ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (this “Agreement”) is
entered into on October 13, 2010 (the “Effective Date”), by
and between Atrinsic, Inc., a Delaware corporation (“Atrinsic”) and
Brilliant Digital Entertainment, Inc., a Delaware corporation (“Brilliant Digital”)
and its wholly-owned subsidiary, Altnet, Inc., a Delaware corporation (“Altnet”). Brilliant
Digital and Altnet are collectively referred to herein as “BDE”, and Atrinsic
and BDE are referred to collectively herein as the “Parties.”
This
Agreement contemplates a transaction in which Atrinsic will purchase certain
assets and assume certain of the liabilities of BDE in consideration of shares
of Atrinsic’s common stock.
Now,
therefore, in consideration of the premises and the mutual promises herein made,
and in consideration of the representations, warranties, and covenants herein
contained, the Parties agree as follows.
SECTION
1. DEFINITIONS.
“Accredited Investor”
has the meaning set forth in Regulation D promulgated under the Securities
Act.
“Acquired Assets”
means all right, title, and interest in and to the assets of BDE that relate to
the Business, including but not limited to any such (a) Webpages, (b) tangible
personal property, (c) Intellectual Property (including the Kazaa Trademark),
all goodwill associated therewith, all licenses and sublicenses granted and
obtained with respect thereto, and all rights thereunder, all remedies against
infringements thereof, and all rights to protection of interests therein under
the laws of all jurisdictions, (d) Acquired Contracts, (e) accounts receivable
from third parties other than Atrinsic, (f) claims, deposits, prepayments,
refunds, causes of action, choses in action, rights of recovery, rights of
set-off, and rights of recoupment (including any such item relating to the
payment of Taxes), (g) copies of necessary books, records, ledgers, files,
documents, and correspondence, (h) customer lists, creative materials,
advertising and promotional materials, studies, reports, and other printed or
written materials, (i) short code, (j) Subscriber Database and (k) the Vozzi
Browser, provided, however, that the
Acquired Assets shall not include (i) BDE’s certificate of formation,
qualifications to conduct business as a foreign company, arrangements with
registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, membership interest transfer books,
blank membership interest certificates, and other documents relating to the
organization, maintenance, and existence of Brilliant Digital and its
Subsidiaries as corporations, (ii) any of the rights of BDE under this Agreement
(or under any side agreement between BDE on the one hand and Atrinsic on the
other hand entered into on or after the date of this Agreement), (iii) Cash,
(iv) any contract or agreement that is not an Acquired Contract or (v) any
security deposits and letters of credit made or obtained by BDE in connection
with that certain Agreement for the Inclusion of Universal Sound Recordings and
Universal Master Tones in Online, On-Demand Subscription Services, dated January
3, 2008, by and between UMG Recordings, Inc. and Brilliant Digital, as
amended.
“Acquired Contracts”
means those contracts and agreements set forth on Schedule 3(o)(i)
hereto.
“Adverse Consequences”
means all actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including court costs and
attorneys' fees and expenses but specifically excluding consequential or
diminution in value claims.”
“Affiliate” with
respect to any Person, means any other Person that, directly or indirectly, is
controlled by, controls or is under common control with that
Person. “Control,” with respect to any Person, means the power,
directly or indirectly, to direct the management and policies of that
Person.
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“Affiliated Group”
means any affiliated group within the meaning of Code Section
1504(a).
“Altnet” has the
meaning set forth in the preface above.
“Assumed Liabilities”
means (a) all obligations of BDE under the Acquired Contracts that arise after
the Closing (but only to the extent that such obligations do not arise from or
relate to any breach (with or without due notice or lapse of time or both) by
BDE of any such Acquired Contracts on or prior to the Closing and do not arise
from or relate to any event, circumstance, or condition occurring or existing on
or prior to the Closing that, with notice or lapse of time, would constitute or
result in a breach by BDE of any of such Acquired Contracts) including
obligations (i) to furnish goods, services, and other non-Cash benefits to
another party after the Closing or (ii) to pay for goods, services, and other
non-Cash benefits that another party will furnish to it after the Closing, (b)
all other Liabilities and obligations arising from Atrinsic’s use of the
Acquired Assets after Closing and (c) in the event that a Music Rights Holder
challenges the correctness of a Royalty payment made to it by BDE pursuant to
the terms of the Master Services Agreement and it is determined by the Parties
that an additional Royalty is due and payable to such Music Rights Holder as a
result of such assertion (the “Underpaid Royalty”),
then Atrinsic shall be responsible for the payment of such Underpaid Royalty
(but only to the extent that such Underpaid Royalty does not arise from or
relate to any material breach (with or without due notice or lapse of time or
both) by BDE of any of its obligations under the Master Services Agreement, does
not arise from or relate to any event, circumstance, or condition occurring or
existing on or prior to the receipt of notice from the applicable Music Rights
Holder that, with notice or lapse of time, would constitute or result in a
material breach by BDE of any of its obligations under the Master Services
Agreement, or does not arise as a result of BDE’s fraud); provided, however, that,
notwithstanding the above, the Assumed Liabilities shall not include (i) any
Liability of BDE for Taxes, (ii) any Liability of BDE for income, transfer,
sales, use, and other Taxes arising in connection
with the consummation of the transactions contemplated hereby (including any
income Taxes arising because BDE is transferring the Acquired Assets; provided,
however, that Atrinsic will be responsible for one-half of any transfer or sales
taxes resulting from the transfer of the Acquired Assets), (iii) any Liability
of BDE for the unpaid Taxes of any Person under Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise, (iv) any obligation of BDE to indemnify
any Person (including any BDE stockholders) by reason of the fact that such
Person was a director, officer, employee, or agent of BDE or was serving at the
request of BDE as a partner, director, manager, officer, employee, or agent of
another entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such indemnification is pursuant to any statute, charter
document, operating agreement, or otherwise), (v) any Liability of BDE for costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, (vi) any Excluded Indebtedness and Obligations, (vii)
except as otherwise provided in the Marketing Services Agreement and/or Master
Services Agreement as in effect immediately prior to the Closing Date, any
Liability in connection with Regulatory Actions arising from occurrences or
events before the Closing Date, (viii) except as
otherwise provided in the Marketing Services Agreement and/or Master Services
Agreement as in effect immediately prior to the Closing Date and except for
refunds issued in the Ordinary Course of Business which will be Assumed
Liabilities, any Liability associated with Consumer Complaints arising from
occurrences or events before the Closing Date (ix) any Liability associated with
the compensation, benefits or negligence of any director, officer, or other
employee of BDE, (x) any Liability associated with Permitted Liens in existence
as of the Closing, (xi) any Liability under any contract or agreement that is
not an Acquired Contract, including, without limitation, any promissory note
issued by BDE, (xii) any liability or obligation of BDE relating to any asset of
BDE that is not an Acquired Asset and (xiii) any Liability or obligation of BDE
under this Agreement (or under any side agreement between BDE on the one hand
and Atrinsic on the other hand entered into on or after the date of this
Agreement), each of which shall be Retained Liabilities.
“Atrinsic” has the
meaning set forth in the preface above.
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“Atrinsic Common
Stock” means the common stock of Atrinsic, par value $.001 per
share.
“Business” means the
subscription-based music service operated by BDE, including the current Kazaa
music subscription business.
“BDE” has the meaning
set forth in the preface above.
“Cash” means cash on
hand and on deposit in banks and other financial institutions and cash
equivalents (including marketable securities and short-term bonds and other
investments) calculated in accordance with GAAP applied on a basis consistent
with the preparation of the Financial Statements.
“Closing” has the
meaning set forth in Section 2(d) below.
“Closing Date” has the
meaning set forth in Section 2(d) below.
“Closing Share Consideration”
has the meaning set forth in Section 2(c) below.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Confidential
Information” means any information concerning the business and affairs of
BDE or Atrinsic that is not already generally available to the
public.
“Consumer Complaints”
means a subscriber allegation of wrongdoing.
“Disclosure Schedule”
has the meaning set forth in Section 3 below.
“Excluded Indebtedness and
Obligations” means any indebtedness owed by BDE to its
Affiliates.
“Financial Statements”
has the meaning set forth in Section 3(g) below.
“GAAP” means United
States generally accepted accounting principles as in effect from time to time,
consistently applied.
“Governmental
Authority” means any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign.
“Intellectual
Property” means all of the following in any jurisdiction throughout the
world: (a) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, patent
applications, and invention disclosures, together with all reissuances,
divisionals, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks (including without limitation the
Kazaa Trademark), service marks, trade dress, logos, slogans, trade names,
corporate names, Internet domain names (including, but not limited to, Xxxxx.xxx
and Xxxxxx.xxx) (i.e., any alphanumeric designation registered with or assigned
by a domain name registrar, registry, or domain name registration authority as
part of an electronic address on the Internet) and rights in telephone
numbers, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works and derivative works thereof, all copyrights, and all
applications, registrations, and renewals in connection therewith, (d) all trade
secrets and confidential business information (including ideas, research and
development, know-how, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including source
code, executable code, data, databases, and related documentation), and (g) all
advertising and promotional materials and (h) all copies and tangible
embodiments thereof (in whatever form or medium).
“Kazaa Trademark”
means the word xxxx Xxxxx, Xxxxxxxxxxxx Xx. 0000000, and all right, title and
interest therein, for the United States and for all foreign countries, and all
renewals, extensions, registrations and applications thereof, together with the
goodwill of the business symbolized thereby.
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“Knowledge of BDE”
means actual knowledge of Xxxxx Xxxxxxxxxx or Xxxxxxx Xxxxxxx after reasonable
investigation.
“Liability” means any
liability or obligation of whatever kind or nature (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
“Lien” means any
mortgage, pledge, lien, encumbrance, charge, or other security interest other
than (a) liens for
Taxes not yet due and payable, (b) purchase money liens and liens securing
rental payments under capital lease arrangements, and (c) other liens arising in
the Ordinary Course of Business and not incurred in connection with the
borrowing of money.
“Marketing Services
Agreement” means that certain Marketing Services Agreement entered into
as of March 26, 2010 and effective as of July 1, 2009 by and between Brilliant
Digital and Atrinsic.
“Master Services
Agreement” means that certain Master Services Agreement entered into as
of March 26, 2010 and effective as of July 1, 2009 by and between Brilliant
Digital and Atrinsic.
“Material Adverse
Effect” or “Material Adverse
Change” means any effect or change that would be materially adverse to
the business or assets of the Business with respect to BDE or the business or
assets of Atrinsic, as is applicable, taken as a whole, or to the ability of any
Party to consummate timely the transactions contemplated hereby; provided that
none of the following shall be deemed to constitute, and none of the following
shall be taken into account in determining whether there has been, a Material
Adverse Effect or Material Adverse Change: (a) any adverse change, event,
development, or effect arising from or relating to (1) general business or
economic conditions, including such conditions related to the Business, (2)
national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon the United States, or any of its territories, possessions,
or diplomatic or consular offices or upon any military installation, equipment
or personnel of the United States, (3) financial, banking, or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index), (4) changes in United States generally accepted accounting
principles, (5) changes in laws, rules, regulations, orders, or other binding
directives issued by any governmental entity, (6) the taking of any action
contemplated by this Agreement and the other agreements contemplated hereby, (b)
any existing event, occurrence, or circumstance with respect to which Atrinsic
has actual knowledge as of the date hereof and (c) any adverse change in or
effect on the Business that is cured before the earlier of (1) the Closing Date
and (2) the date on which this Agreement is terminated pursuant to Section 8
hereof, or (7) the impact on the Business relating to the announcement of the
transactions contemplated by this Agreement.
“Most Recent Balance
Sheet” means the balance sheet contained within the Most Recent Financial
Statements.
“Most Recent Financial
Statements” has the meaning set forth in Section 3(g) below.
“Most Recent Fiscal Month
End” has the meaning set forth in Section 3(g) below.
“Music Rights Holders”
means the owners or other holders of music rights and/or third parties appointed
by such owners or rights holders to manage such music rights. For
avoidance of doubt, the term Music Rights Holders includes, without limitation,
music publishing companies, record labels, performance rights organizations
(e.g., SESAC, BMI and ASCAP), and mechanical rights organizations (e.g., Xxxxx
Xxx Agency, and American Mechanical Rights Agency).
“Ordinary Course of
Business” means BDE’s ordinary course of business consistent with past
custom and practice (including with respect to quantity and
frequency).
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“Open Source
Code” means any software code that is distributed as “free software” or
“open source software” or is otherwise distributed publicly in source code form
under terms that permit modification and redistribution of such
software. Open Source Code includes, without limitation, software
code that is licensed under the GNU General Public License, GNU Lesser General
Public License, Mozilla License, Common Public License, Apache License, BSD
License, Artistic License, or Sun Community Source License.
“Party” has the
meaning set forth in the preface above.
“Patent License” means
the Patent License to be entered into among Atrinsic, Brilliant Digital and
Kinetech, Inc., attached hereto as Exhibit
A.
“Permitted Liens”
means (i) Liens for Taxes or other governmental charges, assessments or levies
that are not delinquent, (ii) landlord’s, mechanic’s, carrier’s, workmen’s,
repairmen’s or other similar Liens arising or incurred in the ordinary course of
business that do not materially detract from the value of the property
encumbered thereby, (iii) other Liens the existence of which do not materially
impair the operations of BDE in the ordinary course or the value of its assets
taken as a whole, (iv) minor imperfections of title, conditions, easements and
reservations of rights, including easements and reservations of, or rights of
others for, rights of way, sewers, electric lines, telegraph and telephone lines
and other similar purposes, encroachments, covenants and restrictions and (v)
any inchoate Liens for Taxes.
“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, any other business entity, or a governmental entity (or any
department, agency, or political subdivision thereof).
“Proxy Statement” has
the meaning set forth in Section 6(a) below.
“Purchase Price” has
the meaning set forth in Section 2(c) below.
“Registration Rights
Agreement” means the form of Registration Rights Agreement attached
hereto as Exhibit
B.
“Regulatory Actions”
means an allegation of wrongdoing by a Governmental Authority, including
requests for information, investigations and formal complaints.
“Required Atrinsic
Vote” means the approval of the issuance of the Share Consideration as
contemplated by this Agreement by a vote of a majority of the total votes cast
on such proposal at a meeting of the stockholders of Atrinsic at which a
majority of the Atrinsic Common Stock entitled to vote is present in person or
represented by proxy.
“Required BDE Vote”
means the approval of the transactions contemplated by this Agreement, including
the sale of the Acquired Assets, by a majority of the outstanding capital stock
of Brilliant Digital entitled to vote thereon.
“Retained Liabilities”
has the meaning set forth in Section 2(b) below.
“Royalty” means all
royalties, licenses, fees and expenses payable to the Music Rights Holders
related to licensed music, audio and other content files and offerings to be
provided as part of BDE’s Services (as defined in the Master Services
Agreement).
“Securities Act” means
the Securities Act of 1933, as amended.
“Share Consideration”
has the meaning set forth in Section 2(c) below.
“Signing Share Consideration”
means 4,161,430 shares of Atrinsic’s common stock.
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“Subscriber Database”
means the listing of all active BDE subscribers relating to the Business that
could be billed on the Closing Date.
“Subsidiary” means,
with respect to any Person, any corporation, limited liability company,
partnership, association, or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
governors, directors, managers, or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited
liability company, partnership, association, or other business entity (other
than a corporation), a majority of the partnership or other similar ownership
interests thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof
and for this purpose, a Person or Persons own a majority ownership interest in
such a business entity (other than a corporation) if such Person or Persons
shall be allocated a majority of such business entity’s gains or losses or shall
be or control any managing director or general partner of such business entity
(other than a corporation). The term “Subsidiary” shall
include all Subsidiaries of such Subsidiary.
“Tax” or “Taxes” means any
federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Section 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, whether computed on a separate or
consolidated, unitary or combined basis or in any other manner, including any
interest, penalty, or addition thereto, whether disputed or not and including
any obligation to indemnify or otherwise assume or succeed to the Tax liability
of any other Person.
“Tax Return” means any
return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
“Transition Services
Agreement” means an agreement to be entered into between the Parties in
relation to transition services to be provided by BDE to Atrinsic post
Closing.
“Vozzi Browser” means
the Vozzi software and applications described on Exhibit C
hereto.
“Webpages”
means all pages active on the domain Kazaa, any
sub-domains and any other pages used by BDE in the operation of the Business to
acquire subscribers. Notwithstanding the foregoing it excludes any
pages used by third parties to acquire subscribers for BDE.
SECTION
2. BASIC
TRANSACTION.
(a) Purchase and Sale of
Assets. On and subject to the terms and conditions of this
Agreement, Atrinsic agrees to purchase from BDE, and BDE agrees to sell,
transfer, convey, and deliver to Atrinsic, all of the Acquired Assets at the
Closing, for the consideration specified below in this Section 2.
(b) Assumption of
Liabilities. On and subject to the terms and conditions of
this Agreement, Atrinsic agrees to assume and become responsible for all Assumed
Liabilities at the Closing. Atrinsic will not assume or have any
responsibility, however, with respect to any other Liability of BDE not included
within the definition of Assumed Liabilities (the “Retained
Liabilities”).
(c) Purchase
Price. The Purchase Price for the Acquired Assets shall
consist of (i) the assumption of the Assumed Liabilities by Atrinsic, and (ii)
11,287,095 shares of Atrinsic’s Common Stock less the Signing Share
Consideration (the “Closing Share
Consideration”)(the Signing Share Consideration and the Closing Share
Consideration are herein referred to collectively as the “Share
Consideration”).
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(d) Closing. The
closing of the transactions contemplated by this Agreement (the “Closing”) shall take
place at the offices of Xxxxxx, Xxxxxxxx & Markiles, LLP, in Xxxxxxx Oaks,
California commencing at 12:00 p.m. local time on July 11, 2011 or such other
date as the Parties may mutually determine (the “Closing
Date”).
(e) Deliveries at
Closing. At the Closing, (i) BDE will deliver to Atrinsic the
various certificates, instruments, and documents referred to in Section 7(a)
below; (ii) Atrinsic will deliver to BDE the various certificates, instruments,
and documents referred to in Section 7(b) below; (iii) BDE will execute,
acknowledge (if appropriate), and deliver to Atrinsic (A) assignments (including
Intellectual Property transfer documents) in the forms attached hereto, and (B)
such other instruments of sale, transfer, conveyance, and assignment as Atrinsic
and its counsel may reasonably request; (iv) Atrinsic will execute, acknowledge
(if appropriate), and deliver to BDE (A) assumptions in the form attached hereto
and (B) such other instruments of sale, transfer, conveyance, and assumption as
BDE and its counsel may reasonably request; and (v) Atrinsic will deliver to
Brilliant Digital the Closing Share Consideration.
(f) Allocation. Within
15 days after the Closing Date, Atrinsic shall prepare an allocation of the
Purchase Price (and all other capitalized costs) among the Acquired Assets in
accordance with Code Section 1060 and the Treasury regulations thereunder (and
any similar provision of state, local or foreign law, as appropriate). Atrinsic
shall deliver such allocation to BDE, and BDE shall have the opportunity to
review and comment on the proposed allocation. If BDE concurs with
the proposed allocation, in writing, it shall be the final
allocation. If BDE differs with the proposed allocation, the parties
shall negotiate in good faith to arrive at a mutually agreeable
allocation. When the parties agree on a final allocation, they shall
document their agreement in writing and Atrinsic, BDE, and their respective
Affiliates shall file Tax Returns (including, but not limited to Internal
Revenue Service Form 8594) consistent with the agreed upon
allocation. BDE shall timely and properly prepare, execute, file and
deliver all such documents, forms and other information as Atrinsic may
reasonably request to prepare such allocation. Neither Atrinsic nor BDE shall
take any position (whether in audits, tax returns or otherwise) that is
inconsistent with such allocation unless required to do so by applicable
law. Notwithstanding the foregoing, Atrinsic shall have the sole and
absolute discretion to determine the allocation of Purchase Price (and all other
capitalized costs) among the Acquired Assets for purposes of, and that will be
used in, its filings with the Securities and Exchange Commission.
SECTION
3. BDE’S
WARRANTIES. BDE represents and warrants to Atrinsic that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3) unless another date is specified,
except as set forth in the disclosure schedule accompanying this Agreement (the
“Disclosure
Schedule”). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
3.
(a) Organization of
BDE. Each of Brilliant Digital and Altnet are corporations
duly organized, validly existing, and in good standing under the laws of the
state of Delaware, have all requisite power and authority to own, lease and
operate their properties and to carry on their business as now being conducted,
and are duly qualified and in good standing to do business in each jurisdiction
in which the nature of their business or the ownership or leasing of their
properties makes such qualification necessary, other than in such other
jurisdictions where the failure so to qualify and be in such standing would not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Certificate of Incorporation and By-laws of each of
Brilliant Digital and Altnet, copies of which are attached to Section 3(a) of
the Disclosure Schedule, are true, complete and correct copies of such documents
as in effect on the date of this Agreement and as of the Closing.
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(b) Authorization of
Transaction. (i) Each of Brilliant Digital and Altnet has the
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform their obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Brilliant Digital and Altnet, with the exception
of the Required BDE Vote, which shall be sought by Brilliant Digital prior to
the Closing. The Required BDE Vote is the only vote of the holders of
any class or series of Brilliant Digital’s capital stock or the capital stock of
Altnet that is necessary to approve and adopt this Agreement and the
transactions contemplated hereby.
(ii) This Agreement has been
duly executed and delivered by Brilliant Digital and Altnet, and, assuming due
authorization, execution and delivery by Atrinsic, constitutes the valid and
legally binding obligation of each of Brilliant Digital and Altnet, enforceable
in accordance with its terms and conditions except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
(c) Non-contravention. Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Brilliant
Digital or Altnet are subject or any provision of the charter or bylaws of such
parties or (ii) except as set forth on Schedule 3(c), conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice or consent under any agreement, contract, lease, license, instrument, or
other arrangement to which Brilliant Digital or Altnet are a party or by which
they are bound or to which any of their assets are subject (or result in the
imposition of any Lien upon any of their assets). Except as set forth
on Schedule 3(c), neither Brilliant Digital or Altnet needs to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency or any other third party for the Parties
to consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above).
(d) Brokers’
Fees. BDE has no Liability to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which Atrinsic could become liable or obligated.
(e) Title to
Assets. Except as set forth on Schedule 3(e), BDE has good and
transferable title to all of the Acquired Assets, free and clear of any Liens or
restriction on transfer. The Acquired Assets are sufficient to
operate the Business as presently conducted, and no other Subsidiary of BDE has
any right, title, or interest in any other assets that are required to operate
the Business as presently conducted.
(f) Intentionally
omitted.
(g) Financial
Statements. The Disclosure Schedule includes the following
financial statements (collectively the “Financial Statements”) for BDE: (i)
unaudited balance sheets and statements of income as of and for the fiscal years
ended December 31, 2009 and December 31, 2008, and statements of cash flow for
the fiscal year ended December 31, 2009; and (ii) unaudited statements of
income, balance sheets, and cash flow (the “Most Recent Financial
Statements”) as of and for the six months ended June 30, 2010 (the “Most Recent Fiscal Month
End”). To the knowledge of BDE, the Financial Statements present fairly
in all material respects the financial condition of BDE as of such dates and the
results of operations of BDE for such periods, are correct and complete, and are
consistent with the books and records of BDE (which books and records are
correct and complete), provided, however, that the
Most Recent Financial Statements are subject to normal year-end adjustments
(which will not be material individually on in the aggregate).
8
(h) Events Subsequent to Most
Recent Fiscal Month End. Between the Most Recent Fiscal Month
End and the Effective Date, there has not been any Material Adverse Change.
Without limiting the generality of the foregoing and except as set forth on
Schedule 3(h), since that date:
(i) BDE has
not sold, leased, transferred, or assigned any of its assets, tangible or
intangible, relating to the Business other than in the Ordinary Course of
Business;
(ii) BDE has
not entered into any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) relating to the Business
(a) outside the Ordinary Course of Business or (b) that involve more than
$10,000;
(iii) No party
(including BDE) has accelerated, terminated, modified, cancelled any agreement,
contract, lease or license relating to the Business (or series of related
agreements, contract, leases, and licenses) involving more than $10,000 to which
BDE is a party or by which it is bound outside the Ordinary Course of
Business.
(iv) BDE has
not imposed or permitted to exist any Lien, except Permitted Liens, upon any of
its assets, tangible or intangible, relating to the Business;
(v) In
connection with the operation of the Business, BDE has not made any capital
investment in, any loan to, or any acquisition of the securities or assets of,
any other Person, other than an Affiliate, (or series of related capital
investments, loans, and acquisitions), either involving more than $10,000 or
outside the Ordinary Course of Business;
(vi) BDE has
not issued any note, bond, or other debt security or created, incurred, assumed,
or guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $10,000.00 singly or $100,000.00 in the
aggregate that has not been waived;
(vii) BDE has
not delayed or postponed the payment of accounts payable and other Liabilities
outside the Ordinary Course of Business;
(viii) BDE has
not cancelled, compromised, waived, or released any right or claim (or series of
related rights and claims) either involving more than $10,000 or outside the
Ordinary Course of Business;
(ix) BDE has
not transferred, assigned, or granted any license or sublicense of any rights
under or with respect to any Intellectual Property that relates to the Business
outside of the Ordinary Course of Business;
(x) BDE has
not experienced any material damage, destruction, or loss (whether or not
covered by insurance) to any of the Acquired Assets;
(xi) BDE has
not discharged a material Liability or Lien outside the Ordinary Course of
Business;
(xii) BDE has
not made any loans or advances of money, except for Affiliate transactions;
and
(xiii) BDE has
not committed to any of the foregoing.
(i) Undisclosed
Liabilities. Except as set forth on Schedule 3(i), BDE does
not have any material Liability, except for (i) Liabilities set forth on the
face of the Most Recent Balance Sheet and (ii) Liabilities that have arisen
after the Most Recent Fiscal Month End in the Ordinary Course of Business (none
of that results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
9
(j) Legal
Compliance. BDE has complied with
all applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and including the
Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.) of federal, state,
local, and foreign governments (and all agencies thereof), and to its Knowledge
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against it alleging any failure so
to comply.
(k) Tax
Matters.
(i) BDE has
timely filed all Tax Returns that it was required to file or has filed for, and
received, an extension with respect to such Tax Return. All such Tax Returns
were correct and complete in all material respects and were prepared in
substantial compliance with all applicable laws and regulations. No
claim has ever been made by an authority in a jurisdiction where BDE does not
file Tax Returns that BDE is or may be subject to taxation by that jurisdiction.
There are no Liens on any of the assets of BDE that arose in connection with any
failure (or alleged failure) to pay any Tax.
(ii) BDE has
withheld and paid all Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, and all Forms W-2 and
1099 required with respect thereto have been properly completed and timely
filed.
(iii) There is
no dispute or claim concerning any Tax Liability of BDE either (A) claimed or
raised by any authority in writing or (B) as to which the BDE (and employees
responsible for Tax matters) has Knowledge based upon personal contact with any
agent of such authority.
(iv) BDE has
not voluntarily waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or
deficiency.
(v) The
unpaid Taxes of BDE (A) did not, as of the Most Recent Fiscal Month End, exceed
the reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the Most Recent Balance Sheet and (B) do not exceed that reserve
as adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of BDE in filing its Tax Returns.
(vi) None of
the Assumed Liabilities is an obligation to make a payment that is not
deductible under Code Section 280G. BDE is not a party to any Tax
allocation or sharing agreement. BDE has no Liability for the Taxes
of any Person under Reg. Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or
otherwise.
(l) Intentionally
Omitted.
(m) Intellectual
Property.
(i) BDE owns
or possesses or has the right to use pursuant to a valid and enforceable written
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the Business as presently
conducted. Each item of Intellectual Property included in the
Acquired Assets will be owned or available for use by Atrinsic on identical
terms and conditions immediately subsequent to the Closing
hereunder. Except as set forth on Schedule 3(m)(i), BDE has taken all
necessary and desirable action to maintain and protect each item of Intellectual
Property that it owns or uses that relates to the Business and will continue to
maintain and protect all of the Intellectual Property that it owns or uses that
relates to the Business prior to Closing so as not to materially adversely
affect the validity or enforceability thereof.
10
(ii) Except as
set forth on Schedule 3(m)(ii), the operation of the Business has not interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights or privacy rights of third parties, there are no
facts that indicate a likelihood of any of the foregoing, and no director,
manager or officer of BDE has ever received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that BDE must license or
refrain from using any Intellectual Property rights of any third party). To the
Knowledge of BDE, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of BDE that relate to the Business.
(iii) The
Disclosure Schedule identifies each issued patent and all registrations that
have been issued to BDE by a Governmental Authority with respect to any of BDE’s
Intellectual Property that relates to the Business, identifies each pending
patent application or application for registration that BDE has made with
respect to any of its Intellectual Property that relates to the Business, and
identifies each license, sublicense, agreement, or other permission that BDE has
granted to any third party with respect to any of its Intellectual Property that
relates to the Business (together with any exceptions). BDE has made available
to Atrinsic correct and complete copies of all such patents, registrations,
applications, licenses, sublicenses, agreements, and permissions (as amended to
date) and has made available to Atrinsic correct and complete copies of all
other written documentation evidencing ownership and prosecution (if applicable)
of each such item. The Disclosure Schedule also identifies each registered or
unregistered trademark, service xxxx, trade name, corporate name or Internet
domain name, computer software item (other than commercially available
off-the-shelf software purchased or licensed for less than a total cost of
$1,000 in the aggregate), including all software developed by or for BDE used in
connection with the Business, and each registered copyright and material
unregistered copyright used by BDE in connection with the
Business. After Closing, Atrinsic will have at least a non-exclusive
right to use any code incorporated into such software that was not specifically
written or developed for use in such software (the “Preexisting Code”)
and there are no third-party rights to such Preexisting Code that will
materially interfere with Atrinsic’s ownership and use of such software. With
respect to each item of Intellectual Property required to be identified in the
Disclosure Schedule pursuant to this Section:
(A) BDE owns
and possesses all right, title, and interest in and to the item, free and clear
of any Lien, license, or other restriction or limitation regarding use or
disclosure and BDE has made available to Atrinsic correct and complete copies of
all written documentation evidencing ownership and prosecution (if applicable)
of each item of BDE’s Intellectual Property in BDE’s possession;
(B) the item
is not subject to any outstanding injunction, judgment, order, decree, ruling,
or charge;
(C) no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the Knowledge of BDE, is threatened that challenges the
legality, validity, enforceability, use, or ownership of the item, and there are
no grounds for the same;
(D) BDE has
never agreed to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to the
item;
(E) no loss
or expiration of the item is threatened, pending, or reasonably foreseeable,
except for patents expiring at the end of their statutory terms (and not as a
result of any act or omission by BDE, including without limitation, a failure by
BDE to pay any required maintenance fees);
11
(F) there are
no maintenance fees, taxes, or actions falling due within 90 days;
and
(G) all such
Intellectual Property is valid, subsisting, and enforceable.
(iv) BDE has
no trade secrets.
(v) The
Disclosure Schedule identifies each item of Intellectual Property relating to
the Business that any third party owns and that BDE uses pursuant to license,
sublicense, agreement, or permission. BDE has made available to Atrinsic correct
and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date) in BDE’s possession. With respect to each item
of Intellectual Property required to be identified in the Disclosure Schedule
pursuant to this Section and to the Knowledge of BDE:
(A) the
license, sublicense, agreement, or permission covering the item is legal, valid,
binding, enforceable, and in full force and effect;
(B) the
license, sublicense, agreement, or permission will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
consummation of the transactions contemplated hereby and no consent of any third
party is required in connection with the transfer, assignment and conveyance of
such license, sublicense, agreement or permission as a result of the
transactions contemplated by this Agreement;
(C) no party
to the license, sublicense, agreement, or permission is in breach or default,
and no event has occurred that with notice or lapse of time would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(D) no party
to the license, sublicense, agreement, or permission has repudiated any
provision thereof;
(E) with
respect to each sublicense, the representations and warranties set forth in
subsections (A) through (D) above are true and correct with respect to the
underlying license;
(F) the
underlying item of Intellectual Property is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(G) no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the Knowledge of any officer or director of BDE, is
threatened that challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property, and there are no grounds for the same;
and
(H) BDE has
not granted any sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
(vi) Except as
set forth on the Disclosure Schedule, all former and current employees of BDE
have executed written contracts with BDE that assign to BDE all rights to any
inventions, improvements, discoveries or information relating to the Business.
To BDE’s Knowledge, no employee of BDE has entered into any contract that
restricts or limits in any way the scope or type of work in which the
employee may be engaged or requires the employee to transfer, assign, or
disclose information concerning his or her work to any person other than
BDE.
(vii) The
Disclosure Schedule contains a complete and accurate list and summary of all
royalties, fees, commissions, and other amounts payable by BDE to any other
person (other than sales commissions paid to employees according to BDE’s
standard commissions plan) upon or for the sale or distribution of any BDE
product or the use of any Intellectual Property that relates to the
Business.
12
(viii) To
BDE’s Knowledge, none of the software (including firmware and other software
embedded in hardware devices) owned, developed (or currently being developed),
used, marketed, distributed, licensed, or otherwise used in connection with the
Business (a) contains any bug, defect, or error (including any bug, defect, or
error relating to or resulting from the display, manipulation, processing,
storage, transmission, or use of date data) that materially and adversely
affects the use, functionality, or performance of such software or any product
or system containing or used in conjunction with such software; (b) fails to
comply with any applicable warranty or other contractual commitment relating to
the use, functionality, or performance of such software or (c) contains any
“back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” or “worm”
(as such terms are commonly understood in the software industry) or any other
code designed or intended to have, or capable of performing, any of the
following functions: (i) disrupting, disabling, harming, or otherwise impeding
in any manner the operation of, or providing unauthorized access to, a computer
system or network or other device on which such code is stored or installed; or
(ii) damaging or destroying any data or file without the user’s
consent.
(ix) The
Disclosure Schedule accurately (i) identifies and describes each item of Open
Source Code that is contained in, distributed with, or used in the development
of software used in the Business or from which any part of any software used in
the Business is derived, (ii) identifies the applicable license for each such
item of Open Source Code, and (iii) identifies and describes the software used
in the Business to which each such item of Open Source Code
relates. No software used in the Business contains, is derived from,
is distributed with, or is being or was developed using Open Source Code that is
licensed under any terms that (i) impose or could impose a requirement or
condition that any software used in the Business or part thereof (A) be
disclosed or distributed in source code form, (B) be licensed for the purpose of
making modifications or derivative works, or (C) be redistributable at no
charge, or (ii) otherwise impose or could impose any other material limitation,
restriction, or condition on the right or ability of the BDE to use or
distribute any software used in the Business.
(x) No
source code for any software used in the Business has been delivered, licensed,
or made available to any escrow agent or other Person who is not party to an
appropriate confidentiality and non-disclosure agreement or such other measure
as is reasonably necessary to protect the proprietary, trade secret or
confidential information contained therein. BDE has no duty or
obligation (whether present, contingent, or otherwise) to deliver, license, or
make available the source code for any software used in the Business to any
escrow agent or other Person. No event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
will, or could reasonably be expected to, result in the delivery, license, or
disclosure of the source code for any software used in the Business to any
other Person.
(n) Tangible
Assets. The equipment and other tangible assets included in
the Acquired Assets are free from defects (patent and latent), have been
maintained in accordance with normal industry practice, are in good operating
condition and repair (subject to normal wear and tear), and are suitable for the
purposes for which it presently is used.
(o) Contracts.
(i) Schedule
3(o)(i) hereto lists each Acquired Contract.
(ii) In
addition, the Disclosure Schedule lists the following contracts and other
agreements to which BDE is a party:
13
(A) any
agreement (or group of related agreements) relating to the Business for the
lease of personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(B) any
agreement (or group of related agreements) relating to the Business for the
purchase or sale of personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of more than 1
year, result in a material loss to BDE, or involve consideration in excess of
$10,000;
(C) any
agreement concerning a partnership or joint venture relating to the
Business;
(D) any
agreement (or group of related agreements) under which it has created, incurred,
assumed, or guaranteed any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of $10,000 or under which it has imposed a Lien on
any of its assets, tangible or intangible;
(E) any
agreement concerning confidentiality or non-competition relating to the
Business;
(F) any
agreement involving any BDE stockholder and their Affiliates (other than BDE)
relating to the Business; or
(G) any
agreement under which the consequences of a default or termination could have a
Material Adverse Effect on the Business or the Acquired Assets.
(iii) BDE has
delivered to Atrinsic a correct and complete copy of each Acquired Contract (as
amended to date) listed on Schedule 3(o)(i) hereto. Each Acquired Contract is a
valid, binding and enforceable obligation of BDE and, to the Knowledge of BDE,
the other party or parties thereto, and each Acquired Contract is in full force
and effect. Neither BDE, nor, to the Knowledge of BDE, any other
party thereto, is in default under any Acquired Contract by which the Acquired
Assets or the Business may be bound or affected or under which such assets,
business or operations receive benefits, and, to the Knowledge of BDE, there has
not occurred any event that with the lapse of time or the giving of notice
or both would constitute such an event of default thereunder.
(p) Accounts
Receivable. All accounts receivable of BDE included within the
Acquired Assets are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
and can be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of BDE.
(q) Powers of
Attorney. There are no outstanding powers of attorney executed
on behalf of BDE.
(r) Litigation. The
Disclosure Schedule sets forth each instance in which BDE (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Knowledge of BDE, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator.
(s) Employees.
With
respect to the business of BDE:
14
(A) there is
no collective bargaining agreement or relationship with any labor organization,
nor has any labor organization or group of employees filed any representation
petition or made any written or oral demand for recognition;
(B) there is
no workmen’s compensation liability, experience, or matter that could have a
Material Adverse Effect; and
(C) there is
no employment-related charge, complaint, grievance, investigation, inquiry, or
obligation of any kind, pending or threatened in any forum, relating to an
alleged violation or breach by BDE (or its officers, managers or directors) of
any law, regulation, or contract.
(t) Suppliers. Since
the date of the Most Recent Balance Sheet, no BDE supplier has indicated that it
shall stop, or materially decrease the rate of, its supply of services to
BDE.
(u) Disclosure. The
representations and warranties contained in this Section 3 do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements and information contained in this Section 3 not
misleading.
(v) Investment. BDE
understands and agrees that (i) the Share Consideration has not been, and,
except as otherwise provided in the Registration Rights Agreement, will not be,
registered under the Securities Act, or under any state securities laws, and is
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (ii) it is acquiring the Share
Consideration solely for its own account for investment purposes, and not with a
view to the distribution thereof other than pursuant to the agreements set forth
on Schedule 3(v) hereof , (iii) it is a sophisticated investor with knowledge
and experience in business and financial matters, (iv) it has received certain
information concerning Atrinsic and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding the Share Consideration, (v) it is able to bear the economic risk and
lack of liquidity inherent in holding the Share Consideration, and (vi) it is an
Accredited Investor.
(w) Investigations. To
the Knowledge of BDE, there is no investigation,
regulatory action or lawsuit pending or, to the Knowledge of BDE, threatened
against BDE by any Governmental Authority and BDE is not subject to any
outstanding order, writ, judgment, injunction or decree of any Governmental
Authority that, in either case, would be reasonably
likely, individually or in the
aggregate, to (a) prevent or materially
delay the consummation of the transaction contemplated hereunder or (b) otherwise
prevent or materially delay performance by BDE of any of its obligations under this
Agreement.
(x) Insurance. The
Disclosure Schedule sets forth the following information with respect to BDE’s
E&O insurance policy: the name, and telephone number of the
agent; the name of the insurer and each covered insured; the policy number and
period of coverage; the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and a description of any other loss-sharing
arrangements. With respect to such insurance policy: (A) the policy
is legal, valid, binding, enforceable, and in full force and effect; (B) the
policy will continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred to in
Section 2 above); (C) neither BDE nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred that, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. After the Closing Date, for a period of two (2) years,
BDE shall maintain in full force and effect its current levels of E&O
insurance as in existence on the Closing Date, which may be satisfied by
obtaining a two year “tail” policy providing substantially the same coverage at
is currently in effect.
15
SECTION
4. ATRINSIC’ REPRESENTATIONS
AND WARRANTIES. Atrinsic represents and warrants to BDE that
the statements contained in this Section 4 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 4).
(a) Organization of
Atrinsic. Atrinsic is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Delaware, has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, other than in such other jurisdictions where the failure so to
qualify and be in such standing would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Atrinsic.
The Certificate of Incorporation and By-laws of Atrinsic, copies of which are
attached to Section 4(a) of the Disclosure Schedule, are true, complete and
correct copies of such documents as in effect on the date of this Agreement and
as of the Closing.
(b) Authorization of
Transaction. Atrinsic has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Atrinsic, with the
exception of the Required Atrinsic Vote, which shall be obtained by Atrinsic
prior to the Closing. The Required Atrinsic Vote is the only vote of
the holders of any class or series of Atrinsic’s capital stock necessary to
approve and adopt this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by
Atrinsic, and, assuming due authorization, execution and delivery by BDE,
constitutes the valid and legally binding obligation of Atrinsic, enforceable in
accordance with its terms and conditions except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
(c) Issuance of Atrinsic
Common
Stock. The Atrinsic Common Stock to be issued pursuant to this
Agreement has been duly authorized and upon issuance will be validly issued,
fully paid, and nonassessable, and will be free of restrictions on transfer
other than restrictions on transfer under this Agreement and under applicable
state and federal securities laws. The authorized capital stock of
Atrinsic consists of (A) 100,000,000 shares of common stock, par value $0.01 per
share, and (B) 1,000,000 shares of preferred stock, par value $.10 per share,
none of which are designated. As of the close of business on September 29, 2010
(x) (1) 20,915,881 shares of Atrinsic common stock were issued and outstanding,
(2) 2,553,370 shares of Atrinsic common stock were reserved for issuance upon
the exercise of outstanding options issued by Atrinsic, (3) 314,443 shares of
Atrinsic common stock were reserved for issuance upon the exercise of
outstanding warrants issued by Atrinsic and (4) 1,043,750 shares of Atrinsic
common stock were reserved for issuance upon the vesting of outstanding
restricted stock units issued by Atrinsic, and (y) no shares of preferred stock
of Atrinsic were outstanding or reserved for issuance. Except for (i)
this Agreement, (ii) the options, warrants and restricted stock units referenced
in clauses (B)(x)(2), (3) and (4) above in this Section 4(c), and (iii)
agreements described in Atrinsic’s SEC Documents, there are no options,
warrants, calls, rights, commitments or agreements to which Atrinsic is a party
that obligates Atrinsic to issue or sell any shares of capital stock of
Atrinsic.
(d) Non-contravention. Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Atrinsic
is subject or any provision of its charter, bylaws, or other governing
documents or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent under
any agreement, contract, lease, license, instrument, or other arrangement to
which Atrinsic is a party or by which it is bound or to which any of its assets
are subject (or result in the imposition of any Lien upon any of its assets).
Atrinsic does not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
or any other third party in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in Section 2 above), except for (A) the filing with the SEC of the
Proxy Statement and such other reports under the Securities Act and the
Securities Exchange Act of 1934, as amended, as may be required in connection
with this Agreement and the transactions contemplated hereby and the obtaining
from the SEC of such orders as may be required in connection therewith, (B) such
filings and approvals as are required to be made or obtained under the
securities or blue sky laws of various states in connection with the
transactions contemplated by this Agreement, if applicable, and (C) notices or
filings with The Nasdaq Stock Market, Inc. (“NASDAQ”) in
connection with the issuance by Atrinsic of the Share
Consideration.
16
(e) Brokers’
Fees. Atrinsic has no Liability to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which BDE could become liable or obligated.
(f) Exchange Act
Filings. Atrinsic has filed, or furnished, as applicable, all
reports and other documents as required by the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) with the Securities and Exchange Commission
since January 1, 2008 (the “Atrinsic SEC Documents”). As of their
respective dates of filing with the SEC (or, if amended or superseded by a
filing prior to the date hereof, as of the date of such filing), the Atrinsic
SEC Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC thereunder applicable to
such Atrinsic SEC Documents, and none of the Atrinsic SEC Documents when filed
contained any untrue statement of a material fact or omitted 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. The
financial statements of Atrinsic included in the Atrinsic SEC Documents complied
as to form, as of their respective dates of filing with the SEC, in all material
respects with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto and, (except, in the case
of unaudited statements, as permitted by the rules and regulations of the SEC),
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be disclosed therein) and fairly present in
all material respects the consolidated financial position of Atrinsic and its
consolidated subsidiaries and the consolidated results of operations, changes in
stockholders’ equity and cash flows of such companies as of the dates and for
the periods shown. There are no outstanding comments from the Staff of the SEC
with respect to any of the Atrinsic’s SEC Documents.
(g) Investigations. To
the Knowledge of any director or officer of Atrinsic, there is no investigation, regulatory action or
lawsuit pending or, to the knowledge of the directors, officers and management
of Atrinsic, threatened against Atrinsic and Atrinsic is not subject to any
outstanding order, writ, judgment, injunction or decree of any Governmental
Authority that, in either case, would be reasonably likely, individually or in the aggregate, to (a) prevent or materially delay the consummation of the transactions contemplated hereunder or (b) otherwise
prevent or materially delay performance by Atrinsic of any of its obligations
under this Agreement.
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SECTION
5. PRE-CLOSING
COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing:
(a) General. Each
of the Parties will use its commercially reasonable efforts to take all actions
and to do all things necessary, proper, or advisable in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the Closing conditions set forth in Section 7
below).
(b) Notices and
Consents. Each of the Parties will give any notices to, make
any filings with, and use its commercially reasonable efforts to obtain any
authorizations, consents, and approvals of all third parties, including without
limitation, governments and governmental agencies, in connection with the
matters referred to in Section 3(c) and Section 4(d) above.
(c) BDE Required
Consents. Without limiting Section 5(b) hereof, BDE will give any notices
to, and use its best efforts to obtain any authorizations, consents, approvals
and assignments from the parties identified on Schedule 5(c) hereto in order to
effectuate the transactions contemplated hereby, in forms reasonably acceptable
to Atrinsic.
(d) Other
Agreements. BDE will use its best efforts to obtain any
waivers necessary so as to ensure that Atrinsic is not subject to the terms of
the agreements set forth on Schedule 5(d) hereof (or any court ordered judgments
or consent judgments contemplated therein) at and following the Closing, with
such waivers being in a form reasonably acceptable to Atrinsic.
(e) Operation of
Business. Each of the Parties will not take any action, or
enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, BDE will
not engage in any practice, take any action, or enter into any transaction of
the sort described in Section 3(h) above.
(f) Preservation of
Business. Each of the Parties will keep their business and
properties substantially intact, including its present operations, physical
facilities, working conditions, insurance policies, and relationships with
lessors, licensors, suppliers, customers, and employees and will not decrease
the coverage provided by its E&O insurance policy. In addition,
each Party will use all reasonable efforts to maintain its rights, franchises,
licenses and other authorizations issued by Governmental
Authorities.
(g) Notice of
Developments. Prior to Closing, each Party will give prompt
written notice to the other Party of any material adverse development occurring
after the date of this Agreement which causes or reasonably could be expected to
cause a breach of any of its own representations and warranties in Section 3 and
Section 4 above and, if waived in writing by the other Party, the Party
providing such disclosure pursuant to this Section 5(g) shall be permitted,
prior to Closing, to amend or supplement its Disclosure Schedule to prevent or
cure any misrepresentation, breach of warranty, or breach of covenant caused by
such material adverse development.
(h) Exclusivity. BDE
will not (i) solicit, initiate, or encourage the submission of any proposal or
offer from any Person relating to the acquisition of any securities, or any
substantial portion of the assets, of BDE (including any acquisition structured
as a merger, consolidation, or share exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort
or attempt by any Person to do or seek any of the foregoing. BDE will
notify Atrinsic immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
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SECTION
6. ADDITIONAL
AGREEMENTS.
(a) Preparation of Proxy
Statement; Stockholders Meetings.
(i) As soon
as practicable following the date of this Agreement, BDE and Atrinsic shall
cooperate in preparing and shall cause to be filed with the SEC proxy materials
which shall constitute the proxy statement relating to the matters to be
submitted to Atrinsic stockholders at its stockholder meeting (such proxy
statement, and any amendments or supplements thereto, the “Proxy
Statement”). Atrinsic shall use commercially reasonable best
efforts to have the Proxy Statement cleared by the SEC and to mail the Proxy
Statement to Atrinsic’s stockholders as promptly as practicable
thereafter. Atrinsic shall, as promptly as practicable after receipt
thereof, provide BDE with copies of any written comments and advise BDE of any
oral comments with respect to the Proxy Statement that pertain to the Business
of BDE that are received from the SEC. Atrinsic shall cooperate and provide BDE
with a reasonable opportunity to review and comment on any amendment or
supplement to the Proxy Statement that relates to the Business of BDE prior to
filing such with the SEC.
(A) None of
the information supplied or to be supplied by BDE for inclusion or incorporation
by reference in the (A) Proxy Statement will, at the time the Proxy Statement is
filed with the SEC, 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 not misleading, and the (B) Proxy Statement will, at the date
of mailing to Atrinsic stockholders and at the times of the meetings of
stockholders to be held in connection with the transactions contemplated hereby,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC thereunder, except that no representation or warranty shall be made by
either such party with respect to statements made or incorporated by reference
therein based on information supplied by the other party for inclusion or
incorporation by reference in the Proxy Statement.
(B) Atrinsic
will advise BDE, promptly after it receives notice thereof, of any request by
the SEC for amendment of the Proxy Statement. If at any time prior to the
Closing Date any information relating to either of the parties, or their
respective affiliates, officers or directors, should be discovered by either
party which should be set forth in an amendment or supplement to the Proxy
Statement so that such document would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly notify the
other party hereto and, to the extent required by law, rules or regulations, an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and disseminated to the stockholders of
Atrinsic.
(C) Except as
otherwise set forth in this Agreement, no amendment or supplement (including by
incorporation by reference) to the Proxy Statement shall be made without prior
notice to BDE.
(ii) Atrinsic
shall duly take all lawful action to call, give notice of, convene and hold a
meeting of its stockholders as promptly as practicable, and in any event within
45 days, following the date upon which the Proxy Statement is mailed to its
stockholders (the “Atrinsic Stockholders
Meeting”) for the purpose of obtaining the Required Atrinsic Vote with
respect to the issuance of the Share Consideration.
19
(iii) BDE shall
duly take all lawful action to call, give notice of, convene and hold a meeting
of its stockholders as promptly as practicable, and in any event within 45 days,
following the date upon which the Proxy Statement is mailed to the Atrinsic
stockholders (the “BDE
Stockholders Meeting” and, together with the Atrinsic Stockholders
Meeting, the “Required
Stockholders Meetings”) for the purpose of obtaining the Required BDE
Vote with respect to the transactions contemplated by this
Agreement.
(b) Access to Information;
Confidentiality.
(i) Upon
reasonable notice, Atrinsic and BDE shall each (and shall cause each of their
respective Subsidiaries to) afford to the representatives of the other, access,
during normal business hours during the period prior to the Closing Date, to all
its properties, books, contracts, records and officers and, during such period,
each of Atrinsic and BDE shall (and shall cause each of their respective
Subsidiaries to) make available to the other such information concerning its
business, properties and personnel as such other party may reasonably request.
Neither party nor any of its Subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights of its customers, jeopardize the attorney-client privilege
of the institution in possession or control of such information or contravene
any law, rule, regulation, order, judgment, decree or binding agreement entered
into prior to the date of this Agreement. The parties will make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply, including adopting additional specific
procedures to protect the confidentiality of certain sensitive material and to
ensure compliance with applicable antitrust laws, and, if necessary, restricting
review of certain sensitive material to the receiving party’s financial advisors
or outside legal counsel.
(ii) The
parties will hold any such information which is nonpublic in confidence to the
extent required by, and in accordance with, the provisions of the letter
agreement, dated May ___, 2010, between
Atrinsic and BDE (the “Confidentiality
Agreement”), which Confidentiality Agreement will remain in full force
and effect.
(iii) No such
investigation by either Atrinsic and BDE shall affect the representations and
warranties of the other.
(c) Issuance of Signing Share
Consideration. In exchange for entering into that certain
Amendment No. 1 to Marketing Services Agreement and that certain Amendment No. 1
to Master Services Agreement concurrently with the execution of this Agreement,
forms of which are attached hereto as Schedule 6(c),
promptly following the execution of this Agreement, Atrinsic will deliver to BDE
the Signing Share Consideration.
(d) Governance. On
or prior to the Closing Date, Atrinsic’s Board of Directors shall take such
actions as are necessary to cause the number of directors that will comprise the
Board of Directors of Atrinsic at the Closing Date to be seven (7) persons.
Immediately following the Closing Date, the Board of Directors of Atrinsic shall
consist of: (i) five (5) members selected by
Atrinsic and (ii) two (2) members selected by BDE,
which BDE members shall be reasonably acceptable to the Board of Directors of
Atrinsic. BDE agrees to provide Atrinsic with the names of its
proposed directors on or before the Closing.
SECTION
7. CONDITIONS TO OBLIGATION TO
CLOSE.
(a) Conditions to Atrinsic’
Obligation. Atrinsic’ obligation to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the
representations and warranties set forth in Section 3 above shall be true and
correct in all material respects at and as of date hereof, and shall also be
true and correct in all material respects as of the Closing Date, except to the
extent that such representations and warranties are qualified by the term
“material,” or contain terms such as “Material Adverse Effect” or “Material
Adverse Change,” in which case such representations and warranties (as so
written, including the term “material” or “Material”) shall be true and correct
in all respects at and as of the applicable date;
20
(ii) BDE shall
have performed and complied with all of its covenants hereunder in all material
respects through the Closing, except to the extent that such covenants are
qualified by the term “material,” or contain terms such as “Material Adverse
Effect” or “Material Adverse Change,” in which case BDE shall have performed and
complied with all of such covenants (as so written, including the term
“material” or “Material”) in all respects through the Closing;
(iii) BDE shall
have received all authorizations, consents, and approvals of governments,
governmental agencies and third parties specified in Section 5(b) and Section
5(c) above in forms reasonably acceptable to Atrinsic;
(iv) BDE shall
have received the waivers specified in Section 5(d) above in forms reasonably
acceptable to Atrinsic;
(v) no
action, suit, or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) materially adversely affect the right of Atrinsic to own
the Acquired Assets and to operate the Business (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(vi) BDE shall
have delivered to Atrinsic a certificate to the effect that each of the
conditions specified above in Section 7(a)(i)-(v) is satisfied in all
respects;
(vii) BDE shall
have delivered to Atrinsic documents evidencing the release of all Liens on the
Acquired Assets;
(viii) BDE shall
have delivered to Atrinsic a certificate of the secretary of BDE, dated the
Closing Date, in form and substance reasonably satisfactory to Atrinsic, as to:
(i) the current charter and bylaws of BDE; (ii) good standing certificates dated
within ten (10) days of the Closing Date from the state of Delaware; (iii) the
resolutions of the board of directors authorizing the execution, delivery, and
performance of this Agreement and the transactions contemplated hereby; and (iv)
incumbency and signatures of the officers of BDE executing this Agreement or any
other agreement contemplated by this Agreement;
(ix) BDE shall
have executed, acknowledged (if appropriate), and delivered to Atrinsic (A)
assignments (including Intellectual Property transfer documents) in the forms
attached hereto or as otherwise may be agreed upon by the Parties, including for
the Kazaa trademark and all third party licenses required to operate the
Business, (B) the Patent License; (C) the Transition Services Agreement (if
deemed necessary by the Parties); (D) the Registration Rights Agreement and (E)
such other instruments of sale, transfer, conveyance, and assignment as Atrinsic
and its counsel may reasonably request, in forms reasonably acceptable to
Atrinsic;
(x) Atrinsic
shall have obtained the Required Atrinsic Vote and BDE shall have obtained the
Required BDE Vote;
(xi) Atrinsic
shall have received an opinion of The Mentor Group to the effect that the Share
Consideration is fair, from a financial point of view, to Atrinsic;
21
(xii) Atrinsic
shall have completed its due diligence on the Business of BDE to its
satisfaction; provided however, that this provision shall lapse thirty (30) days
following the date that BDE provides written notice to Atrinsic that all
material diligence materials reasonably requested by Atrinsic pursuant to its
due diligence request list previously made available to BDE have been provided
to Atrinsic and its advisors.
(xiii) Atrinsic
shall have received audited financial statements of the Business for the fiscal
year ended December 31, 2009;
(xiv) Atrinsic
and BDE shall have entered into a transitional services agreement on terms and
conditions mutually approved by the parties;
(xv) the
Marketing Services Agreement and the Master Services Agreement shall each have
been terminated in a manner reasonably satisfactory to each of the Parties;
and
(xvi) all
actions to be taken by BDE in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Atrinsic.
Atrinsic
may waive any condition specified in this Section 7(a) if it executes a writing
so stating at or prior to the Closing.
(b) Conditions to BDE’s
Obligation. BDE’s obligation to consummate the transactions to
be performed by it in connection with the Closing is subject to satisfaction of
the following conditions:
(i) the
representations and warranties set forth in Section 4 above shall be true and
correct in all material respects at and as of date hereof, and shall also be
true and correct as of the Closing Date, except to the extent that such
representations and warranties are qualified by the term “material,” or contain
terms such as “Material Adverse Effect” or “Material Adverse Change,” in which
case such representations and warranties (as so written, including the term
“material” or “Material”) shall be true and correct in all respects at and as of
the applicable date;
(ii) Atrinsic
shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing, except to the extent that such covenants
are qualified by the term “material,” or contain terms such as “Material Adverse
Effect” or “Material Adverse Change,” in which case Atrinsic shall have
performed and complied with all of such covenants (as so written, including the
term “material” or “Material”) in all respects through the Closing;
(iii) no
action, suit, or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) Atrinsic
shall have delivered to BDE a certificate to the effect that each of the
conditions specified above in Section 7(b)(i)-(ii) is satisfied in all
respects;
(v) Atrinsic
shall have received all authorizations, consents, and approvals of governments
and governmental agencies referred to in Section 4(d) above; and
(vi) Atrinsic
shall have delivered to BDE a certificate of the secretary of Atrinsic, dated
the Closing Date, in form and substance reasonably satisfactory to BDE, as to:
(i) the resolutions of the Board of Directors authorizing the execution,
delivery, and performance of this Agreement and the transactions contemplated
hereby; and (ii) incumbency and signatures of the officers of Atrinsic executing
this Agreement or any other agreement contemplated by this
Agreement;
22
(vii) Atrinsic
shall have executed, acknowledged (if appropriate), and delivered to BDE (A)
assumptions in the form attached hereto; (B) the Patent License; (C) the
Transition Services Agreement (if deemed necessary by the Parties); (D) the
Registration Rights Agreement and (E) such other instruments of assumption as
BDE and its counsel may reasonably request;
(viii) Atrinsic
shall have delivered to BDE the consideration specified in Section 2(c)
above;
(ix) Atrinsic
shall have obtained the Required Atrinsic Vote and BDE shall have obtained the
Required BDE Vote;
(x) Atrinsic
shall have set the number of directors constituting the entire Board of
Directors at seven (7), and two (2) nominees designated by BDE shall have been
appointed as a members of the Board of Directors of Atrinsic with such
appointments to be effective upon the Closing and Atrinsic shall have entered
into its standard form indemnification agreement with each such director
appointee;
(xi) Atrinsic
and BDE shall have entered into a transitional services agreement on terms and
conditions mutually approved by the parties;
(xii) the
Marketing Services Agreement and the Master Services Agreement shall each have
been terminated in a manner reasonably satisfactory to each of the Parties;
and
(xiii) all
actions to be taken by Atrinsic in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to BDE.
BDE may
waive any condition specified in this Section 7(b) if it executes a writing so
stating at or prior to the Closing.
SECTION
8. TERMINATION.
(a) Termination of
Agreement. The Parties may terminate this Agreement as
provided below:
(i) Atrinsic
and BDE may terminate this Agreement by mutual written consent at any time prior
to the Closing;
(ii) Atrinsic
may terminate this Agreement by giving written notice to BDE at any time prior
to the Closing (A) in the event BDE has materially breached any representation,
warranty, or covenant contained in this Agreement, Atrinsic has notified BDE of
the breach, and the breach has continued without cure, if capable of being
cured, for a period of 15 days after the notice of breach; provided, however,
that if the breach is not capable of being cured, Atrinsic shall have the right
to immediately terminate this Agreement by notice to BDE or (B) if the Closing
shall not have occurred on or before July 11, 2011, by reason of the failure of
any condition precedent under Section 7(a) hereof (unless the failure results
primarily from Atrinsic itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) BDE may
terminate this Agreement by giving written notice to Atrinsic at any time prior
to the Closing (A) in the event Atrinsic has materially breached any
representation, warranty, or covenant contained in this Agreement, BDE has
notified Atrinsic of the breach, and the breach has continued without cure, if
capable of being cured, for a period of 15 days after the notice of breach;
provided, however, that if the breach is not capable of being cured, BDE shall
have the right to immediately terminate this Agreement by notice to Atrinsic or
(B) if the Closing shall not have occurred on or before July 11, 2011, by reason
of the failure of any condition precedent under Section 7(b) hereof (unless the
failure results primarily from BDE itself breaching any representation,
warranty, or covenant contained in this Agreement).
23
(b) Effect of
Termination. If any Party terminates this Agreement pursuant
to Section 8(a) above, all rights and obligations of the Parties hereunder
(except those set forth in Section 6(b)(ii)) shall terminate without any
Liability of any Party to any other Party for such termination (except for any
Liability that accrues from a breach of this Agreement).
SECTION
9. POST-CLOSING
COVENANTS. The Parties agree as follows with respect to the
period following the Closing:
(a) General. In
case at any time after the Closing any further actions are necessary or
desirable to carry out the purposes of this Agreement, each of the Parties will
take such further actions (including the execution and delivery of such further
instruments and documents) as any other Party may reasonably request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under Section 10 below). Without
limiting the generality of the foregoing, if reasonably requested by
Atrinsic, BDE will provide reasonable assistance to Atrinsic in preparing
Atrinsic’s audited financial statements relating to the business represented by
the Acquired Assets and Assumed Liabilities, including providing Atrinsic
and its auditors access to and copies of such accounting books and records
of BDE at reasonable times at such places as not to interrupt the business of
BDE.
(b) Consent to
Assignment. This Agreement shall not constitute an agreement
to assign any interest in any Acquired Contract or any claim, right or benefit
arising thereunder or resulting therefrom if an attempted assignment thereof
without the consent required or necessary of a third party would constitute a
breach or violation thereof or affect adversely the rights of Atrinsic or BDE
thereunder. If a consent of a third party which is required in order
to assign any interest is not obtained prior to the Closing Date, or if an
attempted assignment would be ineffective or would adversely affect the ability
of BDE to convey their interest to Atrinsic, BDE shall cooperate with
Atrinsic in any lawful arrangement to provide that Atrinsic shall receive BDE’s
entire interest in the benefits under any such Acquired Contract, including,
without limitation, enforcement for the benefit of Atrinsic of any and all
rights of BDE against any other party thereto arising out of the breach or
cancellation thereof by such party or otherwise; provided, however, that nothing
contained in this Section 9(b) shall affect the liability, if any, of BDE
pursuant to this Agreement for failing to have disclosed the need for such
consent or approval; and provided, further, that nothing
contained in this Section 9(b) shall obligate Atrinsic to waive the satisfaction
of the conditions precedent set forth in Section 7 of this
Agreement.
(c) Litigation Support.
In the event and for so long as any Party actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the date hereof involving a Party, the other Party
will cooperate with it and its counsel in the contest or defense, make
available his or its personnel, and provide such testimony and access to his or
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 10 below).
(d) Covenant Not to
Compete. For a period of two years from
and after the Closing Date, BDE will not engage in a subscription-based music
service or a substantially similar business that competes with the Business as
conducted as of the Closing Date, worldwide. If the final judgment of
a court of competent jurisdiction declares that any term or provision of this
Section 9(d) is invalid or unenforceable, the Parties agree that the court
making the determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
24
(e) Stock
Certificates. Each certificate representing the Share
Consideration will be imprinted with a legend substantially in the following
form:
These
securities have not been registered under the Securities Act of 1933, as
amended, or any state securities act, and may not be sold or transferred in the
absence of such registration or qualification or an exemption therefrom under
the securities act or any such state securities laws that may be
applicable.
Each
holder desiring to transfer Atrinsic Common Stock first must furnish Atrinsic
with (A) (i) a written opinion reasonably satisfactory to Atrinsic in form and
substance from counsel reasonably satisfactory to Atrinsic by reason of
experience to the effect that the holder may transfer the Atrinsic Common Stock
as desired without registration under the Securities Act and (ii) a written
undertaking executed by the desired transferee reasonably satisfactory to
Atrinsic in form and substance agreeing to the restrictions on transfer
contained herein, or (B) a written opinion reasonably satisfactory to Atrinsic
that all appropriate action necessary for compliance with the registration
requirements of the Securities Act of 1933 has been
taken. Notwithstanding the foregoing but subject at all times to
compliance with the Securities Act of 1933 and any applicable state securities
laws, Atrinsic agrees that shares of Atrinsic Common Stock may be
transferred by BDE to the parties to the agreements set forth on Schedule 3(v)
hereof and Atrinsic will cooperate with BDE in connection with such
transfers.
(f) Exchange Act
Compliance. During the period beginning upon the Closing and
ending on the first anniversary of the Closing, Atrinsic (i) agrees to utilize
its commercially reasonable efforts to remain a Section 12(g) reporting company
in compliance with the Exchange Act and (ii) covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed pursuant to the Exchange Act.
(g) Insurance. After
the Closing Date, for a period of two (2) years, BDE shall maintain in full
force and effect its current levels of E&O insurance as in existence on the
Closing Date, which may be satisfied by obtaining a two year “tail” policy
providing substantially the same coverage as is currently in
effect.
(h) Name
Change. After the Closing Date: (a) Altnet shall
promptly change its name from “Altnet, Inc.” to a name not including the words
“Altnet” or any part or colorable imitation thereof (the “Prohibited Names”);
and (b) Altnet shall cease and shall not at any time after the Closing Date use
any Prohibited Names, or establish any business entity that has a name
including, any of the Prohibited Names.
SECTION
10. INDEMNIFICATION.
(a) Survival of Representations
and Warranties. Except as set forth in the immediately
following sentences, all of the representations and warranties of Atrinsic and
BDE contained in this Agreement shall survive the Closing and continue in full
force and effect for a period of 1 year thereafter. The
representations and warranties of BDE contained in Section 3(k) of this
Agreement shall survive the Closing and continue in full force and effect until
thirty (30) calendar days following the expiration of any applicable statute of
limitations; the representations and warranties of BDE contained in Section 3(m)
shall survive the Closing and continue in full force and effect for a period of
two (2) years thereafter; and the representations and warranties of BDE
contained in Sections 3(a) and (b) of this Agreement shall survive the Closing
and continue in full force and effect until the expiration of any applicable
statutes of limitations (after giving effect to any extensions or
waivers). The representations and warranties of Atrinsic contained in
Sections 4(a) and (b) of the Agreement shall survive the Closing and continue in
full force and effect until the expiration of any applicable statutes of
limitation.
25
(b) Indemnification Provisions
for Atrinsic's Benefit. BDE shall indemnify Atrinsic from and
against the entirety of any Adverse Consequences Atrinsic may suffer (including
any Adverse Consequences Atrinsic may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by: (i) any breach (or in the event any third party alleges facts
that, if true, would mean BDE has breached) of BDE’s representations,
warranties, and covenants contained herein; provided that with respect to
breaches of representations and warranties, Atrinsic makes a written claim for
indemnification against BDE within the applicable survival period; (ii) the
operation of BDE’s business at anytime, whether before or after the Closing
Date, or the ownership, use or possession of the Acquired Assets prior to the
Closing Date, including, without limitation, any action or claim brought by any
third party or governmental entity against Atrinsic as a successor in interest
to BDE that is based on facts that arose on or before the Closing Date or on
acts or omissions occurring on or before the Closing Date (other than the
Assumed Liabilities), and (iii) the Retained Liabilities. Other than
breaches or alleged breaches of Sections 3(a) and (b) of this Agreement for
which BDE’s indemnification obligations hereunder shall immediately apply, BDE
shall not have any obligation to indemnify Atrinsic from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or alleged breach) of any representation or warranty of
BDE until Atrinsic has suffered Adverse Consequences by reason of all such
breaches (or alleged breaches) in excess of a $75,000 aggregate threshold (at
which point BDE will be obligated to indemnify Atrinsic from and against all
such Adverse Consequences in excess of $75,000). The aggregate indemnification
obligation under Section 10(b)(i) for any Adverse Consequences resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or
alleged breach) of any representation or warranty of BDE shall not exceed ten
(10) percent of the Share Consideration or, with respect to a breach (or alleged
breach) of Sections 3(a), (b) and (k) of this Agreement, the aggregate value of
the Share Consideration, in each case valued as of the Closing Date based on the
average closing price of the Atrinsic Common Stock during the ten (10)
consecutive trading days immediately preceding the Closing Date (the “Closing
Share Value”).
(c) Indemnification Provisions
for BDE’s Benefit. Atrinsic shall indemnify BDE from and
against the entirety of any Adverse Consequences BDE may suffer (including any
Adverse Consequences BDE may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or caused
by: (i) any breach (or in the event any third party alleges facts that, if true,
would mean Atrinsic has breached) of Atrinsic’s representations, warranties, and
covenants contained herein; provided that with respect to breaches of
representations and warranties, BDE makes a written claim for indemnification
against Atrinsic within the applicable survival period; and (ii) the operation
of Atrinsic’s business at anytime, whether before or after the Closing Date, or
the ownership, use or possession of the Acquired Assets after the Closing Date
(other than Liabilities which are excluded from the definition of Assumed
Liabilities) and for the Assumed Liabilities. Other than breaches or
alleged breaches of Sections 4(a) and (b) of this Agreement for which Atrinsic’s
indemnification obligations hereunder shall immediately apply, Atrinsic shall
not have any obligation to indemnify BDE from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or alleged breach) of any representation or warranty of
Atrinsic until BDE has suffered Adverse Consequences by reason of all such
breaches (or alleged breaches) in excess of a $25,000 aggregate threshold (at
which point Atrinsic will be obligated to indemnify BDE from and against all
such Adverse Consequences in excess of $25,000). The aggregate indemnification
obligation under Section 10(c)(i) for any Adverse Consequences resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or
alleged breach) of any representation or warranty of Atrinsic shall not exceed
ten (10) percent of the Share Consideration or, with respect to a breach (or
alleged breach) of Sections 4(a) and (b) of this Agreement, the aggregate value
of the Share Consideration, in each case valued as of the Closing Date based on
the average share price of the Atrinsic Common Stock during the ten (10)
consecutive trading days immediately preceding the Closing Date.
26
(d) Matters Involving Third
Parties.
(i) If any
third party notifies either Party (the “Indemnified Party”)
with respect to any matter (a “Third-Party Claim”)
that may give rise to a claim for indemnification against any other Party (the
“Indemnifying
Party”) under this Section 10, then the Indemnified Party shall promptly
notify each Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party is thereby
prejudiced.
(ii) Any
Indemnifying Party will have the right to defend the Indemnified Party against
the Third-Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party has given notice of
the Third-Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third-Party Claim (subject to any applicable limitations on
liability set forth in this Section 10), (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to defend against
the Third-Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third-Party Claim involves only money damages and does not seek an
injunction or other equitable relief, and (D) the Indemnifying Party conducts
the defense of the Third-Party Claim actively and diligently.
(iii) So long
as the Indemnifying Party is conducting the defense of the Third-Party Claim in
accordance with Section 10(d)(ii) above, (A) the Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate in the defense
of the Third-Party Claim, (B) the Indemnified Party will not consent to the
entry of any judgment on or enter into any settlement with respect to the
Third-Party Claim without the prior written consent of the Indemnifying Party
(not to be unreasonably withheld), and (C) the Indemnifying Party will not
consent to the entry of any judgment on or enter into any settlement with
respect to the Third-Party Claim without the prior written consent of the
Indemnified Party (not to be unreasonably withheld), unless there is a complete release of the Indemnified
Party specifically included in any settlement agreement. The Indemnified Party
shall provide the Indemnifying Party and its counsel with access to its records
and personnel relating to any such claim, assertion, event or proceeding during
normal business hours and shall otherwise cooperate with the Indemnifying Party
in the defense or settlement thereof.
(iv) In the
event any of the conditions in Section 10(d)(ii) above is or becomes
unsatisfied, or if the Indemnifying Party fails to defend or if, after
commencing or undertaking any such defense, the Indemnifying Party fails to
prosecute or withdraws from such defense, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment on or enter into any
settlement with respect to, the Third-Party Claim in any manner it may
reasonably deem appropriate, subject to the prior written consent of the
Indemnifying Party (not to be unreasonably withheld), (B) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim (including reasonable
attorneys’ fees and expenses) and (C) the Indemnifying Parties will remain
responsible for any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
Third-Party Claim to the fullest extent provided in this Section
10.
27
(e) Determination of Adverse
Consequences. All indemnification payments under this Section
10 shall be deemed adjustments to the Purchase Price for tax purposes and such
agreed treatment shall govern for purposes of this Agreement.
(f) Payment in
Shares. Subject to applicable Law, BDE may satisfy all or a
portion of its indemnification obligations under this Section 10 by delivery to
Atrinsic of that number of shares of the Share Consideration as is equal to (x)
the amount of the indemnification payments BDE chooses to satisfy by delivery of
shares, divided by (y) the Closing Share Value.
(g) Exclusive Remedy for
Representations and Warranties. Other than with respect to
breaches of a Party’s representations and warranties hereunder which are the
result of fraud or intentional misrepresentation (for which all statutory,
equitable, or common law remedies that a Party may have in its favor shall be
available), the rights and obligations of the parties under this Section 10 are
the exclusive rights and obligations of the Parties with respect to any breach
of any representation or warranty in this Agreement and shall be in lieu of any
other rights or remedies to which the party entitled to indemnification
hereunder (other than equitable remedies, if applicable) would otherwise be
entitled as a result of such breach.
SECTION
11. MISCELLANEOUS.
(a) Press Releases and Public
Announcements. The Parties shall use commercially reasonable
best efforts (i) to develop a joint communications plan, (ii) to ensure that all
press releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications plan, and
(iii) except in respect of any announcement required by applicable law or by
obligations pursuant to any listing agreement with or rules of NASDAQ in
which it is impracticable to consult with each other as contemplated by this
clause (iii), to consult with each other before issuing any press release or, to
the extent practical, otherwise making any public statement with respect to this
Agreement or the transactions contemplated hereby. In addition to the foregoing,
no Party shall issue any press release or otherwise make any public statement or
disclosure concerning the other Party or the other Party’s business, financial
condition or results of operations without the prior review by such other
Party.
(b) No Third-Party
Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.
(c) Entire
Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
(d) Succession and
Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(e) Counterparts. This
Agreement may be executed in one or more counterparts (including by means of
facsimile), each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
(f) Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(g) Notices. All
notices, requests, demands, claims, and other communications hereunder shall be
in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given (i) when delivered personally to the recipient, (ii)
one (1) business day after being sent to the recipient by reputable overnight
courier service (charges prepaid), (iii) one (1) business day after being sent
to the recipient by facsimile transmission or electronic mail, providing that
confirmation of receipt has been obtained, or (iv) four (4) business days after
being mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid, and addressed to the intended recipient as set
forth below:
28
If
to BDE:
|
Attention: Xxxxxxx
Xxxxxxx
|
|
00000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
|
||
Xxxxxxx
Xxxx, Xxxxxxxxxx 00000
|
||
000-000-0000
(Direct)
|
||
000-000-0000
(Facsimile)
|
||
If
to Atrinsic:
|
Attention: Chief
Financial Officer
|
|
000
0xx
Xxxxxx, 00xx
Xxxxx
|
||
Xxx
Xxxx, XX 00000
|
||
Fax:
(000) 000-0000
|
||
Phone:
(000) 000-0000
|
||
Copy
to:
|
Xxxxxx,
Xxxxxxxx & Markiles, LLP
|
|
00000
Xxxxxxx Xxxxxxxxx, 00xx
Xxxxx
|
||
Xxxxxxx
Xxxx, XX 00000
|
||
Attention: Xxxxx
Xxxxx
|
||
Fax: (000)
000-0000
|
||
Phone: (000)
000-0000
|
||
Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(h) Governing Law. This Agreement shall be
governed by and construed in accordance with the domestic laws of the State of
New York without giving effect to any choice or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
New York.
(i) Amendments and
Waivers. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by Atrinsic and
BDE. No waiver by any Party of any provision of this Agreement or any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless the same shall be in writing and
signed by the Party making such waiver nor shall such waiver be deemed to extend
to any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such default, misrepresentation, or breach of warranty or
covenant.
(j) Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
(k) Expenses. Each
Party will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby. Without limiting the generality of the foregoing, all transfer,
documentary, sales, use, stamp, registration and other such Taxes, and all
conveyance fees, recording charges and other fees and charges (including any
penalties and interest) incurred in connection with the consummation of the
transactions contemplated by this Agreement shall be paid by BDE when due, and
BDE will, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such Taxes, fees and charges, and, if required
by applicable law, the Parties will, and will cause their Affiliates to, join in
the execution of any such Tax Returns and other documentation. Notwithstanding
anything to the contrary contained herein, each of BDE and Atrinsic shall bear
one-half of the cost of any transfer or sales taxes resulting from the transfer
of the Acquired Assets.
29
(l) Construction. The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or 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 of the provisions
of this Agreement. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
“including” shall mean including without limitation. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein unless the Disclosure Schedule identifies the exception
with reasonable particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself).
(m) Incorporation of Exhibits
and Schedules. The Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Specific
Performance. Each Party acknowledges and agrees that the other
Party would be damaged irreparably in the event any provision of this Agreement
is not performed in accordance with its specific terms or otherwise is breached,
so that a Party shall be entitled to injunctive relief to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in addition to any other remedy to which such
Party may be entitled, at law or in equity. In particular, the Parties
acknowledge that the Business is unique and recognize and affirm that in the
event BDE breaches this Agreement, money damages would be inadequate and
Atrinsic would have no adequate remedy at law, so that Atrinsic shall have the
right, in addition to any other rights and remedies existing in its favor, to
enforce its rights and the other Party’s obligations hereunder not only by
action for damages but also by action for specific performance, injunctive,
and/or other equitable relief.
(o) Submission to
Jurisdiction. Each of the Parties submits to the jurisdiction
of any state or federal court sitting in New York, NY, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each Party also agrees not to bring any action or proceeding arising
out of or relating to this Agreement in any other court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other security that might
be required of any other Party with respect thereto. Any Party may make service
on the other Party by sending or delivering a copy of the process to the Party
to be served at the address and in the manner provided for the giving of notices
in Section 11(g) above. Nothing in this Section 11(o), however, shall affect the
right of any Party to serve legal process in any other manner permitted by law
or in equity. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or in equity.
(p) Governing
Language. This Agreement has been negotiated and executed by
the Parties in English. In the event any translation of this Agreement is
prepared for convenience or any other purpose, the provisions of the English
version shall prevail.
30
(q) Tax Disclosure
Authorization. Notwithstanding anything herein to the
contrary, the Parties (and each Affiliate and Person acting on behalf of any
Party) agree that each Party (and each employee, representative, and other agent
of such Party) may disclose to any and all Persons, without limitation of any
kind, the transaction’s tax treatment and tax structure (as such terms are used
in Code Sections 6011 and 6112 and regulations thereunder) contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) provided to such Party or such Person relating to such tax treatment
and tax structure. This authorization is not intended to permit disclosure of
any other information including (without limitation) (A) any portion of any
materials to the extent not related to the transaction’s tax treatment or tax
structure, (B) the identities of participants or potential participants, (C) the
existence or status of any negotiations, (D) any pricing or financial
information (except to the extent such pricing or financial information is
related to the transaction’s tax treatment or tax structure), or (E) any other
term or detail not relevant to the transaction’s tax treatment or the tax
structure.
(r) Waiver of Jury Trial.
EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY, IN ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH, THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(s) Telecopy Execution and
Delivery. A facsimile, telecopy or other reproduction of this
Agreement may be executed by one or more parties to this Agreement, and an
executed copy of this Agreement may be delivered by one or more Parties to this
Agreement by facsimile or similar electronic transmission device pursuant to
which the signature of or on behalf of such Party can be seen, and such
execution and delivery shall be considered valid, binding and effective for all
purposes. At the request of any Party to this Agreement, all Parties
to this Agreement agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction of this Agreement.
[REMAINDER
OF THIS PAGE INTENTIONALLY BLANK]
31
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date
first above written.
ATRINSIC,
INC.,
a
Delaware corporation
|
||||
|
By:
|
/s/ Xxxxxx Xxxxxx | ||
BRILLIANT
DIGITAL ENTERTAINMENT, INC.,
a
Delaware corporation
|
||||
|
By:
|
/s/ Xxxxx Xxxxxxxxxx | ||
CEO
|
, Chief Executive Officer | |||
ALTNET,
INC.,
a
Delaware corporation
|
||||
|
By:
|
/s/ Xxxxx Xxxxxxxxxx | ||
CEO
|
, Chief Executive Officer | |||
32