favor of the Collateral Agent, for the benefit of the Agents and the Lenders, as security for the U.S. Obligations in 65% of the voting Equity Interests of such Foreign Subsidiary and 100% of all other Equity Interests of such Foreign Subsidiary owned by such Loan Party.”
(z)Section 7.02(d). Section 7.02(d) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

(d)    Change in Nature of Business.
(i)    Engage, or permit any of its Subsidiaries to engage in any business other than a Permitted Business; or
(ii)    notwithstanding anything to the contrary contained in any provision of this Agreement or any other Loan Document, permit any U.S. Loan Party to transfer any funds or any other asset, or make any loan or advance to, or investment in, BVI Borrower, other than to the extent such transfer, loan, advance or investment would have been permitted to have been made to or in any Subsidiary of the Parent that is not a U.S. Loan Party.
(aa)Section 7.02(g). The table set forth in Section 7.02(g) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

Period
Capital Expenditure
January 1, 2016 through December 31, 2016
$7,500,000
January 1, 2017 through December 31, 2017
$10,200,000
January 1, 2018 through the Final Maturity Date
$11,900,000”

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(bb)Section 7.03(a). Section 7.03(a) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(a) Consolidated EBITDA of the Parent and its Subsidiaries. Permit Consolidated EBITDA of the Parent and its Subsidiaries for any four fiscal quarter period of the Parent and its Subsidiaries for which the last fiscal quarter ends on a date set forth below (or in the case of the fiscal quarter ending on September 30, 2016, the period from January 1, 2016 to September 30, 2016) to be less than the amount set forth opposite such date:
Fiscal Quarter End
Consolidated EBITDA
September 30, 2016
($1,930,000)
December 31, 2016
($1,800,000)
March 31, 2017
($2,800,000)
June 30, 2017
($2,700,000)
September 30, 2017
($1,500,000)
December 31, 2017
$1,600,000
March 31, 2018
$3,650,000
June 30, 2018
$6,600,000”

(cc)Section 7.03(b). Section 7.03(b) of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“(b)    Consolidated EBITDA of Vegas.com and its Subsidiaries. Permit Consolidated EBITDA of Vegas.com and its Subsidiaries for any four fiscal quarter period of Vegas.com and its Subsidiaries for which the last fiscal quarter ends on a date set forth below (or in the case of the fiscal quarter ending on September 30, 2016, the period from January 1, 2016 to September 30, 2016) to be less than the amount set forth opposite such date:
Fiscal Quarter End
Consolidated EBITDA
September 30, 2016
$5,000,000
December 31, 2016
$7,000,000
March 31, 2017
$7,500,000
June 30, 2017
$8,200,000
September 30, 2017
$8,500,000
December 31, 2017
$8,500,000

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March 31, 2018
$8,500,000
June 30, 2018
$8,500,000

(dd)Section 12.10. Section 12.10 of the Financing Agreement is hereby amended by adding a new clause to the end thereof to read in its entirety as follows:

“(b)    The BVI Borrower hereby irrevocably appoints C T Corporation System (the “Process Agent”), with an office on the date hereof at 111 Eighth Avenue, New York, New York 10011 as its agent to receive on behalf of the BVI Borrower service of the summons and complaint and any other process which may be served in any action or proceeding described above. Such service may be made by mailing or delivering a copy of such process to the BVI Borrower, in care of the Process Agent at the address specified above for such Process Agent, and the BVI Borrower hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. The BVI Borrower covenants and agrees that, for so long as it shall be bound under this Agreement or any other Loan Document, it shall maintain a duly appointed agent for the service of summons and other legal process in New York, New York, United States of America, for the purposes of any legal action, suit or proceeding brought by any party in respect of this Agreement or such other Loan Document and shall keep the Agents advised of the identity and location of such agent. If for any reason there is no authorized agent for service of process in New York, the BVI Borrower irrevocably consents to the service of process out of the said courts by mailing copies thereof by registered United States air mail postage prepaid to it at its address specified in Section 12.01. Nothing in this Section 12.10 shall affect the right of any Secured Party to (i) commence legal proceedings or otherwise sue the BVI Borrower in the country in which it is domiciled or in any other court having jurisdiction over the BVI Borrower or (ii) serve process upon the BVI Borrower in any manner authorized by the laws of any such jurisdiction.”
(ee)Section 12.23. Section 12.23 of the Financing Agreement is hereby amended and restated to read in its entirety as follows:

“Section 12.23 Investment Unit Tax Reporting. The Borrowers and the Secured Parties acknowledge and agree that the Warrants and the CBG Warrants are part of an investment unit within the meaning of Section 1273(c)(2) of the Internal Revenue Code, which includes the Loan. The Borrowers and the Secured Parties further agree as between them, that the fair market value of the Warrants is $3,000,000 and that, pursuant to Treasury Regulations Section 1.1273-2(h), $3,000,000 of the issue price of the investment unit will be allocable to the Warrants and the balance (after taking into account the Discount (as defined in the Fee Letter)) shall be allocable to the Loan. The Borrowers and the Secured Parties further agree as between them, that the fair market value of the CBG Warrants is $3,500,000 and that, pursuant to Treasury Regulations Section 1.1273-2(h), $3,500,000 of the issue price of the

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investment unit will be allocable to the CBG Warrants and the balance (after taking into account the Additional Discount (as defined in the Fee Letter)) shall be allocable to the Loan. The Borrowers and the Secured Parties each agree to prepare their federal income tax returns in a manner consistent with the foregoing.”
(ff)Article XII. Article XII of the Financing Agreement is hereby amended by adding the following new Sections to the end thereof to read in their entirety as follows:

“Section 12.24 Judgment Currency. This is an international financial transaction in which the specification of a currency and payment in New York is of the essence. Dollars shall be the currency of account in the case of all payments pursuant to or arising under this Agreement or under any other Loan Document, and all such payments shall be made to the Administrative Agent’s Account in New York in immediately available funds. To the fullest extent permitted by applicable law, the obligations of each Loan Party to the Secured Parties under this Agreement and under the other Loan Documents shall not be discharged by any amount paid in any other currency or in a place other than to the Administrative Agent’s Account in New York to the extent that the amount so paid after conversion under this Agreement and transfer to New York does not yield the amount of Dollars in New York due under this Agreement and under the other Loan Documents. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder in Dollars into another currency (the “Other Currency”), to the fullest extent permitted by applicable law, the rate of exchange used shall be that at which the Administrative Agent could, in accordance with normal procedures, purchase Dollars with the Other Currency on the Business Day preceding that on which final judgment is given. The obligation of each Loan Party in respect of any such sum due from it to the Secured Parties hereunder shall, notwithstanding any judgment in such Other Currency, be discharged only to the extent that, on the Business Day immediately following the date on which the Administrative Agent receives any sum adjudged to be so due in the Other Currency, the Administrative Agent may, in accordance with normal banking procedures, purchase Dollars with the Other Currency. If the Dollars so purchased are less than the sum originally due to the Secured Parties in Dollars, each Loan Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Secured Parties against such loss, and if the Dollars so purchased exceed the sum originally due to the Secured Parties in Dollars, the Secured Parties agrees to remit to the Loan Parties such excess.
Section 12.25    Waiver of Immunity. To the extent that any Loan Party has or hereafter may acquire (or may be attributed, whether or not claimed) any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service of process or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such Loan Party hereby irrevocably waives and agrees not to plead or claim, to the fullest extent permitted by law, such immunity in respect of (a) its obligations under the Loan Documents,

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(b) any legal proceedings to enforce such obligations and (c) any legal proceedings to enforce any judgment rendered in any proceedings to enforce such obligations. Each Loan Party hereby agrees that the waivers set forth in this Section 12.25 shall be to the fullest extent permitted under the Foreign Sovereign Immunities Act and are intended to be irrevocable for purposes of the Foreign Sovereign Immunities Act.
Section 12.26    English Language. This Agreement and each other Loan Document have been negotiated and executed in English. All certificates, reports, notices and other documents and communications given or delivered by any party hereto pursuant to this Agreement or any other Loan Document shall be in English or, if not in English, accompanied by a certified English translation thereof. The English version of any such document shall control the meaning of the matters set forth herein.”
(gg)Schedules. Schedule 1.01(A) of the Financing Agreement is hereby amended and restated to read in its entirety as set forth on Annex I hereto.

3. Consent to CBG Acquisition. The Lenders and the Agents hereby consent to the consummation of the CBG Acquisition and agree that the CBG Acquisition shall be deemed to be a Permitted Acquisition under the Financing Agreement and for all purposes of the Loan Documents (other than for purposes of clause (j) of the definition of the term “Permitted Acquisitions” and for purposes of such clause (j), the CBG Acquisition is not treated as an Acquisition).

4. Representations and Warranties. Each Loan Party hereby represents and warrants to the Agents and the Lenders as follows:

(a) Representations and Warranties; No Event of Default. The representations and warranties herein, in Article VI of the Financing Agreement and in each other Loan Document, certificate or other writing delivered by or on behalf of the Loan Parties to any Agent or any Lender pursuant to the Financing Agreement or any other Loan Document on or immediately prior to the First Amendment Effective Date are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date), and no Default or Event of Default has occurred and is continuing as of the First Amendment Effective Date or would result from this Amendment becoming effective in accordance with its terms.

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(b) Organization, Good Standing, Etc. Each Loan Party (i) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has all requisite power and authority to conduct its business as now conducted and as presently contemplated, and to execute and deliver this Amendment, and to consummate the transactions contemplated hereby and by the Financing Agreement, as amended hereby, and (iii) is duly qualified to do business in, and is in good standing in each jurisdiction where the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary except (solely for the purposes of this subclause (iii)) where the failure to be so qualified and be in good standing could not reasonably be expected to have a Material Adverse Effect.

(c) Authorization, Etc. The execution and delivery by each Loan Party of this Amendment and each other Loan Document to which it is or will be a party, and the performance by it of the Financing Agreement, as amended hereby, (i) are within the power and authority of such Loan Party and have been duly authorized by all necessary action, (ii) do not and will not contravene any of its Governing Documents, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Loan Document) upon or with respect to any of its properties, (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to its operations or any of its properties, except (solely for the purposes of this subclause (iv)) to the extent that such default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal could not reasonably be expected to have a Material Adverse Effect and (v) do not contravene any applicable Requirement of Law or any Contractual Obligation binding on or otherwise affecting it or any of its properties, except (solely for the purposes of this subclause (v)) to the extent it could not reasonably be expected to have a Material Adverse Effect.

(d) Enforceability of Loan Documents. This Amendment is, and each other Loan Document to which any Loan Party is or will be a party, when delivered hereunder, will be, a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by principles of equity.

(e) Governmental Approvals. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required in connection with the due execution, delivery and performance by any Loan Party of any Loan Document to which it is or will be a party.

(f) Outstanding Obligations. On the First Amendment Effective Date, $27,500,000 of the principal amount of the Initial Loan was outstanding, and the Loan Parties acknowledge and agree that such amount is payable pursuant to the Financing Agreement without defense, offset, withholding, counterclaim, or deduction of any kind.


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5. Conditions to Effectiveness. This Amendment shall become effective only upon satisfaction in full, in a manner satisfactory to the Agents, of the following conditions precedent (the first date upon which all such conditions shall have been satisfied being hereinafter referred to as the “First Amendment Effective Date”):

(a) Payment of Fees, Etc. The Borrowers shall have paid on or before the First Amendment Effective Date all fees, costs, expenses and taxes then payable pursuant to Section 2.06 (including fees provided for in the Fee Letter) or 12.04 of the Financing Agreement.

(b) Representations and Warranties. The representations and warranties contained in this Amendment and in Article VI of the Financing Agreement and in each other Loan Document shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of the First Amendment Effective Date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date).

(c) No Default; Event of Default. No Default or Event of Default shall have occurred and be continuing on the First Amendment Effective Date or result from this Amendment becoming effective in accordance with its terms.Delivery of Documents. The Collateral

(d) Agent shall have received on or before the First Amendment Effective Date the following, each in form and substance satisfactory to the Collateral Agent and, unless indicated otherwise, dated the First Amendment Effective Date:

(i)this Amendment, duly executed by the Loan Parties, each Agent and each Lender;

(ii)the Fee Letter (as amended and restated on the First Amendment Effective Date), duly executed by the Borrowers and the Agents;

(iii)the Amendment to Shareholder Letter, duly executed by the Collateral Agent, the Administrative Borrower and DigiPac;

(iv)the Side Letter (as amended and restated on the First Amendment Effective Date), duly executed by the Collateral Agent and the Administrative Borrower;

(v)the CBG Warrants and the CBG Registration Rights Agreement (and related subscription agreement, officer’s certificate and voting agreement), in each case, duly executed by the Parent;

(vi)[reserved];

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(vii)a Notice of Borrowing, duly executed by the Administrative Borrower;

(viii)the First Amendment Disbursement Agreement, duly executed by each Loan Party, the Agents and the Lenders;

(ix)a copy of the resolutions of each Loan Party, certified as of the First Amendment Effective Date by an Authorized Officer thereof, authorizing (A) the additional borrowings hereunder and the transactions contemplated by this Amendment and the other Loan Documents to which such Loan Party is or will be a party, and (B) the execution, delivery and performance by such Loan Party of this Amendment and each other Loan Document to which such Loan Party is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith;

(x)a certificate of an Authorized Officer of each Loan Party, certifying the names and true signatures of the representatives of such Loan Party authorized to sign this Amendment and each other Loan Document to which such Loan Party is or will be a party and the other documents to be executed and delivered by such Loan Party in connection herewith and therewith, together with evidence of the incumbency of such Authorized Officers;

(xi)a certificate of the appropriate official(s) of the jurisdiction of organization and each jurisdiction of foreign qualification of each Loan Party where its ownership or lease of property or the conduct of its business requires such qualification certifying as of a recent date not more than 30 days prior to the First Amendment Effective Date as to the good standing of such Loan Party, in such jurisdictions, except, in each case, where the failure to be so qualified could not reasonable be expected to have a Material Adverse Effect;

(xii)a true and complete copy of the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of each Loan Party certified as of a recent date not more than 30 days prior to the First Amendment Effective Date by an appropriate official of the jurisdiction of organization of such Loan Party, which shall set forth the same complete name of such Loan Party as is set forth herein and the organizational number of such Loan Party, if an organizational number is issued in such jurisdiction (or, to the extent the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of such Loan Party has not been amended, modified or supplemented since the Effective Date, a certificate from an Authorized Officer of such Loan Party certifying that such charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of such Loan Party has not been amended, modified or supplemented since the Effective Date);

(xiii)a copy of the charter and by-laws, limited liability company agreement, operating agreement, agreement of limited partnership or other organizational documents of each Loan Party, together with all amendments thereto, certified as of the First Amendment Effective Date by an Authorized Officer of such Loan Party (or, to the extent the charter

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and by-laws, limited liability company agreement, operating agreement, agreement of limited partnership or other organizational documents of such Loan Party have not been amended, modified or supplemented since the Effective Date, a certificate from an Authorized Officer of such Loan Party certifying that such charter and by-laws, limited liability company agreement, operating agreement, agreement of limited partnership or other organizational documents have not been amended, modified or supplemented since the Effective Date);

(xiv)the results of UCC, tax, lien, judgment, litigation and similar searches with respect to each Loan Party, CBG, and each CBG Subsidiary, the results of which shall be satisfactory to the Agents;

(xv)an opinion of (A) Olshan Frome Wolosky LLP, counsel to the Loan Parties, (B) Sklar Williams PLLC, Nevada counsel to the Loan Parties, and (C) Farara Kerins, BVI counsel to the Agents, in each case, as to such matters as the Collateral Agent may reasonably request, including, without limitation, the CBG Registration Rights Agreement and the CBG Warrants;

(xvi)a certificate of an Authorized Officer of each Loan Party, certifying as to the matters set forth in subsections (b), (c), (g) and (h) of this Section 5;

(xvii)a certificate of the chief financial officer of each Loan Party, certifying as to the solvency of such Loan Party (after giving effect to the Loans made on the First Amendment Effective Date and the transactions contemplated by this Amendment);

(xviii)a certificate of the chief financial officer of the Parent setting forth in reasonable detail the calculations required to establish compliance, on a pro forma basis after giving effect to the Additional Loan, with each of the financial covenants contained in Section 7.03 of the Financing Agreement, as amended by this Amendment;

(xix)[reserved];

(xx)Debenture, duly executed by the BVI Borrower;

(xxi)Share Charge, duly executed by the Parent;

(xxii)Share Transfers, duly executed by the Parent;

(xxiii)Resignation Letters, duly executed by each member of the board of directors of the BVI Borrower;

(xxiv)Joinder Agreements, duly executed by the BVI Borrower and RAAD;

(xxv)Security Agreement Supplements, in the form attached as Exhibit C to the Security Agreement, duly executed and delivered by the BVI Borrower and RAAD,

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together with the original certificates representing all of the Equity Interests of the CBG Subsidiaries owned by the BVI Borrower required to be pledged thereunder, and related Irrevocable Proxies and Registration Pages (as defined in the Security Agreement), and all promissory notes payable to the BVI Borrower or RAAD required to be pledged thereunder, accompanied by undated stock or other powers executed in blank and other proper instruments of transfer;

(xxvi)a Pledge Amendment, substantially in the form of Exhibit A to the Security Agreement, duly executed by the Parent, together with the original certificates representing all of the Equity Interests of the BVI Borrower and RAAD required to be pledged thereunder, accompanied by undated stock or other powers executed in blank, and related Irrevocable Proxies and Registration Pages (as defined in the Security Agreement);

(xxvii)a counterpart to the Intercompany Subordination Agreement, duly executed by the BVI Borrower, RAAD and the CBG Subsidiaries;

(xxviii)evidence satisfactory to the Collateral Agent of the filing of appropriate financing statements on Form UCC-1 or under other applicable laws in any jurisdiction in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by the Security Agreement against the BVI Borrower and RAAD;

(xxix)a Perfection Certificate, duly executed by the BVI Borrower and RAAD, and completed in a manner satisfactory to the Collateral Agent; and

(xxx)such other documents as the Agents may reasonably request.

(e) Material Adverse Effect. The Agents shall have determined, in their reasonable judgment, that no event or development shall have occurred since December 31, 2015, which could reasonably be expected to have a Material Adverse Effect.

(f) Liens; Priority. The Agents shall be satisfied that the Collateral Agent has been granted, and holds, for the benefit of the Agents and the Lenders, a perfected, first priority Lien on and security interest in all of the Collateral, subject only to Permitted Liens, to the extent such Liens and security interests are required pursuant to the Loan Documents to be granted or perfected on or before the First Amendment Effective Date.

(g) Approvals. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with any Loan Document or the transactions contemplated thereby or the conduct of the Loan Parties’ business shall have been obtained or made and shall be in full force and effect. There shall exist no claim, action, suit, investigation, litigation or proceeding (including, without limitation, shareholder or derivative litigation) pending or, to the knowledge of any Loan Party, threatened in any court or before any arbitrator or Governmental Authority which (i) relates to the Loan Documents or the transactions contemplated thereby or (ii) could reasonably be expected to have a Material Adverse Effect.

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(h) Consummation of CBG Acquisition. The Agents shall have received, in form and substance reasonably satisfactory to them, evidence that the CBG Acquisition will be consummated in accordance with the terms of the CBG Acquisition Documents concurrently with the effectiveness of this Amendment. Concurrently with the making of the Additional Loan, (i) the BVI Borrower shall have purchased pursuant to the CBG Acquisition Documents (no provision of which shall have been amended or otherwise modified or waived in a manner adverse to the Parent, the other Loan Parties, the Agents or the Lenders without the prior written consent of the Agents), and shall have become the owner, free and clear of all Liens other than Permitted Liens, of all of the outstanding Equity Interests of the CBG Subsidiaries, (ii) a portion of the proceeds of the Additional Loan shall have been applied to finance a portion of the consideration for the CBG Acquisition payable pursuant to the CBG Acquisition Documents for all of the outstanding Equity Interests of the CBG Subsidiaries and the closing and other costs relating thereto and (iii) each of the Parent, the BVI Borrower, CBG and the CBG Subsidiaries shall have fully performed (or, with the prior written consent of the Collateral Agent, received a waiver with respect to) all of the obligations to be performed by such Person under the CBG Acquisition Documents.

(i) Due Diligence. The Agents shall have completed their business, legal and collateral due diligence with respect to each Loan Party and each CBG Subsidiary, and the results thereof shall be acceptable to the Agents, in their sole and absolute discretion.

6. Continued Effectiveness of the Financing Agreement and Other Loan Documents. Each Loan Party hereby (a) acknowledges and consents to this Amendment, (b) confirms and agrees that the Financing Agreement and each other Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the First Amendment Effective Date, all references in any such Loan Document to “the Financing Agreement”, the “Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Financing Agreement shall mean the Financing Agreement as amended by this Amendment, (c) confirms and agrees that, to the extent that any such Loan Document purports to assign or pledge to the Collateral Agent, for the benefit of the Agents and the Lenders, or to grant to the Collateral Agent, for the benefit of the Agents and the Lenders, a security interest in or Lien on any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Financing Agreement (as amended hereby) and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects and (d) with respect to each Loan Party that is a Guarantor, confirms and agrees that all of the provisions of and obligations under its Guaranty are hereby ratified and confirmed in all respects (and specifically confirms and agrees (without limiting any provisions of Sections 11.02 and 11.03 of the Financing Agreement) that the Obligations in respect of the Additional Loan shall constitute part of the Guaranteed Obligations). This Amendment does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties’ obligations to repay the Loans in accordance with the terms of Financing Agreement or the obligations of the Loan Parties under any Loan Document to which they are a party, all of which obligations shall remain in full force and effect. Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Agent or any Lender

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under the Financing Agreement or any other Loan Document nor constitute a waiver of any provision of the Financing Agreement or any other Loan Document.

7. Post-First Amendment Effective Date Obligations. The Loan Parties hereby agree to deliver to the Agents within 30 days of the First Amendment Effective Date, or such later date as the Agents shall agree in their reasonable discretion, (a) all Control Agreements that, in the reasonable judgment of the Agents, are required for the Loan Parties to comply with the Loan Documents as of the First Amendment Effective Date, each duly executed by, in addition to the applicable Loan Party, the applicable financial institution with respect to each account listed on Schedule IV of each Security Agreement Supplement, (b) BVI Borrower shall have irrevocably appointed a process agent as its agent to receive service of the summons and complaint and any other process which may be served in any action or proceeding brought in the courts of the State of New York located in New York, New York, or of the United States of America sitting in New York, New York, (c) certificated membership interests (together with effective endorsements thereof executed in blank), and organizational documents of RAAD evidencing the election by RAAD to “opt-in” to Article 8 of the UCC, in each case in form and substance satisfactory to the Collateral Agent, (d) a favorable opinion of California counsel to the Loan Parties reasonably acceptable to the Agents as to such customary matters as the Agents may reasonably request and (e) evidence of the insurance coverage required by Section 7.01(h) of the Financing Agreement and evidence that such insurance coverage is in full force and effect.

8. No Novation. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby.

9. No Representations by Agents or Lenders. Each Loan Party hereby acknowledges that it has not relied on any representation, written or oral, express or implied, by any Agent or any Lender, other than those expressly contained herein, in entering into this Amendment.

10. Release. Each Loan Party hereby acknowledges and agrees that: (a) neither it nor any of its Subsidiaries has any claim or cause of action against any Agent or any Lender (or any of the directors, officers, employees, agents, attorneys or consultants of any of the foregoing) and (b) the Agents and the Lenders have heretofore properly performed and satisfied in a timely manner all of their obligations to the Loan Parties, and all of their Subsidiaries and Affiliates. Notwithstanding the foregoing, the Agents and the Lenders wish (and the Loan Parties agree) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of their rights, interests, security and/or remedies. Accordingly, for and in consideration of the agreements contained in this Amendment and other good and valuable consideration, each Loan Party (for itself and its Subsidiaries and Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the “Releasors”) does hereby fully, finally, unconditionally and irrevocably release, waive and forever discharge the Agents and the Lenders, together with their respective Affiliates and Related Funds, and each of the directors, officers, employees, agents, attorneys and consultants of each of the foregoing (collectively, the “Released Parties”), from any and all debts, claims, allegations,

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obligations, damages, costs, attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done, in each case prior to the First Amendment Effective Date, directly arising out of, connected with or related to the Financing Agreement or any other Loan Document or any act, event or transaction related or attendant thereto (other than this Amendment) (other than this Amendment, or the agreements of any Agent or any Lender contained therein, or the possession, use, operation or control of any of the assets of any Loan Party, or the making of any Loans or other advances, or the management of such Loans or other advances or the Collateral. Each Loan Party represents and warrants that it has no knowledge of any claim by any Releasor against any Released Party or of any facts or acts or omissions of any Released Party which on the date hereof would be the basis of a claim by any Releasor against any Released Party which would not be released hereby. The foregoing release does not release or discharge, or operate to waive performance by, the Agents or the Lenders of their express agreements and obligations stated in the Loan Documents on or after the First Amendment Effective Date.

11. Further Assurances. The Loan Parties shall execute any and all further documents, agreements and instruments, and take all further actions, as may be required under Applicable Law or as any Agent may reasonably request, in order to effect the purposes of this Amendment.

12. Miscellaneous.

(a) This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.

(b) Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

(c) This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

(d) Each Loan Party hereby acknowledges and agrees that this Amendment constitutes a “Loan Document” under the Financing Agreement. Accordingly, it shall be an immediate Event of Default under the Financing Agreement if (i) any representation or warranty made by any Loan Party under or in connection with this Amendment shall have been incorrect in any respect when made or deemed made, or (ii) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in this Amendment.


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(e) Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date set forth on the first page hereof.
 
U.S. BORROWERS:
 
 
 
REMARK MEDIA, INC.
BANKS.COM, INC.
BIKINI.COM LLC
FILELATER.COM LLC
ROOMLIA, INC.
TAX EXTENSION LLC
VEGAS.COM, LLC
 
By:
/s/ Douglas Osrow
 
 
Name: Douglas Osrow
 
 
Title: Chief Financial Officer
 
 
 
BVI BORROWER:
 
 
 
KANKAN LIMITED
 
By:
/s/ Kai-Shing Tao
 
 
Name: Kai-Shing Tao
 
 
Title: Director
 
 
 
U.S. GUARANTORS:
 
 
 
CASINO TRAVEL & TOURS, LLC
CTT TOURS, LLC
CT&T TRANSPORTATION, LLC
INTAC INTERNATIONAL, INC.
LV.COM, LLC
REMARK TRAVEL, INC.
SLAPTV LLC
REMARK HOLDINGS SPV, INC.
 
By:
/s/ Douglas Osrow
 
 
Name: Douglas Osrow
 
 
Title: Chief Financial Officer


Amendment No. 1



 
BVI GUARANTOR:
 
 
 
 
RAAD PRODUCTIONS, LLC
 
By:
/s/ Douglas Osrow
 
 
Name:
Douglas Osrow
 
 
Title:
Chief Financial Officer


Amendment No. 1



 
COLLATERAL AGENT AND ADMINISTRATIVE AGENT:
 
 
 
 
MGG INVESTMENT GROUP LP
 
By:
/s/ Kevin F. Griffin
 
 
Name:
Kevin F. Griffin
 
 
Title:
Chief Executive Officer and
Chief Investment Officer


Amendment No. 1



 
LENDERS:
 
 
 
 
 
MGG FUNDING II LLC
 
By:
/s/ Kevin F. Griffin
 
 
Name:
Kevin F. Griffin
 
 
Title:
Chief Executive Officer and
Chief Investment Officer
 
 
 
 
MGG SPECIALTY FINANCE FUND LP
 
By:
/s/ Kevin F. Griffin
 
 
Name:
Kevin F. Griffin
 
 
Title:
Chief Executive Officer and
Chief Investment Officer
 
 
 
 
MGG SF EVERGREEN FUND LP
 
By:
/s/ Kevin F. Griffin
 
 
Name:
Kevin F. Griffin
 
 
Title:
Chief Executive Officer and
Chief Investment Officer
 
 
 
 
MGG SF EVERGREEN MASTER FUND (CAYMAN) LP
 
By:
/s/ Kevin F. Griffin
 
 
Name:
Kevin F. Griffin
 
 
Title:
Chief Executive Officer and
Chief Investment Officer



Amendment No. 1



Schedule 1.01(A)

Lenders, Lenders’ Commitments and Lenders’ Loans

Lender
Initial Loan 1
Additional Loan Commitment
MGG FUNDING II LLC
$26,063,870.26
$5,879,977.00
MGG SPECIALTY FINANCE FUND LP
95,123.64
1,351,304.00
MGG SF EVERGREEN FUND LP
0.00
0.00
MGG SF EVERGREEN MASTER FUND (CAYMAN) LP
289,610.86
768,719.00
MGG SF DRAWDOWN UNLEVERED FUND LP
1,051,395.24
0.00
Total
$27,500,000.00
$8,000,000.00



























 
 
1 As of the First Amendment Effective Date.


Exhibit




REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of September 20, 2016, is made and entered into by and among Remark Media, Inc., a Delaware corporation (the “Company”), each of the parties listed as Subscribers on the signature page hereto (each, a “Subscriber” and collectively, the “Subscribers”, and the Company and the Subscribers are each a “Party”, and collectively, the “Parties”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Subscription Agreement (as defined below).
RECITALS
WHEREAS, the Company and the Subscribers are parties to a Subscription Agreement of dated as of the date hereof (the “Subscription Agreement”), pursuant to which, upon the terms and subject to the conditions set forth in the Subscription Agreement, the Subscribers will receive certain securities of the Company as inducement for the Subscribers to enter into Amendment No. 1; and
WHEREAS, as a condition to the Closing, the Company and the Subscribers agreed to enter into this Agreement to provide for, among other things, certain registration rights with respect to certain securities of the Company, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS

Section 1. 1Capitalized terms used herein and not otherwise defined shall have the definitions ascribed to such terms in the Subscription Agreement. For purposes of this Agreement:

(a)Advice” has the meaning set forth in Section 2.4.

(b)Board” means the Company’s Board of Directors.

(c)Common Stock” means (i) the Company’s shares of Common Stock, par value $0.001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.






(d)Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(e)Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

(f)Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

(g)Holder” means any holder of Registrable Securities who is a party to this Agreement.

(h)Lead Investor” means MGG Specialty Finance Fund LP.

(i)Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision of such governmental agency.

(j)Prospectus” means a prospectus forming a part of the Registration Statement.

(k)Registrable Securities” means the Shares, as well as any securities issued as a dividend or other distribution with respect to, or in exchange or in replacement of, the Shares; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 3.1, and excluding for purposes of Article II any Shares for which registration rights have terminated pursuant to Section 2.7 of this Agreement.

(l)Registration Period” has the meaning set forth in Section 2.1(a).

(m)Registration Statement” has the meaning set forth in Section 2.1(a).

(n)Required Holders” means the holders of at least a majority of the Registrable Securities and shall include the Lead Investor so long as the Lead Investor or any of its Affiliates holds any Registrable Securities.

(o)Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

(p)SEC” means the Securities and Exchange Commission.

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

(r)Shares” means 130% of the shares of Common Stock issuable upon exercise of the Warrants issued to the Subscribers at Closing.

(s)Warrants” means the warrants to purchase Common Stock to be issued to the Subscribers upon the terms and subject to the conditions set forth in the Subscription Agreement.

ARTICLE II
REGISTRATION RIGHTS

Section 2. 1Registration.

(a)The Company, at its sole cost and expense, shall prepare and file with the SEC a registration statement on Form S-3 (or on Form S-1 if the Company is then ineligible to use Form S-3) pursuant to Rule 415 under the Securities Act (the “Registration Statement”) covering the resale of the Shares as soon as reasonably practicable following the Closing Date, but in no event later than forty-five (45) days thereafter. The Company shall use its reasonable best efforts: (i) to cause such Registration Statement to be declared effective by the SEC promptly after filing; and (ii) to maintain the effectiveness of such Registration Statement until the earlier of such time that all of the Registrable Securities covered thereby (x) have been sold by the Holders or (y) are permitted to be sold by each Holder without volume or manner-of- sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 (the “Registration Period”). By 9:30 a.m. New York time on the Business Day following the date that the Registration Statement has been declared effective by the SEC, the Company shall file with the SEC in accordance with Rule 424 under the Securities Act the final prospectus to be used in connection with sales pursuant to the Registration Statement.

(b)Notwithstanding anything to the contrary contained in this Agreement, in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to the Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf of, the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Holders participating therein (or as otherwise may be acceptable to each Holder) without being named therein as an “underwriter,” then the Company shall reduce the number of shares to be included in such Registration Statement by all Holders until such time as the Staff and the SEC shall permit such Registration Statement to become effective as aforesaid. In making such reduction, the Company shall reduce the number of shares to be

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included by all Holders on a pro rata basis (based upon the number of Registrable Securities otherwise required to be included for each Holder) unless the inclusion of shares by a particular Holder or a particular set of Holders are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position, in which event the shares held by such Holder or set of Holders shall be the only shares subject to reduction (and if by a set of Holders on a pro rata basis by such Holders or on such other basis as would result in the exclusion of the least number of shares by all such Holders). In addition, in the event that the Staff or the SEC requires any Holder seeking to sell securities under the Registration Statement filed pursuant to this Agreement to be specifically identified as an “underwriter” in order to permit such Registration Statement to become effective, and such Holder does not consent to being so named as an underwriter in such Registration Statement, then, in each such case, the Company shall reduce the total number of Registrable Securities to be registered on behalf of such Holder, until such time as the Staff or the SEC does not require such identification or until such Holder accepts such identification and the manner thereof. In the event of any reduction in Registrable Securities pursuant to this paragraph, an affected Holder shall have the right to require, upon delivery of a written request to the Company signed by such Holder, the Company to file a registration statement within twenty (20) days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale by such Holder in a manner acceptable to such Holder, and the Company shall following such request cause to be and keep effective such registration statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder, in each case until the end of the Registration Period with respect to such Registrable Securities or until such Holder agrees to be named as an underwriter in any such Registration Statement in a manner acceptable to such Holder as to all Registrable Securities held by such Holder and that have not theretofore been included in the Registration Statement filed pursuant to this Agreement (it being understood that the special demand right under this sentence may be exercised by a Holder multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such Holder as contemplated above).

Section 2. 2Registration Procedures. In connection with the registration of any Registrable Securities, the Company shall, as soon as reasonably practicable:

(a)Prepare and file with the SEC such pre-effective and post-effective amendments and supplements to the Registration Statement and the Prospectus used in connection with the Registration Statement, and/or file such reports under the Exchange Act, as may be necessary to cause the Registration Statement to become effective, to keep the Registration Statement continuously effective during the Registration Period and ensure that the Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading, and as may otherwise be required or applicable under, and to comply with the provisions of, the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the Registration Period.


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(b)Furnish to each Holder such number of copies of the Prospectus, and each amendment or supplement thereto, in conformity with the requirements of the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate the disposition of Registrable Securities owned by it.

(c)Notify each Holder: (i) when a Prospectus or any Prospectus supplement or post-effective amendment is proposed to be filed and, with respect to any post-effective amendment, when the same has become effective, except for any filing to be made solely to incorporate by reference a Current Report on Form 8-K, Quarterly Report on Form 10-Q or Annual Report on Form 10-K to be filed with the SEC; (ii) of any request by the SEC, or any other federal or state governmental authority, for amendments or supplements to the Registration Statement or a Prospectus or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; and (v) of the occurrence of any event or circumstance that makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, Prospectus or documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company.

(d)Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of, any order suspending the effectiveness of the Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, promptly.

(e)If requested by any of the Holders, (i) incorporate in a Prospectus supplement or post-effective amendment such information as such Holders reasonably request be included therein regarding such Holders or the plan of distribution of the Registrable Securities and (ii) make all required filings of the Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of such matters to be incorporated in such Prospectus supplement or post-effective amendment; provided, however, that the Company shall not be required to take any action pursuant to this Section 2.2(e) that would, in the opinion of counsel to the Company, violate applicable law.

(f)Upon the occurrence of any event contemplated by Section 2.2(c), prepare and deliver to the Holders any required supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document, including such reports as may be required to be filed under the Exchange

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Act, so that, as thereafter delivered, the Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(g)Use its reasonable best efforts to cause all Registrable Securities, the resale of which is registered under cover of the Registration Statement, to be listed on the NASDAQ Capital Market or such other securities exchange or automated quotation system, if any, as is then the principal securities exchange or automated quotation system on which the Common Stock is then listed.

(h)Use its reasonable best efforts to cause all Registrable Securities registered by the Registration Statement to be registered or qualified under the securities or “blue sky” laws of such states as the Holders shall reasonably request; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or to subject itself to any material tax in any such jurisdiction where it is not then so subject.

(i)Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold pursuant to the Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may reasonably request, a reasonable period of time prior to sales of the Registrable Securities pursuant to the Registration Statement.

(j)Neither the Company nor any Subsidiary or Affiliate thereof shall identify any Holder as an underwriter in any public disclosure or filing with the SEC, the Principal Market or any Eligible Market and any Holder being deemed an underwriter by the SEC shall not relieve the Company of any obligations it has under this Agreement or any other Transaction Document (as defined in the Subscription Agreement).

Section 2. 3Obligation to Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to the Registrable Securities of a Holder that such Holder shall have furnished to the Company such information regarding it, the Registrable Securities held by it, and the intended method of disposition of such Registrable Securities as the Company shall reasonably request and as shall be required in connection with the action to be taken by the Company.

Section 2. 4Delay or Suspension of Registration Statement. Upon receipt of any notice from the Company to the Holders of the existence of any fact of the kind described in Section 2.2(c)(v), each Holder shall forthwith discontinue disposition of Registrable Securities until such Holder’s receipt of copies of a supplemented or amended Prospectus contemplated by Section 2.2(f), or until it is advised in writing (the “Advice”) by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder shall deliver to the Company (at the sole expense of the Company) all copies, other than

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permanent file copies then in each Holder’s possession, of the Prospectus current at the time of receipt of such notice. In the event the Company shall give any such notice, the Registration Period shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.2(c)(v) to and including the date when the Holders shall have received the copy of the supplemented or amended prospectus contemplated by Section 2.2(f) or the Advice.

Section 2. 5Expenses of Registration. All expenses incurred in connection with the registration pursuant to Section 2.1 (excluding any underwriters’ discounts and commissions and fees and disbursements of counsel for the Holders), including, without limitation all registration and qualification fees, and fees and disbursements of counsel and accountants for the Company, shall be borne solely by the Company.

Section 2. 6Indemnification.

(a)To the fullest extent permitted by law, the Company shall, and hereby does, indemnify and hold harmless each Holder, each director, officer, manager, partner, member, employee, representative and agent of each Holder, and each person, if any, who controls each Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (a “Controlling Person”), against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act and applicable state securities laws insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including any preliminary Prospectus or final Prospectus or any amendments or supplements thereto or in any qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances, or (iii) any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company and relating to action or inaction required of the Company in connection with any such registration; and shall reimburse each such Person for any legal or other expenses reasonably incurred by him in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such claim. The indemnity agreement contained in this Section 2.6 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed) nor shall the Company be liable to a Holder or Controlling Person of such Holder for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or an alleged untrue statement or omission or alleged omission made in connection with the Registration Statement, preliminary Prospectus, final Prospectus, or amendments or supplements thereto or Blue Sky Filing, in reasonable reliance upon and in conformity with information furnished by such Holder in writing expressly for use in connection with such registration by or on behalf of such Holder or Controlling Person of such Holder.

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(b)To the fullest extent permitted by law, each Holder shall indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, each Controlling Person of the Company, and any underwriter for the Company (as defined in the Securities Act), against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer, Controlling Person or underwriter may become subject, under the Securities Act and applicable state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including any preliminary Prospectus or final Prospectus or any amendments or supplements thereto or in any Blue Sky Filing, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, preliminary Prospectus or final Prospectus or any amendments or supplements thereto or Blue Sky Filing, in reasonable reliance upon and in conformity with information furnished by such Holder or Controlling Person of such Holder in writing expressly for use in connection with such registration. The indemnity agreement contained in this Section 2.6 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld, conditioned or delayed).

(c)In no event shall the liability of any Holder under Section 2.6(b) be greater than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(d)Promptly after receipt by an indemnified party under this Section 2.6 of notice of the commencement of any action or actual knowledge of a claim that would, if asserted, give rise to a claim for indemnity hereunder, such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.6, notify the indemnifying party in writing of the commencement thereof or knowledge thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with qualified counsel. The failure to notify an indemnifying party promptly of the commencement of any such action or of the knowledge of any such claim, only if materially and demonstrably prejudicial to its ability to defend such action, shall relieve such indemnifying party of liability to the indemnified party under this Section 2.6 to the extent of such prejudice, but the omission so to notify the indemnifying party shall not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.6.

(e)If the indemnification provided for in this Section 2.6 is for any reason, other than pursuant to the terms thereof, held to be unavailable to an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate

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to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions that resulted in such losses, claims, damages, liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 2.6(e) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to above in this Section 2.6(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Section 2.6(e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim, but shall be subject, in the case of a Holder, to the limitation of Section 2.6(c) above. No Person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person who was not also guilty of such fraudulent misrepresentation. No Party shall be liable for contribution with respect to any loss, claim, damage, liability, or action if such settlement is effected without the prior written consent of such Party, which consent shall not be unreasonably withheld, conditioned or delayed.

Section 2. 7Termination. The registration rights under Article II of this Agreement shall terminate upon expiration of the applicable Registration Period, provided that the rights and obligations of the Parties pursuant to Section 2.6 shall survive such termination.

Section 2. 8Rule 144. The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it shall, upon the request of any Holder, use its reasonable best efforts to make publicly available other information so long as is necessary to permit sales pursuant to Rule 144. The Company shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act pursuant to the exemption provided by Rule 144 under the Securities Act. Upon the request of any Holder, the Company shall deliver to the Holders a written statement as to whether it has complied with such information requirements.

Section 2. 9Grant of Other Registration Rights. From time to time, the Company may grant registration rights to any other holder or prospective holder of any of the capital stock of the Company. Notwithstanding the foregoing, in no event shall the Company include any securities other than Registrable Securities and the securities issued and issuable pursuant to the Acquisition Agreement (including but not limited to the Acquisition Warrants) on the Registration Statement filed pursuant to this Agreement without the prior written consent of the Required Holders.


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ARTICLE III
MISCELLANEOUS.

Section 3. 1Assignment; No Third Party Beneficiaries.

(a)This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.

(b)The rights under this Agreement shall be automatically assignable by the Holders to any transferee of all or any portion of such Holder’s Registrable Securities if: (i) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (A) the name and address of such transferee or assignee, and (B) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act or applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Subscription Agreement.

(c)This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the Holders, the permitted assigns and its successors and the permitted assigns of the Holders.

(d)This Agreement shall not confer any rights or benefits on any Persons that are not Parties hereto, other than as expressly set forth in this Agreement.

Section 3. 2Further Assurances. Upon the reasonable request of the Company, each Subscriber will execute and deliver, or cause to be executed and delivered, all further documents and instruments and take all further action as may be reasonably necessary in order to satisfy its obligations under this Agreement. Each Subscriber will not, directly or indirectly, take any action that would make any representation or warranty of such Subscriber contained herein untrue or incorrect in any material respect or that would reasonably be expected to have the effect of preventing or materially delaying such Subscriber from performing any of such Subscriber’s obligations under this Agreement.

Section 3. 3Governing Law; Venue. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City

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of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

Section 3. 4Counterparts. This Agreement may be executed in multiple counterparts (including by means of electronically mailed or telecopied signature pages), any one of which need not contain the signatures of more than one Party, but all such counterparts taken together shall constitute one and the same instrument.

Section 3. 5Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b) when transmitted via telecopy (or other facsimile device) mail to the number set out in Section 6.3 of the Subscription Agreement if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), (c) when transmitted via electronic mail to the email address set out in