The undersigned hereby appoints Alan M. Meckler
as proxy holder, with the power to designate a substitute, and hereby authorizes him to represent and to vote as designated below,
all the shares of common stock of Mediabistro Inc. held of record by the undersigned on May 29, 2014, at the Annual Meeting of
Stockholders to be held at the offices of Mediabistro Inc., 475 Park Avenue South, 4th Floor, New York, New York 10016 on [_____],
2014, or any adjournment thereof. At his discretion, the proxy holder is authorized to vote such shares of common stock upon such
other business as may properly come before the Annual Meeting.
/ To vote by mail, please detach along
the perforated line and mail in the envelope provided. /
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ITEMS 1, 2, 3, 5, and 6 .
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1.
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To approve the sale of specified assets and the assumption of specified liabilities related to the Business by Mediabistro to PGM-MB as contemplated by the Asset Purchase Agreement, dated May 28, 2014, by and among Mediabistro, PGM-MB Holdings LLC and Prometheus Global Media, LLC.
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FOR
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AGAINST
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ABSTAIN
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2.
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To approve an amendment to our certificate of incorporation to change our name to Mecklermedia Corporation.
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FOR
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AGAINST
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3.
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To approve, by non-binding, advisory
vote, the compensation of Mediabistro’s named executive officers to be received in connection with the sale of the Business.
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FOR
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5.
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To approve, by non-binding, advisory vote, the compensation of the named executive officers.
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FOR
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AGAINST
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6
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To approve the adjournment of the Annual Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Annual Meeting to approve the sale of the Business proposed under Item 1.
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FOR
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AGAINST
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ABSTAIN
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE DIRECTOR NOMINEES LISTED BELOW WITH TERMS EXPIRING AT THE 2015 ANNUAL MEETING.
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NOMINEES:
o
Alan
M. Meckler
o
Wayne A. Martino
o
John R. Patrick
o
William A. Shutzer
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FOR all nominees listed at left, except as marked below
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WITHHOLD AUTHORITY for all nominees listed to the left
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INSTRUCTION: To withhold a vote for an individual nominee(s), write the name of such nominee(s) in the space provided below. Your shares will be voted for the remaining nominee(s).
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To change the address on your account, please check the
box at right and indicate your new address in the space below. Please note that changes to the registered name(s) on the account
may not be submitted via this method.
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Signature of
Stockholder:
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Date:
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Signature of
Stockholder:
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Date:
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Note:
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Please sign exactly as your name or names appear on this proxy. When shares of common stock are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign in full corporate name by a duly authorized officer, giving full title as such. If the signer is a partnership, please sign in partnership name by an authorized person.
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ANNEX A
ASSET PURCHASE AGREEMENT
BY AND AMONG
MEDIABISTRO INC.,
PGM-MB HOLDINGS
LLC, AND
PROMETHEUS GLOBAL
MEDIA, LLC
MAY 28, 2014
TABLE OF CONTENTS
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Page
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ARTICLE I PURCHASE AND SALE
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1
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1.1
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Purchase and Sale of Assets
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1
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1.2
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Retained Assets
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3
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1.3
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Assumed Liabilities
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3
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1.4
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Retained Liabilities
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4
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1.5
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Closing Payment
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5
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1.6
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Allocation of Purchase Price
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6
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ARTICLE II CLOSING
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6
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2.1
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Closing
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6
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2.2
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Documents To Be Delivered By Seller
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7
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2.3
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Payment and Documents To Be Delivered By Buyer
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7
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
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8
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3.1
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Corporate Organization and Standing
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9
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3.2
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Authorization
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9
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3.3
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No Conflict or Violation
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10
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3.4
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Seller SEC Documents; Financial Statements
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10
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3.5
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Absence of Undisclosed Liabilities
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11
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3.6
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Real Property
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11
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3.7
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Contracts
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12
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3.8
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Books and Records
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14
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3.9
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Equipment
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14
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3.10
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Acquired Assets
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14
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3.11
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Litigation
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14
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3.12
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Licenses and Permits
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14
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3.13
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Environmental
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15
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3.14
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Intellectual Property
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15
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3.15
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Customers, Distributors and Suppliers
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21
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3.16
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Taxes
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21
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3.17
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Employee Plans
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23
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TABLE OF CONTENTS
(continued)
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Page
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3.18
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Employee Matters
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24
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3.19
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Labor Unions
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24
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3.20
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Brokers, Finders
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25
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3.21
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Compliance With Laws
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25
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3.22
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Insurance
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25
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3.23
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Changes in Circumstances
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25
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3.24
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Agreements with Affiliates
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27
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3.25
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Information in Proxy Statement
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27
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3.26
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Opinion of Financial Advisor
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27
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3.27
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Solvency
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27
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3.28
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Seller Subsidiaries
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
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28
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4.1
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Corporate Organization and Standing
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28
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4.2
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Authorization
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28
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4.3
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No Conflict or Violation
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28
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4.4
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Litigation
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4.5
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Brokers, Finders
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28
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4.6
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Source of Funds
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28
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ARTICLE V CONDITIONS TO CONSUMMATION OF THE CLOSING
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29
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5.1
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Conditions to Buyer’s Obligations
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29
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5.2
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Conditions to Seller’s Obligations
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30
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ARTICLE VI COVENANTS OF THE PARTIES
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30
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6.1
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Conduct of Business
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30
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6.2
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Acquisition Proposals
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31
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6.3
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Preparation of Proxy Statement; Stockholders Meeting
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33
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6.4
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Access to Records and Properties; Supplemental Information
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35
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6.5
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Efforts to Consummate Closing; Cooperation
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36
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6.6
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Restrictive Covenants
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36
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6.7
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Maintenance of Insurance
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39
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6.8
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Public Announcement
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TABLE OF CONTENTS
(continued)
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Page
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6.9
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Employment
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6.10
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Employee Benefit Matters
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6.11
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Defined Contribution Plans
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6.12
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COBRA
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6.13
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Tax Matters
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6.14
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Assignability and Consents
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6.15
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Litigation Support
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6.16
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Seller’s Obligation to Change Name
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6.17
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Seller Status
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6.18
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Contract Renewal
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ARTICLE VII INDEMNIFICATION
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7.1
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Survival of Representations, Warranties and Covenants
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44
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7.2
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Indemnification by Seller
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7.3
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Indemnification by Buyer
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7.4
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Payment Source
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46
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7.5
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Procedures for Indemnification
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46
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7.6
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Determination of Loss Amount
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47
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7.7
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Tax Treatment
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47
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7.8
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Other Exclusions
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47
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7.9
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Remedies Exclusive
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48
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7.10
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Additional Limitations, Mitigation, Subrogation.
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48
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ARTICLE VIII TERMINATION
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48
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8.1
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Termination
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48
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8.2
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Effect of Termination
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49
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8.3
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Expenses and Termination Fee
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50
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ARTICLE IX MISCELLANEOUS
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50
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9.1
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Expenses
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50
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9.2
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Notices
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51
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9.3
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Counterparts
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52
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9.4
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Entire Agreement
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52
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TABLE OF CONTENTS
(continued)
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Page
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9.5
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Interpretation
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52
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9.6
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Headings
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52
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9.7
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Assignment; Amendment
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52
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9.8
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Governing Law
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53
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9.9
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No Third-Party Rights
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53
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9.10
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Non-Waiver
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53
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9.11
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Severability
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53
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9.12
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Incorporation of Exhibits and Schedules
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54
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9.13
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Remedies
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54
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9.14
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Specific Performance
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54
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9.15
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WAIVER OF JURY TRIAL
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54
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ARTICLE X BUYER PARENT GUARANTEE
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54
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10.1
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Buyer Parent Guarantee
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54
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10.2
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Buyer Parent Representations and Warranties
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55
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EXHIBITS
Exhibits
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Exhibit A
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Definitions
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Exhibit B
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Form of Escrow Agreement
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Exhibit C
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Form of Bill of Sale and Assignment and Assumption Agreement
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Exhibit D
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Form of IP Assignments
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Exhibit E
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Form of Transition Services Agreement
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Exhibit F
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Form of Non-Compete Agreement
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ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE AGREEMENT
(this “
Agreement
”), dated as of May 28, 2014, is entered into by and among Mediabistro Inc., a Delaware corporation
(“
Seller
”), PGM-MB Holdings LLC, a Delaware limited liability company (“
Buyer
”), and solely
with respect to
Sections 6.5
,
6.6,
6.8
,
6.18
and
Article X
and the applicable provisions of
Article IX
, Prometheus Global Media, LLC, a Delaware limited liability company (“
Buyer Parent
”). Capitalized
terms used and not otherwise defined herein have the meanings set forth in
Exhibit A
attached hereto for the purposes of
this Agreement.
RECITALS
WHEREAS
, the Seller
Parties are engaged in the business of providing online publishing of editorial content, e-commerce offerings, online job board
(including career oriented services such as freelancer marketplaces), online education and certificate programs for social media,
traditional media and creative professionals and bundled subscription services of the foregoing (the “
Business
”);
WHEREAS
, Seller’s
services offerings include trade shows and conferences and research and data services and products (the “
Retained Businesses
”);
WHEREAS
, Seller
desires to sell substantially all of its and the Seller Subsidiaries’ assets, properties, rights and interests used in or
related to the Business to Buyer, and Buyer desires to purchase and acquire the same from the Seller Parties in consideration of
certain payments by Buyer to Seller and the assumption by Buyer of certain Liabilities of the Seller Parties, all on the terms
and conditions set forth in this Agreement;
WHEREAS
, the Seller
Parties desire to conduct the Retained Business after the Closing of this Agreement; and
WHEREAS
, concurrently
with the execution of this Agreement, Alan M. Meckler and Buyer have entered into a voting agreement whereby Mr. Meckler has agreed
to vote his shares of Seller’s stock in favor of the Transactions;
NOW, THEREFORE
,
in consideration of the promises and the mutual covenants hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE
I
PURCHASE AND SALE
1.1
Purchase
and Sale of Assets
. On the terms and subject to the conditions of this Agreement and the Ancillary Agreements, at
the Closing, Seller shall, and shall cause the Seller Subsidiaries to, sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase and acquire from the Seller Parties, all right, title and interest of the Seller Parties in and to
the Acquired Assets, as the same shall exist as of the Closing Date free and clear from all Liens, other than Permitted
Liens. For purposes of this Agreement, “
Acquired Assets
” means all of the Assets, properties and rights of
every kind (whether tangible or intangible) of any Seller Party other than the Retained Assets (as defined below), whether
now existing or acquired prior to the Closing Date as the same may exist on the Closing Date, including:
(a) the Equipment,
and all third party warranties and guarantees and other similar contractual rights as to third parties held by or in favor of any
Seller Party with respect to any of the Equipment;
(b) the Inventory;
(c) all rights and
interests in all contracts, agreements, arrangements, understandings, personal property leases, obligations (including purchase
orders), commitments, undertakings, and pending bids or proposals which bids or proposals if accepted would result in a binding
contract (whether written or oral, express or implied) (the “
Contracts
”) primarily related to the Business;
(d) to the extent
transferable under applicable Law, the Licenses and Permits, if any;
(e) the Business IP
and all content of Seller hosted on Twitter, Facebook, LinkedIn and all other social media sites (including all passwords associated
with the foregoing accounts), together with the right to sue and collect for past, present and future infringement or misappropriation
thereof, and all tangible embodiments thereof;
(f) to the extent
transferable, all rights under or pursuant to warranties and guarantees made by suppliers, manufacturers or contractors in connection
with products or services provided to the Business and all other claims and rights against third parties relating to the Acquired
Assets or the Assumed Liabilities;
(g) to the extent
transferable, any credits, prepaid expenses, deferred charges, deposits and claims for refunds or reimbursements, in each case,
relating to any of the Acquired Assets or Assumed Liabilities;
(h) to the extent
transferable, all insurance proceeds or rights to insurance proceeds under any insurance policies of Seller with respect to any
of the Acquired Assets or Assumed Liabilities;
(i) all transferable
telephone numbers listed on
Schedule 1.1(i)
;
(j) other than as
specifically set forth in
Section 1.2(e)
, all books, records, ledgers, files, documents, correspondence, lists, plats, specifications,
drawings, advertising and promotional materials, studies, Tax Returns (to the extent they relate to the Business and Acquired Assets,
provided, however, that Seller may retain copies of such Tax Returns), reports and other materials (in whatever form or medium)
that are used or held for use that relate to the conduct of the Business;
(k) all non-disclosure
or confidentiality agreements entered into by or on behalf of Seller within the last 12 months related to the sale of the Business;
and
(l) all goodwill associated,
or arising in connection, with the Business or any of the Acquired Assets.
1.2
Retained
Assets
. Notwithstanding any other provision of this Agreement to the contrary, the Seller Parties shall retain, and Buyer
shall not acquire any Seller Party’s right, title or interest in or to, and the Acquired Assets will not include the
following (collectively, the “
Retained Assets
”):
(a) Seller’s
rights under this Agreement and the Ancillary Agreements to which any Seller Party is a party;
(b) all cash on hand
and cash equivalents at the time of Closing, except for such cash or cash equivalents included in the Acquired Assets under
Section
1.1(h)
, and all bank accounts;
(c) all Contracts
of insurance and policies of insurance held by any Seller Party, including casualty, liability or group life, health or accident
insurance;
(d) all Employee Plans
and Assets related to any Employee Plan;
(e) each Seller Party’s
corporate charter, qualification to conduct business as a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers, corporate seal, minute books, stock transfer books, blank stock
certificates, books and records (including Tax Returns) relating to federal, state, local or foreign income, net or gross receipts,
franchise, estimated, alternative minimum, or add-on Taxes, and any other documents relating to the organization, maintenance or
existence of any Seller Party as a corporation; and
(f) all Assets exclusively
related to or used in the Retained Businesses;
(g) all equity interests
in Seller and Seller’s Subsidiaries;
(h) the Leases;
(i) all accounts receivable
for money due to any Seller Party arising out of the sale of goods or materials or the rendering of services prior to the Closing
by or on behalf of any Seller Party that are in existence as of the Closing;
(j) Seller’s
interests in that certain Asset Purchase Agreement dated as of August 7, 2009 by and between Seller (f/k/a WebMediaBrands Inc.)
and QuinStreet, Inc.; and
(k) the Contracts,
Assets, properties, rights and interests specifically described on
Schedule 1.2(k)
.
1.3
Assumed
Liabilities
. On the terms and subject to the conditions contained in this Agreement and except as otherwise provided in
Section 1.4
,
at the Closing, Buyer will assume and thereafter pay, perform or otherwise discharge only the following Liabilities of the
Seller Parties (the “
Assumed Liabilities
”):
(a) all Liabilities arising under or
related to the Contracts included in the Acquired Assets from and after the Closing (other than Liabilities attributable to any
breach or default, or deemed breach or default, by a Seller Party under the terms thereof), including all deferred revenue, including
prepaid subscriptions and other similar liabilities, associated with such Contracts or the Business;
(b) all Liabilities, including without
limitation Tax Liabilities, arising after the Closing Date to the extent arising out of or related to Buyer’s ownership or
operation of the Business or Buyer’s use or ownership of the Acquired Assets;
(c) all Liabilities relating to the Transferred
Employees, only to the extent arising following the Closing Date;
(d) Taxes arising
as a result of the Transactions that are the responsibility of the Buyer pursuant to
Section 6.13(f)
, or for which Buyer
is responsible pursuant to any of the Ancillary Agreements; and
(e) all Liabilities
specifically described on
Schedule 1.3(e)
.
1.4
Retained Liabilities
.
Notwithstanding any other provision of this Agreement, the Seller Parties shall retain, and Buyer shall not assume or be responsible
or liable with respect to any, Liabilities of any Seller Party other than the Assumed Liabilities (collectively, the “
Retained
Liabilities
”). By way of example and not of limitation, Buyer will not be responsible for any of the following (each
of which will constitute a Retained Liability):
(a) all accounts payable of the Seller
arising out of the purchase of goods, materials or services prior to the Closing by or on behalf of the Seller that are in existence
as of the Closing;
(b) the Seller Transaction Expenses;
(c) any Liability relating to, based
in whole or in part on events or conditions occurring or existing in connection with, or arising out of, any Retained Assets;
(d) all Indebtedness of any Seller Party
outstanding as of the close of business on the Closing Date (including, for the avoidance of doubt, all Indebtedness payable to
Alan M. Meckler);
(e) any Liabilities under the Leases
or with respect to the Leased Real Property;
(f) any Liability
or obligation of any Seller Party or relating to the Business, the Acquired Assets or the Assumed Liabilities with respect to:
(i) Taxes for any Pre-Closing Tax Period, (ii) Taxes arising as a result of the Transactions that are the responsibility of Seller
pursuant to
Section 6.13(f)
, or for which a Seller Party is responsible pursuant to any of the Ancillary Agreements, and
(iii) other Taxes of a Seller Party of any kind that become a Liability of the Buyer as a transferee or successor, or otherwise
by operation of Contract or Law;
(g) any Liability arising out of or related
to the generation, use, handling, presence, treatment, storage, transportation, disposal or Release of any Hazardous Materials,
including any offsite disposal of Hazardous Materials, in connection with (i) the Retained Assets, whether before or after Closing,
or (ii) the ownership or the operation of the Business, the Leased Real Property, or the Acquired Assets prior to the Closing,
in each case, including any such Liabilities resulting from violations of applicable Environmental Laws;
(h) any Liabilities arising out of or
relating to any current or former officer, director, employee, consultant, leased employee, independent contractor or contract
employee, including all eligible beneficiaries, of any Seller Party, and further including the employment, engagement, compensation
and termination thereof by any Seller Party occurring prior to, and on or after the Closing Date or as a result of the Transactions,
including as a result of a change of control or under any Employee Plan, Multiemployer Plan (including any related withdrawal liability)
or any claim for benefits, equity awards, bonuses or other incentives or under COBRA or HIPAA;
(i) other than as
expressly assumed pursuant to
Section 1.3(a)
above, any Liability arising out of or relating to services provided or products
designed, manufactured, sold or repaired in connection with the Business on or prior to the Closing Date, including all product
return, rebate, credit and warranty obligations, and all product liabilities, relating thereto;
(j) any Liability arising out of or relating
to any action, charge, claim (including any cross-claim or counter-claim), suit, litigation, arbitration, proceeding (including
any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation
relating to the Business relating to any period on or prior to the Closing Date;
(k) any Liability of Seller under the
Agreement and the Ancillary Agreements to which any Seller Party is a party; and
(l) the Liabilities
specifically described on
Schedule 1.4(l)
.
1.5
Closing Payment.
(a)
Closing Payment
Calculation
. At the Closing, Buyer will pay to Seller, by wire transfer of immediately available funds to an account or accounts
designated by Seller, an amount equal to (i) Eight Million Dollars ($8,000,000) (the “
Initial Purchase Price
”),
minus
(ii) the Escrow Amount. The sum of the Initial Purchase Price less the Escrow Amount, is referred to herein as the
“
Closing Payment
”.
(b)
Escrow Holdback
.
To secure the indemnification obligations of Seller set forth in
Article VII
, at the Closing, Buyer will deposit an amount
equal to One Million Five Hundred Thousand Dollars ($1,500,000) less the amount by which any Covered Buyer Expenses incurred as
of the Closing Date exceed, in the aggregate, the Covered Buyer Expense Deductible (the “
Escrow Amount
”) out
of the Initial Purchase Price in immediately available funds in an escrow account (the “
Escrow Fund
”) with
Deutsche Bank Trust Company Americas, a New York banking corporation, as escrow agent (the “
Escrow Agent
”),
pursuant to the terms and conditions of an escrow agreement (the “
Escrow Agreement
”) in substantially the form
attached hereto as
Exhibit B
.
1.6
Allocation
of Purchase Price
.
(a) Within 90 days
after the Closing Date, Buyer will provide to Seller copies of Internal Revenue Service Form 8594 and any required exhibits thereto
(the “
Allocation Statement
”), prepared in accordance with Section 1060 of the Code setting forth its calculation
of the amount of the total consideration (including Assumed Liabilities) allocable to the Acquired Assets, including the amount
allocable to the covenant not to compete described in
Section 6.6(b)
.
(b) Seller will review the Allocation
Statement and, to the extent Seller disagrees in good faith with the content of the Allocation Statement, Seller will inform Buyer
of such disagreement within 45 days after receipt of the Allocation Statement. Seller and Buyer will attempt in good faith to resolve
such disagreement. If Seller and Buyer are unable to agree on the Allocation Statement within 180 days after the Closing Date,
Seller and Buyer will each use their own allocation statement.
(c) If Buyer and Seller agree on the
Allocation Statement, Buyer and Seller will report the allocation of the total consideration among the Acquired Assets in a manner
consistent with the Allocation Statement and will act in accordance with the Allocation Statement in the preparation and timely
filing of all income Tax Returns (including filing Form 8594 with their respective federal income Tax Returns for the taxable year
that includes the Closing Date and any other forms or statements required by the Code, the Internal Revenue Service or any applicable
state or local Tax Authority). Buyer and Seller agree to promptly provide the other Party with any additional information and reasonable
assistance required to complete Form 8594 or compute Taxes arising in connection with (or otherwise affected by) the Transactions.
(d) Buyer and Seller will promptly inform
one another in writing of any challenge by any Tax Authority to any allocation made pursuant to this section and agree to consult
with and keep one another informed with respect to the status of, and any discussion, proposal or submission with respect to, such
challenge.
(e) Any adjustments to the Purchase Price
shall be allocated in a manner consistent with the Allocation Statement.
ARTICLE II
CLOSING
2.1
Closing
.
The closing of the Transactions (the “
Closing
”) will occur within three Business Days following the satisfaction
or waiver of each of the conditions to Closing set forth in
Article V
at the offices of Jenner & Block LLP, 919 Third
Avenue, New York, New York, or at such other place or on such other date as the Parties may agree in writing. The date on which
the Closing actually occurs will be referred to as the “
Closing Date
,” and the Closing will be deemed effective
as of 11:59 p.m., Eastern Time, on the Closing Date.
2.2
Documents
To Be Delivered By Seller
. At the Closing, Seller shall (and with respect to items (a) and (b) below shall cause the Seller
Subsidiaries to) deliver to Buyer:
(a) a duly executed
counterpart of the bill of sale and assignment and assumption agreement, in substantially the form attached as
Exhibit C
(the “
Bill of Sale and Assignment and Assumption Agreement
”);
(b) duly executed
counterparts of the intellectual property assignments, in substantially the form attached as
Exhibit D
and domain name
assignments in the form required by the registrars of the domain names included in the Acquired Assets (the “
IP Assignments
”);
(c) a duly executed counterpart of the
Escrow Agreement;
(d) a duly executed
counterpart of the transition services agreement, in substantially the form attached as
Exhibit E
(the “
Transition
Services Agreement
”);
(e) a good standing certificate for Seller
from the Secretary of State of the State of Delaware, dated no earlier than 10 Business Days prior to the Closing Date;
(f) a certificate of a Secretary, Assistant
Secretary or other similar officer of Seller certifying as to (i) the resolutions of the board of directors of Seller approving
and authorizing this Agreement, the Ancillary Agreements to which Seller is a party and the Transactions and (ii) the requisite
approval and authorization of this Agreement and the Transactions by the stockholders of Seller;
(g) copies of all Closing Consents;
(h) the certificate
required by
Section 5.1(e)
;
(i) releases, including
termination statements under the Uniform Commercial Code of any financing statements filed against any Acquired Assets, evidencing
discharge, removal and termination of all Liens required by
Section 5.1(h)
, which releases shall be effective at or
prior to the Closing;
(j) evidence of the
change of Seller’s and Mediabistro.com Subsidiary Inc.’s, a Delaware corporation (“
MB Sub
”), corporate
name, effective as of the Closing;
(k) a certificate of non-foreign status
from Seller dated as of the Closing Date in form and substance required by Treasury Regulations Section 1.1445-2(b)(2) issued pursuant
to Section 1445 of the Code stating that no Seller Party is a foreign person within the meaning of Section 1445 of the
Code; and
(l) a noncompetition
and nonsolicitation agreement, duly executed by Alan Meckler in the form attached hereto as
Exhibit F
(the “
Noncompete
Agreement
”).
2.3
Payment and
Documents To Be Delivered By Buyer
.
(a) At the Closing, Buyer shall deliver
to Seller (and with respect to items (ii) and (iii) below, the applicable Seller Subsidiary):
(i) the Closing Payment;
(ii) a duly executed counterpart of the
Bill of Sale and Assignment and Assumption Agreement;
(iii) duly executed counterparts of the
IP Assignments;
(iv) a duly executed counterpart of the
Escrow Agreement;
(v) a duly executed counterpart of the
Transition Services Agreement;
(vi) a duly executed counterpart of the
Noncompete Agreement
(vii) the
certificate required by
Section 5.2(d)
;
(viii) a good standing certificate for
Buyer from the Secretary of State of the State of Delaware, dated no earlier than 10 Business Days prior to the Closing Date; and
(ix) a certificate of a Secretary, Assistant
Secretary or other similar officer of Buyer certifying as to (i) the resolutions of the board of directors of Buyer approving and
authorizing this Agreement, the Ancillary Agreements to which Seller is a party and the Transactions and (ii) the requisite approval
and authorization of this Agreement and the Transactions by the stockholders of Buyer.
(b) At the Closing, Buyer shall deliver
the Escrow Amount to the Escrow Agent.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF SELLER
Except as set forth
in the Disclosure Schedules delivered by Seller to Buyer concurrently with the execution and delivery of this Agreement, Seller
hereby represents and warrants to Buyer as set forth in this
Article III
. The schedule numbers contained in the Disclosure
Schedules correspond to the section numbers of the representations and warranties in the Agreement. Any matter, information or
item disclosed in the Disclosure Schedules qualifies the corresponding section in the Agreement and the other sections in the
Agreement, as the case may be, to the extent that it is reasonably apparent on its face that such disclosure qualifies or applies
to such other section(s). The inclusion of any matter, information or item in the Disclosure Schedules does not (i) constitute
an admission of any liability or obligation by Seller or any other person to any third party, or (ii) otherwise imply that any
such matter, information or item is material or creates a measure for materiality for the purposes of the Agreement or any other
purpose. No disclosure in the Disclosure Schedules relating to any possible breach or violation of any Contract or Law may be
construed as an admission or indication that any such breach or violation exists or has actually occurred. Where the terms of
a Contract, action or other disclosure item have been summarized or described in the Disclosure Schedules, such summary or description
does not purport to be a complete statement of the material terms of such Contract, action or other item and are qualified by
reference to the text of the Contract, action or documents described.
3.1
Corporate
Organization and Standing
. Seller is a corporation duly organized, validly existing and in good standing under the Laws of
the State of Delaware and has all requisite corporate power and authority to operate the Business, to own, lease or use the properties
used or held for use in the Business, to carry on the Business as presently conducted and to enter into and perform this Agreement
and the Ancillary Agreements to which Seller is a party and the Transactions. Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of the Business as now being conducted by it or the
property owned or leased by it makes such qualification necessary. Each Seller Subsidiary is a corporation duly organized, validly
existing and in good standing under the Laws of the state of its incorporation and has all requisite corporate power and authority
to operate the Business, to own, lease or use the properties used or held for use in the Business, to carry on the Business as
presently conducted and to enter into and perform the Ancillary Agreements to which it is a party and the Transactions. Each Seller
Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the
nature of the Business as now being conducted by it or the property owned or leased by it makes such qualification necessary.
3.2
Authorization
.
The execution and delivery by Seller of this Agreement and the Ancillary Agreements to which Seller is or is to become a party,
the performance of its obligations hereunder and thereunder, and the Transactions have been duly and validly authorized by all
necessary corporate action on the part of Seller other than the Seller Stockholder Approval. Seller has the right, power and authority
to execute and deliver this Agreement and the Ancillary Agreements to which it is or is to become a party and to perform its obligations
hereunder and thereunder. This Agreement has been, and each of the Ancillary Agreements to which Seller or a Seller Subsidiary
is or is to become a party, when executed and assuming due authorization, execution and delivery by Buyer and each other party
hereto or thereto other than a Seller Party, will be, duly executed and delivered by such Seller Party and constitute valid and
legally binding obligations of Seller enforceable in accordance with their respective terms, except as such enforceability may
be (i) limited by applicable bankruptcy, insolvency, reorganization, fraudulent transfer and other laws affecting creditors’
rights generally (other than claims brought by Alan Meckler), and (ii) subject to the rules of law governing specific performance,
injunctive relief, or other equitable remedies. The Board of Directors of Seller, has (a) (i) determined that the Transactions
are in the best interests of Seller and its stockholders and approved and declared advisable this Agreement and the Transactions,
on the terms and subject to the conditions set forth herein, and (ii) resolved to recommend that Seller’s stockholders vote
in favor of the Transactions and (b) directed that this Agreement and the terms of the Transaction be submitted to the Seller’s
stockholders for their approval. The execution and delivery by each Seller Subsidiary of the Ancillary Agreements to which it
is to become a party, the performance of its obligations thereunder, and the Transactions have been duly and validly authorized
by all necessary corporate action on the part of such Seller Subsidiary other than the Seller Stockholder Approval. Each Seller
Subsidiary has the right, power and authority to execute and deliver the Ancillary Agreements to which it is to become a party
and to perform its obligations hereunder and thereunder.
3.3
No Conflict
or Violation
. Except as set forth on
Schedule 3.3
, neither the execution and delivery of this Agreement or the Ancillary
Agreements to which any Seller Party is a party nor the consummation of the Transactions will (a) require consent under or
violate, conflict with or result in or constitute a default under or result in the termination or the acceleration of, or the
creation in any party of any right (whether or not with notice or lapse of time or both) to declare a default, accelerate, terminate,
modify or cancel any Material Contract to which any Seller Party is a party or by which it is bound, (b) violate, conflict
with or result in a breach of or constitute a default under any provision of the articles of incorporation or by-laws of any Seller
Party, (c) violate, conflict with or result in a breach of or constitute a default under any judgment, order, decree, pronouncement,
rule or regulation of any court or Governmental Authority to which any Seller Party or the Business is subject, (d) violate,
conflict with or result in a breach of any law, statute, regulation, rule, ordinance, requirement, directive, restriction, order,
judgment, decree, or other binding action or requirement of any Governmental Authority (a “Law”), or (e) result
in the creation or imposition of any Lien upon the Acquired Assets, other than a Permitted Lien.
3.4
Seller SEC
Documents; Financial Statements
.
(a) Seller has filed
and furnished all required reports, schedules, forms, prospectuses, and registration, proxy and other statements with the SEC
since January 1, 2012 (collectively and together with all documents filed on a voluntary basis on Form 8-K, and in each case including
all exhibits and schedules thereto and documents incorporated by reference therein, the “
Seller SEC Documents
”).
None of Seller’s Subsidiaries is required to file periodic reports with the SEC pursuant to the Exchange Act. Seller has
made available (including via EDGAR) to Buyer true and complete copies of the Seller SEC Documents filed with the SEC by Seller
on or prior to the Closing Date, and Seller shall make available (including via EDGAR) to Buyer true and complete copies of any
Seller SEC Documents filed with the SEC by Seller after the date hereof and prior to the Closing Date. As of their respective
filing dates, (i) the Seller SEC Documents complied or will comply, as applicable, in all material respects with the requirements
of the Exchange Act and the Securities Act and (ii) none of the Seller SEC Documents contained or will contain, as applicable,
any untrue statement of a material fact related to the Business or the Acquired Assets, or omitted or will omit, as applicable,
to state a material fact required to be stated therein or necessary to make the statements made therein related to the Business
or the Acquired Assets, in the light of the circumstances under which they were made, not misleading, except to the extent amended
or superseded by a subsequently filed Seller SEC Document.
(b)
Schedule 3.4(b)
sets forth the following financial statements of the Business: (i) the unaudited balance sheet of the Business as of December
31, 2012 and December 31, 2013 and the related statements of income for the year then ended; and (ii) the unaudited balance sheet
of the Business as of March 31, 2014 and the related statements of income for the three months then ended (together, the “
Financial
Statements
”). The Financial Statements were prepared in accordance with GAAP applied on a basis consistent throughout
the periods indicated (except as otherwise stated in such Financial Statements) and fairly present in all material respects the
consolidated financial condition and the results of operations of the Business as at the respective dates thereof and for the
periods indicated therein.
(c) Seller has implemented and maintains
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) designed to ensure that all
material information relating to Seller, including its consolidated Subsidiaries, required to be disclosed by Seller in the reports
that it files or submits under the Exchange Act is recorded, processed, summarized and reported to the individuals responsible
for preparing such reports within the time periods specified in the rules and forms of the SEC and all such information is accumulated
and communicated to Seller’s management, including its principal executive and principal financial officers, and to other
individuals responsible for preparing such reports as appropriate to allow timely decisions regarding required disclosure and to
make the certifications of the principal executive officer and principal financial officer of Seller required under the Exchange
Act with respect to such reports. Seller has disclosed, based on its most recent evaluation prior to the date hereof, to Seller’s
outside auditors and the audit committee of Seller’s board of directors (i) any significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange
Act) that are reasonably likely to adversely affect Seller’s ability to record, process, summarize and report financial information
and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Seller’s
internal control over financial reporting.
(d) Seller’s system of internal
controls over financial reporting is reasonably sufficient in all material respects to provide reasonable assurance regarding the
reliability of Seller’s financial reporting and financial statements, and includes policies and procedures (i) providing
reasonable assurance that (A) transactions are recorded as necessary to permit preparation of financial statements in accordance
with GAAP and (B) receipts and expenditures are in accordance with the authorization of Seller’s management and directors
and (ii) regarding prevention or timely detection of unauthorized acquisition, use or disposition of Seller’s assets that
could have a material effect on Seller’s financial statements. No significant deficiency or material weakness was identified
in management’s assessment of internal controls as of December 31, 2013 with respect to the Business or Acquired Assets,
nor has any such deficiency or weakness been identified between that date and the date of this Agreement with respect to the Business
or Acquired Assets.
3.5
Absence of
Undisclosed Liabilities
. Neither Seller nor any of its Subsidiaries has any Liabilities related to the Business, other than
those (i) set forth or adequately provided for in the Financial Statements, (ii) incurred or accrued since March 31, 2014
consistent with past practice (including in amount) and in the ordinary and normal course of business, (iii) incurred in connection
with this Agreement or (iv) set forth on
Schedule 3.5
.
3.6
Real Property
.
(a)
Schedule 3.6(a)
sets forth a list of each lease or similar agreement, including all amendments, modifications, supplements, renewals, extensions
and guarantees related thereto (collectively, the “
Leases
”), related to the Leased Real Property.
(b) Seller’s possession and quiet
enjoyment of the Leased Real Property have not been disturbed, and Seller has not subleased, licensed or otherwise granted any
Person the right to use or occupy all or any portion of the Leased Real Property nor has Seller collaterally assigned, mortgaged
or otherwise encumbered its interest in any Leased Real Property. There are no condemnation or eminent domain proceedings pending
against the Leased Real Property or, to the Knowledge of Seller, contemplated or threatened against the Seller’s interest
in all or any part of the Leased Real Property, and all buildings, facilities and other improvements located on the Leased Real
Property are supplied with utilities and other services necessary for the normal conduct of the business undertaken at such Leased
Real Property.
3.7
Contracts
.
Set forth on
Schedule 3.7
is a list of the following Contracts in each case which are used or held for use in or related
to the conduct of the Business:
(a) any Contract, sales order or purchase
order (i) to which Seller is a party or which is otherwise binding on Seller or the Business and is presently in effect which involves
aggregate future payments by or to the Business in excess of $20,000 in any 12-month period or extends for a period of more than
one year and is not terminable at will without penalty (other than normal course inventory purchase or sale Contracts) or (ii) between
Seller and any distributors, customers, manufacturers’ agents or selling agents in excess of $10,000 (excluding advertising
insertion orders);
(b) each joint venture, partnership,
teaming or similar Contract involving a sharing of profits or expenses to which Seller is a party;
(c) each Contract or other agreement
entered into outside the ordinary course of business under which Seller has agreed to indemnify any Person;
(d) each non-competition, restrictive
covenant, exclusivity covenant or other agreement that restricts Seller or, to the Knowledge of Seller, any of its Employees from
doing business anywhere in the world;
(e) each Contract presently in effect,
whether or not fully performed, by Seller with any current or former officer, director, consultant, independent contractor, other
Employee (or group of Employees) or equity holder (or group of equity holders), or labor organization representing Employees, of
Seller;
(f) each Contract pursuant to which the
Business is committed to make a capital expenditure or to purchase a capital asset in excess of $50,000 which is not contemplated
by Seller’s capital expenditure budget for the Business;
(g) each Contract between Seller and
any consultant, representative or broker of Seller;
(h) each Contract that is material to
the Business and which relates to the Business IP or to third-party Intellectual Property Rights (including licenses-in and licenses-out);
(i) each Contract that (A) grants any
Person other than Seller and its Affiliates any (1) exclusive license, supply or distribution rights or other exclusive rights,
(2) “most favored nation” rights or (3) rights of first refusal, rights of first negotiation or similar rights with
respect to any Business Product or Business IP or (B) contain any provision that requires the purchase of all or a given portion
of the Business’s requirements from a given third party;
(j) each Contract relating to the employment
of any Employee and any change in control or retention agreement or other compensatory agreement under which benefits (including
any severance, termination or “golden parachute” payments or similar payments, additional rights or benefits) exist
or will arise, be increased or accelerated by the occurrence of the Transactions or upon the termination of employment or any other
compensatory agreement (other than any agreement for “at will” employment) that provides for aggregate payments to
any Person in any calendar year in excess of $50,000;
(k) each other Contract that is material
to the Business or outside the ordinary course of business; and
(l) each Contract
that would reasonably be expected to have a Material Adverse Effect if (i) any other party cancelled or terminated such Contract
(with or without notice or passage of time), (ii) any other party claimed monetary damages (either individually or in the aggregate
with all other such claims under such Contract) from Seller, or (iii) any obligation were accelerated or any benefit were
lost under such Contract (the items described in clauses (a) through (k) together with the Leases and Business IP Contracts being
collectively referred to herein as the “
Material Contracts
”).
Seller has made available
to Buyer correct and complete copies of all Contracts listed or required to be listed on
Schedule 3.7
, together with all
modifications or supplements thereto (or a description if unwritten). Seller has performed, or is performing, in all material
respects all contractual obligations required to be performed by it to date under all Material Contracts. Seller is not in default
in any material respect under any Material Contract, and to the Knowledge of Seller, no other party is in breach or default under
or has repudiated any term of any Material Contract. Each Material Contract is legally valid and binding and enforceable against
Seller and, to the Knowledge of Seller, against each other party thereto, in either case subject to the effect of bankruptcy,
insolvency, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally and except as the
availability of equitable remedies may be limited by general principles of equity. Each Material Contract will continue to be
legally valid and binding and enforceable immediately following the Closing in accordance with its terms as in effect prior to
the Closing, subject to the effect of bankruptcy, insolvency, moratorium or other similar Laws affecting the enforcement of creditors’
rights generally and except as the availability of equitable remedies may be limited by general principles of equity. Seller has
no Liabilities under any Material Contract providing for (i) penalties in the event of misfeasance by Seller in the performance
of its duties thereunder, or (ii) the renegotiation or redetermination of profits or prices, nor will any of Seller’s
costs which are incurred or accruable prior to the Closing under Material Contracts, or under subcontracts entered into between
Seller and any other Person, be subject to disallowance. Seller has not received any written notice of termination, cancellation
or non-renewal with respect to any Material Contract, and to the Knowledge of Seller, no other party to a Material Contract plans
to terminate, cancel or not renew any Material Contract.
3.8
Books and
Records
. The books and records of Seller maintained in connection with the Business (including (a) books and records relating
to the purchase of materials and supplies, manufacture or processing of products, sales of products, dealings with customers,
invoices, customer lists, inventories, supplier lists and personnel records, and (b) computer software and data in computer readable
and human readable form used to maintain such books and records together with the media on which such software and data are stored
and all documentation relating thereto) accurately record all transactions relating to the Business, and have been maintained
consistent with good business practice.
3.9
Equipment
.
Set forth on
Schedule 3.9
is a list of all material equipment, tools, goods, furnishings, fixtures, office equipment, production
and other supplies and spare and repair parts, stores and other tangible personal property (whether owned or leased) in each case
which is used by the Business or otherwise used or held for use in or related to the conduct of the Business (the “
Equipment
”).
3.10
Acquired
Assets
. Seller has good, valid and marketable title to all items of owned Acquired Assets, free and clear of all Liens of
any kind except (a) Liens for Taxes and assessments or governmental charges or levies, in each case not yet due and payable, (b)
Liens of landlords, carriers, warehousemen, mechanics and materialmen arising in the ordinary course of business under applicable
Law, and (c) for Acquired Assets other than Intellectual Property Rights, minor imperfections of title, none of which, individually
or in the aggregate, materially detracts from the value of or impairs the use of the affected Acquired Asset or impairs any operations
of the Business as it is currently conducted (the Liens described in clauses (a) through (c) being collectively referred to herein
as “
Permitted Liens
”). Other than as set forth on
Section 3.10
, the Acquired Assets include all Assets,
properties and rights used or held for use by Seller that (y) are necessary to operate the Business as presently conducted and
(z) generated the financial performance and results of operations reflected in the Financial Statements. The tangible Acquired
Assets, including Equipment and the Leased Real Property, are in good operating condition and repair, ordinary wear and tear excepted,
and are usable in the ordinary course of business.
3.11
Litigation
.
Except as set forth on
Schedule 3.11
, since January 1, 2011, Seller has not been a party to, nor, to the Knowledge of Seller,
been threatened with any judgment, order, decree, claim, action, suit, proceeding or investigation related to the Business and,
to the Knowledge of Seller, none of Seller’s Affiliates, directors, officers, agents or Employees (in their capacity as
such) have been a party to or been threatened with any such judgment, order, decree, claim, action, suit, proceeding or investigation.
There is no legal, arbitration, administrative or other formal proceeding or governmental investigation pending or, to the Knowledge
of Seller, threatened against Seller that seeks to enjoin or otherwise challenges the consummation of any of the Transactions.
3.12
Licenses
and Permits
.
Schedule 3.12
sets forth a list of all material licenses, franchises, permits, approvals and other similar
authorizations, and any waivers of the foregoing, issued by or obtained from any Governmental Authority that are necessary for,
or otherwise material to, the conduct of the Business (collectively, “
Licenses and Permits
”). All such Licenses
and Permits are in full force and effect, and Seller is in compliance in all material respects with such Licenses and Permits.
3.13
Environmental
.
(a) To the Knowledge of Seller, the Business,
Leased Real Property and Acquired Assets have at all times been in compliance with all Environmental Laws and the Licenses and
Permits. Seller has timely given all notices, made all reports, and prepared and maintained all records required by Environmental
Law.
(b) To the Knowledge of Seller, there
has been no Release on or from the Leased Real Property which, with notice or the lapse of time, or both, would be required under
Environmental Laws to be abated, remediated or reported to any Governmental Authority, and, to the Knowledge of Seller, there are
no past or present conditions, events, circumstances or facts that could reasonably be expected to form the basis of any claim
against Seller or the Business or related to the Leased Real Property based on or related to any Release or any violation of any
Environmental Law.
(c) Seller has not received any notice
of alleged, actual or potential responsibility for, or any inquiry concerning, and has no Knowledge of any investigation regarding,
(i) any Release or threatened Release from or relating to its operation of the Business, the Leased Real Property or the Acquired
Assets; or (ii) an alleged violation of or non-compliance of any Environmental Law or with the conditions of any License or
Permit required under applicable Environmental Law and relating to its operation of the Business, Leased Real Property or the Acquired
Assets.
(d) Notwithstanding any other provision
herein, the representations and warranties contained in Section 3.13(a), (b), and (c) constitute Seller’s sole representations
and warranties in respect of the compliance of the Business, Leased Real Property and Acquired Assets with Environmental Laws.
3.14
Intellectual
Property
.
(a)
Registered
IP
.
Schedule 3.14(a)
accurately identifies: (i) each item of Registered Business IP (excluding uniform resource
locators where the host is a domain name listed on
Schedule 3.14(a))
; (ii) the jurisdiction in which each such item of
Registered Business IP has been registered or filed and the applicable registration or serial number; and (iii) any other Person
that has an ownership interest in each such item of and the nature of such ownership interest.
(b)
Inbound Licenses
.
Schedule 3.14(b)
accurately identifies: (i) each Business IP Contract pursuant to which any Intellectual Property
Right is licensed, sold, assigned, or otherwise conveyed or provided (including in the form of a covenant not to assert) by any
Person to Seller (other than (A) agreements between Seller and its employees or freelancers and (B) any non-customized
Software that (1) is so licensed, sold, assigned, or otherwise conveyed or provided solely in executable or object code form
pursuant to a non-exclusive, internal use software license, and (2) is generally available on standard terms and has been
licensed by Seller for less than $10,000 for internal-use in the Business); and (ii) whether the licenses or rights granted
to Seller in each such Business IP Contract are exclusive or non-exclusive.
(c)
Outbound Licenses
.
Schedule 3.14(c)
accurately identifies (i) each Business IP Contract pursuant to which any Person has been granted
any license under, or otherwise has received or acquired any right (whether or not currently exercisable) or interest in (including
in the form of a covenant not to assert), any Business IP (other than (A) the end user terms and conditions of use of the
websites included in the Acquired Assets, and (B) any Business IP Contract that has expired or terminated and under which
the benefit of any right or interest (including in the form of a covenant not to assert) granted in that Business IP Contract
with respect to any Business IP does not continue to inure to any Person; and (ii) whether the licenses or rights granted
under each such Business IP Contract are exclusive or non-exclusive. Seller is not bound by, and no Business IP is subject to,
any Contract containing any covenant or other provision that in any way materially limits or restricts the use, sale, exploitation,
assertion, or enforcement of any Business IP anywhere in the world.
(d)
Royalty Obligations
.
Schedule 3.14(d)
contains a complete and accurate list of all royalties, fees, commissions, and other amounts payable
by Seller or its Affiliates to any other Person (other than sales commissions paid to employees according to Seller’s standard
commissions plan) upon or for the use, manufacture, sale, license, or distribution of any Business Product or the use of any Business
IP.
(e)
Standard Form
IP Agreements
. Seller has provided to Buyer a complete and accurate copy of Seller’s standard form of any Business IP
Contract currently used by Seller or currently in effect, including Seller’s standard form of: (i) employee handbook;
(ii) consulting or independent contractor agreement containing any intellectual property assignment or license of Intellectual
Property Rights; (iii) confidentiality or nondisclosure agreement; and (iv) end user terms and conditions of use of
the Websites. Except as set forth in
Schedule 3.14(f)(iv)
or as would not have a material and adverse effect on the
Business, no Business IP Contract materially deviates from the corresponding standard form agreement provided to Buyer in any
of the following manners: (1) any Person has been granted any license under, or otherwise has received or acquired any right
(whether or not currently exercisable) or interest in (including in the form of a covenant not to assert), any Business IP that
is materially broader in scope than as set forth in the corresponding standard form agreement; (2) any Person has granted
an assignment of, or license, right or other interest to, any Intellectual Property Right that is materially narrower in scope
than as set forth in the corresponding standard form agreement (excluding any Business IP Contract with any freelancer pursuant
to which Seller is granted a shorter period of exclusive publication rights than as set forth in the corresponding standard form
agreement provided to Buyer); (3) Seller has undertaken any indemnification obligation that is materially broader in scope
than as set forth in the corresponding standard form agreement; (4) any Person has undertaken any indemnification obligation
that is materially narrower in scope than as set forth in the corresponding standard form agreement; or (5) any limitation
of liability provision materially deviates from the corresponding standard form agreement.
(f)
Ownership
Free and Clear
. Seller exclusively owns all right, title and interest to and in the Business IP free and clear of any Encumbrances
(other than licenses and rights granted pursuant to the Business IP Contracts identified in
Schedule 3.14(c)
, Permitted
Liens, the end user terms and conditions of use of the Websites, or as set forth in
Schedule 3.14(f))
. Without limiting
the generality of the foregoing:
(i)
Employees
and Contractors
. Except as set forth in
Schedule 3.14(f)(i)(A)
, no current or former stockholder, officer, director
or employee of Seller has any valid claim, right (whether or not currently exercisable) or interest to or in any Business IP or
Business Product. To the Knowledge of Seller, no employee of the Business is (a) bound by or otherwise subject to any Contract
restricting him or her from performing his or her duties for Seller or (b) in breach of any Contract with any former employer
or other Person concerning Intellectual Property Rights or confidentiality due to his or her activities as an employee of Seller.
Except as set forth in
Schedule 3.14(f)(i)(B)
, to the Knowledge of Seller, each Person who is or was an employee or contractor
of a third party who is or was involved in the creation or development of any Business Product or Business IP which has been assigned
by such third party to Seller, has signed a valid, enforceable agreement containing an assignment of Intellectual Property Rights
pertaining to such Business Product or Business IP in relation to such third party (enabling such rights to be assigned from such
third party to Seller) and confidentiality provisions protecting the Business IP.
(ii)
Government
Rights
. To the Knowledge of Seller, no funding, facilities or personnel of any Governmental Authority or any public or private
university, college, or other educational or research institution were used, directly or indirectly, to develop or create, in
whole or in part, any Business IP.
(iii)
Protection
of Proprietary Information
. Seller has taken commercially reasonable steps to maintain the confidentiality of and otherwise
protect and enforce its rights in all proprietary information pertaining to the Business or any Business Product that Seller holds,
or purports to hold, as a trade secret. Without limiting the generality of the foregoing, no portion of the source code for any
Software owned by Seller and currently used by Seller in connection with the Business has been disclosed (other than to employees
or contractors of Seller bound by nondisclosure obligations) or licensed to any escrow agent or other Person.
(iv)
Past
IP Dispositions
. Except as set forth in the Schedule 3.14(f)(iv), in the five-year period immediately preceding
the date hereof, Seller has not assigned or otherwise transferred ownership of, or agreed to assign or otherwise transfer ownership
of, any Intellectual Property Rights to any other Person that, absent such assignment or transfer, would constitute Business IP.
(v)
Standards
Bodies
. Seller is not and has not been a member or promoter of, or a contributor to, any industry standards body or similar
organization that requires or obligates Seller to grant or offer to any other Person any license or right to any Business IP.
(vi)
Sufficiency
.
Seller owns or otherwise has, and at the Closing Buyer will have, by ownership or license, all Intellectual Property Rights needed
to conduct the Business as currently conducted and currently planned to be conducted by Seller.
(g)
Valid and
Enforceable
. All Business IP is valid, subsisting and enforceable. Without limiting the generality of the foregoing:
(i)
Misuse
and Inequitable Conduct
. To the Knowledge of Seller, Seller has not engaged in patent or copyright misuse or any fraud or
inequitable conduct in connection with Registered Business IP.
(ii)
Trademarks
.
Except as set forth in
Schedule 3.14(g)(ii)
, no Trademark owned, used or applied for by Seller in connection with
the Business (collectively, the “
Business Trademarks
”) conflicts or interferes with any Trademark owned, used
or applied for by any other Person; provided, however, that the foregoing representation and warranty shall be deemed to be made
to the Knowledge of Seller with respect to any such conflict or interference caused by the use by Seller of any Business Trademark
on any Website in any jurisdiction in which (A) such Business Trademark also is not Registered Business IP and (B) such
use is solely an incidental consequence of such Website being available on a worldwide basis (and not, for example, as a result
of Seller intentionally targeting such Website or Business Trademark use to Persons in that jurisdiction). No event or circumstance
(including a failure to exercise adequate quality controls and an assignment in gross without the accompanying goodwill) has occurred
or exists that has resulted in, or could reasonably be expected to result in, the abandonment of any Business Trademark.
(iii)
Legal
Requirements and Deadlines
. To the Knowledge of Seller, each item of Registered Business IP is and at all times has been in
material compliance with all Laws, and all filings, payments and other actions required to be made or taken to maintain such item
of Business IP in full force and effect have been made by the applicable deadline, except where such failure would not have a
material and adverse effect on the Business. No application for a copyright or trademark registration or any other type of Registered
IP filed by or on behalf of Seller in connection with the Business has been abandoned, allowed to lapse or rejected in the last
two years, except where such failure would not have a material and adverse effect on the Business.
(iv)
Interference
Proceedings and Similar Claims
. Except as set forth in
Schedule 3.14(h)(iv)
, no third party has challenged the
scope, validity or enforceability of any Business IP in any Proceeding currently pending before the U.S. Patent and Trademark
Office (or any foreign equivalent) or any other court or tribunal. To the Knowledge of Seller, there is no reasonable basis for
a claim that any Business IP is invalid or unenforceable.
(h)
Third-Party
Infringement of Business IP
. Except as set forth in
Schedule 3.14(h)
, to the Knowledge of Seller, no Person is
currently infringing, misappropriating or otherwise violating any Business IP.
Schedule 3.14(h)
accurately identifies
(and Seller has provided to Buyer a complete and accurate copy of) each letter or other written or electronic communication or
correspondence that has been sent or otherwise delivered by Seller or any representative of Seller in the past two years regarding
any actual, alleged or suspected infringement or misappropriation of any Business IP (other than (i) any notice of infringement
sent or otherwise delivered by Seller or any representative of Seller under the Digital Millennium Copyright Act with respect
to which the recipient has expeditiously removed or disabled access to the materials claimed to be infringing in such notice,
(ii) cease and desist or other similar letters that were not material or that were otherwise resolved in the Ordinary Course
of Business, where such resolution would not have a material and adverse effect on the Business), and provides a brief description
of the current status of the matter referred to in such letter, communication, or correspondence.
(i)
Effects of
This Transaction
. Except as set forth in
Schedule 3.14(i)
, neither the execution, delivery or performance of this
Agreement (or any of the Ancillary Agreements) nor the consummation of any of the Transactions will, with or without notice or
lapse of time, result in, or give any other Person the right or option to cause or declare, (i) a loss of, or Encumbrance
on, any Business IP, (ii) a breach of or default under any Business IP Contract, (iii) the release, disclosure, or delivery
of any Business IP by or to any escrow agent or other Person, or (iv) the grant, assignment or transfer to any other Person
of any license or other right or interest under, to or in any of the Business IP.
(j)
No Infringement
of Third Party IP Rights
. Except as set forth in
Schedule 3.14(j)
, in connection with the operation of the Business,
including the making, using, selling, development, licensing and distribution of the Business Products by Seller, Seller has not
infringed (directly, contributorily, by inducement or otherwise), misappropriated or otherwise violated or made unlawful use of
any Intellectual Property Right of any other Person or engaged in unfair competition and, and the operation of the Business, including
the use, sale, manufacture or importation of any Business Product or Business Asset, does not infringe, violate or make unlawful
use of any Intellectual Property Right of any other Person; provided, however, that the foregoing representation and warranty
shall be deemed to be made to the Knowledge of Seller with respect to any such infringement, misappropriation or violation caused
by the use by Seller of any Business Trademark on any Website in any jurisdiction in which (A) such Business Trademark also
is not Registered Business IP
and
(B) such use is solely an incidental consequence of such Website being
available on a worldwide basis (and not, for example, as a result of Seller intentionally targeting such Website or Business Trademark
use to Persons in that jurisdiction). Except as set forth in
Schedule 3.14(j)
, to the Knowledge of Seller, there is
no reasonable basis for a claim that Seller, through the operation of the Business or use of sale of any Business Product, has
(i) engaged in unfair competition, (ii) has infringed or misappropriated any Intellectual Property Right of another
Person. Except as set forth in
Schedule 3.14(j)
, to the Knowledge of Seller, there is no reasonable basis for a claim
that any Business Product infringes, violates or makes unlawful use of any Intellectual Property Right of, or contains any Intellectual
Property Right misappropriated from, any other Person. Without limiting the generality of the foregoing:
(i)
Infringement
Claims
. Except as set forth in
Schedule 3.14(j)(i)
, no infringement, misappropriation or similar claim or Proceeding
is pending or, to the Knowledge of Seller, threatened against Seller (or against any other Person who is or may be entitled to
be indemnified, defended, held harmless, or reimbursed by Seller) with respect to such claim or Proceeding with respect to the
Business, Acquired Assets or Business IP. Other than any notice of infringement received by Seller under the Digital Millennium
Copyright Act with respect to which Seller has expeditiously removed or disabled access to the materials claimed to be infringing
in such notice, or cease-and-desist or other similar letters from third parties that were not material or that were otherwise
resolved in the Ordinary Course of Business, where such resolution would not have a material and adverse effect on the Business,
Seller has not received, within the two-year period preceding the Closing Date (or, in the case of any allegation of Patent infringement,
within the four-year period preceding the Closing Date), any notice (whether in writing, via electronic communication or otherwise)
(a) alleging infringement, misappropriation, or violation by Seller, the Business or the Acquired Assets, any of its employees
or agents, or any Business Product of any Intellectual Property Rights of another Person or (b) asserting that Seller must (or
suggesting that Seller) obtain a license to any Intellectual Property Right of another Person.
(ii)
Other
Infringement Liability
. Except as set forth in the Schedule 3.14(j)(ii), Seller is not bound by any Contract to indemnify,
defend, hold harmless or reimburse any other Person with respect to, or otherwise assumed or agreed to discharge or otherwise
take responsibility for, any existing or potential intellectual property infringement, misappropriation, or similar claim (other
than indemnification provisions in Seller’s standard forms of Business IP Contracts) with respect to the Business.
(iii)
Infringement
Claims Affecting In-Licensed IP
. Except as set forth in the
Schedule 3.14(j)(iii)
, to the Knowledge of Seller,
no claim or Proceeding involving any Intellectual Property Right licensed to Seller in connection with the Business is pending
or has been threatened, except for any such claim or Proceeding that, if adversely determined, would not adversely affect (a)
the use or exploitation of such Intellectual Property Right by Seller in connection with the operation of the Business, or (b)
the design, development, marketing, distribution, provision, licensing or sale of any Business Product.
(k)
Bugs
.
To the Knowledge of Seller, none of the Software used by Seller in connection with the Business at any time since January 1,
2010 (excluding any third-party software that is generally available on standard commercial terms and is licensed to Seller solely
for internal use on a non-exclusive basis) (collectively, “
Business Software
”) either (i) contains any
bug, defect or error that materially and adversely affects the use, functionality or performance of such Business Software or
any product or system containing or used in conjunction with such Business Software, or (ii) fails to comply in any material
respect with any applicable warranty or other contractual commitment relating to the use, functionality or performance of such
Business Software.
(l)
Harmful Code
.
To the Knowledge of Seller, no Business Software 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: (a) 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 (b) damaging or destroying any data or file without
the user’s consent.
(m)
Open Source.
Schedule 3.14(m)
accurately identifies and describes each item of Open Source Code that is contained in or distributed
with the Business Products, or from which any part of any Business Product is derived. No Business Product 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 Business Product 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 Seller to use or distribute any Business Product.
(n)
Privacy. Schedule 3.14(n)
contains the current Business Privacy Policy and identifies the period of time during which such Business Privacy Policy was
or has been in effect. Seller has complied at all times and in all material respects with all of the Business Privacy Policies
and, to the Knowledge of Seller, with all applicable United States Laws pertaining to privacy (including the obtaining, storing,
using or transmitting of User Data) and User Data. To the Knowledge of Seller, Seller has complied at all times and in all material
respects with the “safe harbor” framework developed by the United States Department of Commerce in consultation with
the European Commission regarding the European Commission’s Directive on Data Protection in connection with User Data (including
the obtaining, storing, using or transmitting of User Data), except where such failure to comply would not have a material and
adverse effect on the Business. To the Knowledge of Seller, Seller has complied with all other applicable foreign Laws pertaining
to privacy (including the obtaining, storing, using or transmitting of User Data) and User Data, except where such failure to
comply would not have a material and adverse effect on the Business. Neither the execution, delivery, or performance of this Agreement
(or any of the Ancillary Agreements) nor the consummation of any of the Transactions, nor Buyer’s possession or use of User
Data, will result in any violation of any Business Privacy Policy or any applicable Laws pertaining to privacy or User Data.
3.15
Customers,
Distributors and Suppliers
.
Schedule 3.15
sets forth a complete and accurate list of the top ten (a) customers
of the Business based on annual sales, showing the approximate total sales in dollars by the Business to each such customer during
the 12-month period ended December 31, 2013, and (b) suppliers to the Business during the 12-month period ended December 31,
2013, showing the approximate total of purchases in dollars by the Business from each such supplier during such fiscal year. Seller
has not received any written communication from any customer named on
Schedule 3.15
of any intention to terminate
or materially reduce purchases from the Business and since December 31, 2013 there has been no material change to the business
relationship of Seller with any customer or supplier named on
Schedule 3.15
.
3.16
Taxes
.
(a) Seller has timely filed all material
Tax Returns that it was required to file with respect to the Business and the Acquired Assets, all such Tax Returns were correct
and complete in all material respects and all material Taxes due and owed by Seller with respect to the Business and the Acquired
Assets (whether or not shown on such Tax Returns) have been timely paid in full. No claim has ever been made in writing to the
Seller by any Tax Authority in a jurisdiction where the Seller does not file Tax Returns that the Seller, the Business, or the
Acquired Assets are subject to taxation by that jurisdiction.
(b) Seller has timely withheld and paid
all Taxes required by Law to have been withheld and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor or other third party, and has properly and timely filed all Tax Returns with respect to such amounts.
(c) Seller has not waived any statute
of limitations with respect to Taxes, or agreed to any extension of time with respect to a Tax assessment or deficiency, with respect
to the Business or the Acquired Assets.
(d) No examination or audit by a Tax
Authority of any Tax Return of Seller concerning or attributable to the Business, the Acquired Assets or Assumed Liabilities has
ever been conducted.
(e) Seller is a “United States
person” within the meaning of section 7701(a)(30) of the Code.
(f) Seller has not received any written
notice of assessment or proposed assessment from a Tax Authority in connection with the Business or any of the Acquired Assets.
To the Knowledge of the Seller, no Tax Authority has threatened any assessment in connection with the Business or any of the Acquired
Assets.
(g) There are no outstanding orders,
rulings or requests for rulings with any Tax Authority with respect to the Business or the Acquired Assets.
(h) Seller is not (i) liable for Taxes
of any other Person by operation of Law, (ii) currently under any contractual obligation to indemnify any Person with respect to
Taxes or (iii) a party to any Tax sharing agreement or any other contract providing for payments by it with respect to Taxes.
(i) None of the Acquired Assets: (i)
are property that Seller is required to treat as being owned by any other Person pursuant to the “safe harbor lease”
provisions of former section 168(f)(8) of the Code; (ii) are required to be depreciated under the alternative depreciation system
under section 168(g)(2) of the Code; or (iii) are “tax-exempt use property” within the meaning of section 168(h) of
the Code.
(j) Seller has not engaged in a transaction
that is a “listed transaction,” as set forth in Treasury Regulation section 1.6011-4(b)(2).
(k) Seller is not a party to or otherwise
bound by any agreement, contract, arrangement or plan that obligates it to compensate any Person for additional Taxes or interest
imposed pursuant to Code sections 280G or 409A.
(l) Seller has (i) collected all sales,
use, value added, goods and services, and similar Taxes required to be collected in connection with the Business and (ii) timely
remitted all such Taxes collected to the appropriate Tax Authority in accordance with applicable Laws.
3.17
Employee
Plans
.
(a)
Schedule 3.17(a)
lists: (i) each plan, fund, program, Contract or arrangement for the provision of executive compensation, deferred or incentive
compensation, profit sharing, stock bonus, bonus, stock option or other equity-based awards, stock purchase, termination, salary
continuation, employee assistance, supplemental retirement, severance, vacation, post-employment/post-retirement health and welfare
(including retiree medical or retiree life) sickness, disability, death, fringe benefit, insurance, medical or other benefits
to any current or former officer, director, Employee, consultant, leased employee, independent contractor or contract employee,
or any dependent, survivor or beneficiary with respect to any of the foregoing, which is currently maintained, administered or
contributed to by Seller or any Affiliate of Seller in connection with the Business or to which Seller or any Affiliate of Seller
has or may have any Liability; (ii) each Employee Pension Benefit Plan (including any Multiemployer Plan) which has been maintained,
administered or contributed to by Seller or any Affiliate of Seller in connection with the Business or to which Seller or any
Affiliate of the Seller has or may have any Liability with respect to such Employee Pension Benefit Plan; and (iii) each
Employee Welfare Benefit Plan which is currently maintained, administered or contributed to by Seller or any Affiliate of Seller
in connection with the Business (collectively, all arrangements described in this
Section 3.17(a)
are hereinafter referred
to as the “
Employee Plans
”).
(b) Neither this Agreement nor the consummation
of any of the Transactions will cause Buyer to assume any Liabilities for any Tax, fine, Lien, penalty or other Liability imposed
by ERISA, the Code or other Laws with respect to any Employee Plan.
(c) No action, investigation, suit, proceeding,
audit, hearing or claim with respect to any Employee Plan (other than routine claims for benefits) is pending or, to the Seller’s
Knowledge, threatened, that could reasonably be expected to result in any Liability to the Buyer.
(d) No facts or circumstances exist that
could directly or indirectly subject the Buyer or any of its Affiliates as the purchaser of the Acquired Assets or as “successor
employer” or any of their assets to any Lien, Tax, penalty or other Liability of any nature with respect to any Employee
Plan described in this Section 3.17(d). No Employee Plan has terms requiring the assumption thereof by the Buyer.
(e) Each Employee Plan intended to be
qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS or is comprised of a master
or prototype plan that has received a favorable opinion letter from the IRS, and since the date of such determination, no event
has occurred and no condition or circumstance has existed that resulted or is likely to result in the revocation of any such determination
letter or opinion letter.
(f) The execution of this Agreement and
the consummation of the Transactions do not constitute a triggering event under any Employee Plan, policy, arrangement, statement,
commitment or Contract, whether or not legally enforceable, which (either alone or upon the occurrence of any additional or subsequent
event) will or may result in any payment (whether of severance pay or otherwise), “parachute payment” (as such term
is defined in Section 280G of the Code), or liability to Buyer under any Employee Plan or Multiemployer Plan, acceleration, vesting
or increase in benefits to any current or former officer, director, employee, consultant, leased employee, independent contractor
or contract employee of Seller or any Affiliate of Seller.
3.18
Employee
Matters
.
(a)
Schedule 3.18(a)
lists for each employee of the Business who is actively employed by the Business or on an approved leave of absence on the
date hereof (the “
Current Employees
”) his job title, hire date, salaried or hourly pay status, exempt status
under the Fair Labor Standards Act, current rates of pay, latest annual bonus, total annual compensation, leave status (including
anticipated return). Seller has not undertaken any activities in the 90 day period immediately preceding the Closing Date which
would give rise to Liability under the WARN Act, and no former employees of the Business have suffered an “employment loss”
(as defined by the WARN Act) in the 90-day period immediately preceding the Closing Date. There are no grievances, arbitrations,
causes of action or other claims pending or, to the Knowledge of Seller, threatened against Seller arising from the hiring, compensation,
employment or discharge of any Current Employees, including any claims pending or, to the Knowledge of Seller, threatened, against
Seller under any workers’ compensation or long-term disability plan or policy. Seller has paid or provided all Current Employees,
former employees and any qualified beneficiaries with all wages, benefits, relocation benefits, stock options, bonuses and incentives,
and all other compensation due and payable, including any such amounts or benefits due and payable under any Employee Plan.
(b)
Schedule 3.18(b)
sets forth a complete and accurate list of all third party temporary employees, consultants, and independent contractors who
are currently providing services to Seller or any Affiliate of Seller as of April 30, 2014 and includes their name, position description
or service performed, and fee structure.
(c) To Seller’s Knowledge, no employee
at the director level or a more senior position whose work relates primarily to the Business has notified Seller of an intention
to terminate his or her employment with Seller, any of its Affiliates, or the Business within the first twelve (12) months following
the Closing Date.
(d) No current employee of Seller has
a principal place of employment outside the United States or is subject to the labor and employment Laws of any country other than
the United States.
(e) Except as set
forth on
Schedule 3.18(e)
, the Seller Subsidiaries have no employees.
3.19
Labor Unions
.
Seller is not a party to any collective bargaining agreement or other agreement with a labor organization with respect to any
current or former employees of the Business. There is no pending, anticipated or threatened strike, slowdown, picketing, boycott,
work stoppage or other such concerted activity with respect to employees of the Business. To the Knowledge of Seller, no employees
of the Business have undertaken any activity to form, join or seek representation by a labor organization or to decertify any
existing bargaining unit representative with respect to their employment with Seller at any time in the past two years.
3.20
Brokers,
Finders
. Neither Seller nor any of its Affiliates has retained any broker or finder in connection with the Transactions, and
neither Seller nor any of its Affiliates is obligated or has agreed to pay any brokerage or finder’s commission, fee or
similar compensation with respect to such Transactions.
3.21
Compliance
With Laws
.
(a) Seller has conducted and is conducting
the Business in material compliance with all Laws and no written notice, action or assertion has been received by Seller or, to
the Knowledge of Seller, has been filed, commenced or threatened against Seller alleging any violation of any Law.
(b) To the Knowledge of Seller, no event
has occurred, and no condition or circumstance exists, that would reasonably be expected (with or without notice or lapse of time)
to constitute or result directly or indirectly in a material violation by Seller of, or a material failure on the part of Seller
to comply with, any applicable Law to which the Business, any of the Acquired Assets or the Assumed Liabilities are subject.
(c) Neither Seller nor any of its Affiliates
have made, offered or agreed to offer anything of value to any employees or any customers of a company, as applicable, or to any
foreign or domestic governmental official, political party or candidate for government office or any of its employees or representatives
in any manner which would result in Seller being in violation of any Applicable Law, including the Foreign Corrupt Practices Act
of 1977, as amended (“FCPA”). Without limiting the foregoing, Seller does not provide and has not provided, cash, gifts,
or other personal benefits to its customers in violation of any Law. Seller is not currently the subject of, nor has it been the
subject of, an investigation, inquiry, audit, or compliance assessment, or been the recipient of a subpoena, letter of investigation
or other document alleging a violation, or possible violation, of the FCPA or other applicable anti-bribery legislation.
3.22
Insurance
.
Schedule 3.22
contains a list of all insurance policies (collectively, the “
Policies
”) and bonds
(specifying the insured, insurer, amount of coverage, expiration date, type of insurance and policy number) covering the Acquired
Assets and the operation of the Business which are maintained by Seller. There is no claim pending under any of such Policies
or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such Policies or bonds. All premiums
due and payable under all such Policies and bonds have been paid and Seller is otherwise in compliance with the terms of such
Policies and bonds, and such Policies and bonds are in full force and effect. Seller is not self-insured for any insurance or
bonding.
3.23
Changes in
Circumstances
. Except as disclosed on
Schedule 3.23
or as required by the terms of this Agreement, since December 31,
2013, (a) there has not been a Material Adverse Effect, and to the Knowledge of Seller, no events, facts or circumstances
exist, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect, and (b) Seller
has, in all material respects, conducted the operations of the Business in the ordinary course of business consistent with past
practice and has not taken any of the following actions:
(i) adopted or proposed any amendment
or change in its certificate of incorporation or bylaws or other applicable governing instruments;
(ii) merged or consolidated with any
other Person, or restructured, reorganized or approved of any plan of liquidation;
(iii) except for any repurchase, cancellation
or exchange by Seller of its stock or warrants or as otherwise provided in any existing option plan of Seller that has been made
available to Buyer or as deemed necessary in the sole discretion of Seller for ordinary course working capital needs and not in
connection with the sale of the Seller, issued, sold, pledged, disposed of, granted, transferred, encumbered, or authorized the
issuance, sale, pledge, disposition, grant, delivery or encumbrance of, any shares of capital stock of Seller, or securities convertible
or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind
to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iv) except for dispositions in the ordinary
course of business, sold, transferred or otherwise disposed of any of its properties or Assets used or held for use in connection
with the operation of the Business having a book value in excess of $10,000, individually, or $50,000 in the aggregate;
(v) entered into, accelerated, terminated,
modified or amended any Material Contract;
(vi) changed in any material respect
any of its accounting methods, principles or practices (other than changes required by GAAP), revalued or reclassified in any material
respect any of its assets or liabilities related to the Business, including write-downs of Inventory, except in the ordinary course
of business, changed its pricing policies or credit practices, the rate or timing of its payment of accounts payable or its collection
of accounts receivable, changed its earnings accrual rates on Contracts or failed to pay any creditor any amount owed to such creditor
when due;
(vii) entered into any settlement of
pending or threatened litigation other than any settlement that, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect;
(viii) mortgaged, pledged or otherwise
subjected to any Lien any of the Acquired Assets, whether tangible or intangible, except for Permitted Liens in the ordinary course
of business;
(ix) other than in the ordinary course
of business consistent with past practice or as required by applicable Laws, made any change in the rate of compensation, commission,
bonus or other remuneration to or in respect of any Employee;
(x) other than as required by any applicable
Laws or under the terms of any Employee Plan (including as may be required or desirable to protect any Employee from incurring
adverse tax consequences under Section 409A of the Code), (A) established, entered into or adopted any Employee Plan, (B) caused
or permitted any Employee Plan to be amended (other than as required to comply with any Law) or (C) waived any of its material
rights under, or permitted or provided for the acceleration or vesting or payment under, any provisions of any Employee Plan;
(xi) sold, assigned, licensed or otherwise
transferred or disposed of any Business IP or taken (or omitted to take) any action that adversely affects, or could reasonably
be expected to adversely affect, any rights of Seller to the Business IP; or
(xii) taken any action or omitted to
take any action that could reasonably be expected to result in the occurrence of any of the foregoing.
3.24
Agreements
with Affiliates
. Except as disclosed on
Schedule 3.24
, there are no Contracts between Seller and any of Seller’s
Affiliates which relate to the conduct of the Business or the ownership of the Acquired Assets.
3.25
Information
in Proxy Statement
. The Proxy Statement and any other document filed with the SEC by Seller in connection with the Transactions
(or any amendment thereof or supplement thereto), at the date first mailed to the stockholders of the Company, at the time of
the Seller Stockholders Meeting and at the time filed with the SEC, as the case may be, will not 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 are made, not misleading; provided, however, that no representation is
made by Seller with respect to statements made therein based on information supplied in writing by Buyer specifically for inclusion
in such documents. The Proxy Statement and such other documents filed with the SEC by Seller will comply in all material respects
with the provisions of the Exchange Act.
3.26
Opinion of
Financial Advisor
. The Board of Directors of Seller has received the opinion of Janney Montgomery Scott LLC, dated the date
of this Agreement, to the effect that, as of such date, and subject to the various assumptions and qualifications set forth therein,
the consideration contemplated in connection with the Transactions is fair, from a financial point of view, to Seller’s
stockholders (the “
Fairness Opinion
”). A correct and complete copy of the Fairness Opinion has been delivered
to Buyer. Seller has been authorized by Janney Montgomery Scott LLC to permit the inclusion of the Fairness Opinion and references
thereto in the Proxy Statement.
3.27
Solvency
.
Immediately after giving effect to the Transactions, Seller will be able to pay its debts as they become due and will own property
having a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount
of all contingent liabilities). Immediately after giving effect to the Transactions, Seller will have adequate capital to carry
on its business.
3.28
Seller Subsidiaries
.
All representations and warranties made by Seller in this Agreement are true and correct with respect to each Seller Subsidiary,
as if the term “Seller Subsidiary” were substituted with the term “Seller” in each such representation;
provided
,
however
, that the foregoing shall not apply with respect to the representations and warranties contained
in
Sections 3.1-3.5
and
3.25
and
3.26
.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to
Seller, as of the date hereof and as of the Closing Date:
4.1
Corporate
Organization and Standing
. Buyer is a limited liability company duly organized, validly existing and in good standing under
the Laws of the State of Delaware and has all requisite limited liability company power and authority to enter into and perform
this Agreement and the Ancillary Agreements to which Buyer is a party contemplated hereby and thereby. Buyer is duly qualified
to do business as a foreign limited liability company in each jurisdiction in which the nature of its business as now being conducted
by it or the property owned or leased by it makes such qualification necessary.
4.2
Authorization
.
This Agreement and the Ancillary Agreements to which Buyer is a party have been duly authorized, executed and delivered by Buyer,
and this Agreement and the Ancillary Agreements to which Buyer is a party are the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar Laws affecting the enforcement of creditors’ rights generally. All necessary consents, approvals and authorizations
have been provided by the manager of Buyer in connection with this Agreement, the Ancillary Agreements to which Buyer is a party
and the Transactions.
4.3
No Conflict
or Violation
. Neither the execution and delivery of this Agreement or the Ancillary Agreements to which Buyer is a party nor
the consummation of the Transactions will (a) violate, conflict with or result in a breach of or constitute a default under
any provision of Buyer’s certificate of formation or operating agreement, (b) violate, conflict with or result in a
breach of or constitute a default under any judgment, order, decree, rule or regulation of any court or Governmental Authority
to which Buyer or its business is subject, or (c) violate, conflict with or result in a breach of any Law.
4.4
Litigation
.
There is no litigation, arbitration or administrative proceeding pending or threatened against Buyer, or investigation pending
or threatened by a Governmental Authority, that seeks to enjoin or otherwise challenges the consummation of the Transactions.
4.5
Brokers, Finders
.
Buyer has not retained any broker or finder in connection with the Transactions, and Buyer is not obligated and has not agreed
to pay any brokerage or finder’s commission, fee or similar compensation with respect to such Transactions.
4.6
Source of
Funds
. Buyer will have on the Closing Date, sufficient immediately available funds to pay, in cash, the Initial Purchase Payment
and all other amounts payable pursuant to this Agreement or otherwise necessary to consummate all the Transactions.
ARTICLE V
CONDITIONS TO
CONSUMMATION OF THE CLOSING
5.1
Conditions
to Buyer’s Obligations
. The obligation of Buyer to effect the Closing and consummate the Transactions is subject to
the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Buyer in
its discretion:
(a)
Stockholder
Approval
. Seller Stockholder Approval shall have been obtained.
(b)
Accuracy of
Representations and Warranties
. All of the representations and warranties of Seller contained in
Sections 3.1
(Corporate
Organization and Standing) and
3.2
(Authorization) and the first sentence of
Section 3.10
(Acquired Assets) shall
be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on the
Closing Date (except to the extent in either respect such representations and warranties are expressly made only as of an earlier
date, in which case they shall be true and correct in all material respects as of such earlier date). All of the other representations
and warranties of Seller contained in this Agreement shall be true and correct in all respects as of the date of this Agreement
and as of the Closing Date as though made on the Closing Date (except to the extent in either respect such representations and
warranties are expressly made only as of an earlier date, in which case they shall be true and correct in all respects as of such
earlier date), except where the failure of such representations and warranties to be so true and correct has not had, or would
not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(c)
Compliance
with Covenants
. Seller shall have performed or complied in all material respects with each of the covenants, agreements and
obligations required by this Agreement to be performed or complied with by Seller on or prior to the Closing Date.
(d)
Material Adverse
Effect
. Since the date hereof, there shall have occurred no Material Adverse Effect.
(e)
Certificate
of Seller
. At the Closing, Seller shall have delivered to Buyer a certificate dated the Closing Date and executed by an officer
of Seller, to the effect that the conditions specified in
Sections 5.1(a)
,
(b)
,
(c)
and
(d)
have
been fulfilled.
(f)
No Proceeding
or Litigation
. No litigation, action, suit, investigation, claim or proceeding brought by or on behalf of any Person or Governmental
Authority challenging the legality of, or seeking to restrain, prohibit, materially modify or rescind, the Transactions shall
have been instituted and not settled or otherwise terminated.
(g)
Ancillary
Agreements and Other Closing Deliveries
. Seller shall have delivered all agreements and other deliveries required to be delivered
by Seller in accordance with Section 2.2, including all Ancillary Agreements to which Seller is a party.
(h)
Release of
Liens
. Seller shall have taken such actions as may be necessary to secure the release as of the Closing of any and all Liens
(other than Permitted Liens), including any guarantees relating to or otherwise affecting the Acquired Assets.
(i)
Consents
.
All Closing Consents will have been obtained.
5.2
Conditions
to Seller’s Obligations
. The obligation of Seller to effect the Closing and consummate the Transactions is subject to
the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Seller in
its discretion:
(a)
Stockholder
Approval
. Seller Stockholder Approval shall have been obtained.
(b)
Accuracy of
Representations and Warranties
. All of the representations and warranties of Buyer contained in
Article IV
of this
Agreement shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made
on the Closing Date, except to the extent such representations and warranties are expressly made only as of an earlier date, in
which case as of such earlier date.
(c)
Compliance
with Covenants
. Buyer shall have performed or complied in all material respects with each of the covenants, agreements and
obligations required by this Agreement to be performed or complied with by Buyer on or prior to the Closing Date.
(d)
Certificate
of Buyer
. At the Closing, Buyer shall have delivered to Seller a certificate dated the Closing Date and executed by an officer
of Buyer, to the effect that the conditions specified in
Sections 5.2(b)
and
(c)
have been fulfilled.
(e)
No Proceeding
or Litigation
. No litigation, action, suit, investigation, claim or proceeding brought by or on behalf of any Person or Governmental
Authority challenging the legality of, or seeking to restrain, prohibit, materially modify or rescind, the Transactions shall
have been instituted and not settled or otherwise terminated.
(f)
Ancillary
Agreements and Other Closing Deliveries
. Buyer shall have delivered all agreements and other deliveries required to be delivered
by Buyer in accordance with
Section 2.3
, including all Ancillary Agreements to which Buyer is a party, delivery of the
Closing Payment to Seller and delivery of the Escrow Amount to the Escrow Agent.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1
Conduct of
Business
. During the period from the date hereof through the Closing Date, Seller shall (a) conduct the Business and operate
the Acquired Assets in the Ordinary Course of Business and not materially reduce the price of its offerings, including its jobs
packs; (b) maintain the tangible Acquired Assets in good operating condition and repair, ordinary wear and tear excepted, and
maintain and use commercially reasonable efforts consistent with past practices to protect the Business IP; (c) use commercially
reasonable efforts to preserve the goodwill associated with the Business and the beneficial relationships between Seller and its
agents, Employees, distributors, lessors, suppliers and customers and continue normal maintenance, marketing, advertising, distributional
and promotional expenditures in connection with the Business in the ordinary course of business in accordance with commercially
reasonable practices; and (d) except upon the prior written consent of Buyer (which consent may not be unreasonably withheld,
delayed, or conditioned) not engage in any practice, take or fail to take any commercially reasonable action, or enter into any
transaction that would cause any of the representations or warranties set forth in (i)
Section 3.23
to be breached or become
untrue in any respect or (ii)
Article III
to be materially breached or to become materially untrue (except where such representations
or warranties are qualified by “materiality,” “Material Adverse Effect” or similar qualification, in which
case Seller shall not engage in any practice, take or fail to take any commercially reasonable action, or enter into any transaction
that would cause any of the representations and warranties in
Article III
to be breached or to become untrue). Seller shall
not, except for any repurchase, cancellation or exchange by Seller of its stock or warrants or as deemed necessary in the sole
discretion of Seller for working capital needs and not in connection with the sale of the Seller, issue, sell, pledge, dispose
of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, deliver, lease, license, guarantee
or encumbrance of, any shares of capital stock of Seller, or securities convertible or exchangeable into or exercisable for any
shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock
or such convertible or exchangeable securities. Nothing contained in this Agreement will give to Buyer, directly or indirectly,
rights to control or direct the operations of Seller prior to the Closing Date. Prior to the Closing Date, Seller will exercise,
consistent with the terms and conditions of this Agreement, complete control and supervision of the Business.
6.2
Acquisition
Proposals
.
(a) Seller, and its
directors, officers, employees, financial advisors, attorneys, accountants and consultants, shall immediately cease any discussions
or negotiations presently being conducted with respect to any Acquisition Proposal, and direct all such persons in writing to
return or cause the destruction of all copies of confidential information previously provided to such parties by Seller, its Subsidiaries
or representatives. Seller shall not and shall cause its directors, officers, employees, financial advisors, attorneys, accountants
and consultants not to, directly or indirectly (i) initiate, solicit, knowingly take any action to facilitate or knowingly encourage
any inquiries with respect to, or the making of, any Acquisition Proposal, (ii) engage in any negotiations or discussions with,
furnish any information or data to or enter into any letter of intent (except for any confidentiality agreement contemplated by
Section 6.3(b)
, subject to compliance with this
Section 6.2(a))
, agreement in principle, acquisition agreement or
similar agreement with any party relating to any Acquisition Proposal, (iii) grant any waiver or release under any standstill
or similar agreement with respect to acquisitions of any of the Acquired Assets by any party other than Buyer or (iv) propose
publicly or agree to do any of the foregoing related to any Acquisition Proposal. Seller shall be responsible for any breach of
the provisions of this
Section 6.2
by any director, officer, financial advisor, attorney, accountants or consultant of
Seller.
(b) Notwithstanding
anything to the contrary contained in this
Section 6.2
, Seller may engage in discussions or negotiations with, and furnish
information and data to, any party that submits an unsolicited written Acquisition Proposal after the date of this Agreement and
on or prior to the date the Seller Stockholder Approval is obtained, (the “
Applicable Period
”) if (i) the Board
of Directors of Seller determines in good faith that such Acquisition Proposal constitutes, or is reasonably likely to result
in, a Superior Acquisition Proposal (ii) the Board of Directors of Seller determines in good faith that the failure to take such
action would be reasonably likely to result in a breach of the fiduciary duties of the Board of Directors under applicable Law,
(iii) prior to providing any material, non-public information regarding Seller, Seller receives from the party submitting such
Acquisition Proposal an executed confidentiality agreement containing provisions that are no less favorable to Seller than the
provisions contained in the Confidentiality Agreement, and which permits Seller to perform and comply with its obligations under
this Agreement, and (iv) Seller promptly, and in any event by 5:00 p.m. New York time, on the second Business Day after the day
on which Seller became aware of the same, provide Buyer with notice of such determination by the Board of Directors of Seller.
(c) Notwithstanding
anything to the contrary contained in this
Section 6.2
, if at any time during the Applicable Period and after receipt of
a Superior Acquisition Proposal the Board of Directors of Seller, in the exercise of its fiduciary duties, determines in good
faith that to do otherwise would be reasonably likely to result in a breach of its fiduciary duties under applicable Law, the
Board of Directors of Seller may, pursuant to this
Section 6.2
, fail to make, withdraw or modify in a manner adverse to
Buyer its recommendation to Seller’s stockholders for approval of this Agreement (a “
Change in Recommendation
”).
(d) Notwithstanding anything to the contrary
contained in this Section 6.2, the Board of Directors of Seller may terminate this Agreement in accordance with Section 8.1(g),
if (i) Seller has received an unsolicited written Acquisition Proposal during the Applicable Period, (ii) the Applicable Period
has not expired prior to the date of termination, (iii) the Board of Directors of Seller determines in good faith that such Acquisition
Proposal constitutes a Superior Acquisition Proposal (after taking into account any changes in the terms and conditions of this
Agreement proposed by Buyer in accordance with Section 6.2(e)) and (iv) the Board of Directors of Seller determines in good faith
that the failure to take such action would likely result in a breach of the fiduciary duties of the Board of Directors under applicable
Law.
(e) Seller shall
provide Buyer with not less than three (3) Business Days prior written notice of its determination to take any action referred
to in
Section 6.2(c)
or
(d)
. Seller’s notice shall include a description of the reasons for any Change in
Recommendation and a copy of the most recent version of any written agreement relating to the Superior Acquisition Proposal, which
may be redacted to conceal the identity of the party submitting the Superior Acquisition Proposal. If requested by Buyer after
the delivery of such notice, during such three (3) Business Day period Seller shall engage in reasonable, good faith negotiations
with Buyer regarding any modifications to the terms and conditions of this Agreement proposed by Buyer. If Buyer proposes any
such modifications in the form of a binding written offer to modify the terms and conditions of this Agreement prior to the expiration
of the three (3) Business Day period following delivery of Seller’s notice and such modifications were material, Seller
may not take any action referred to in
Section 6.2(c)
or
(d)
unless and until the Board of Directors of Seller determines
in good faith that the Acquisition Proposal resulting in the proposed Change in Recommendation or termination pursuant to
Section
6.2(d)
continues to constitute a Superior Acquisition Proposal, after taking into account any changes in the terms and conditions
of this Agreement proposed in Buyer’s binding written offer in accordance with this
Section 6.2(e)
. If any material
modifications are made to the terms and conditions of any Acquisition Proposal after the date notice thereof is provided by Seller
to Buyer pursuant to this
Section 6.2(e)
, then Seller shall again be required to comply with the provisions of this
Section
6.2(e)
with respect to such modified Acquisition Proposal, except the three (3) Business Day time period contained herein
shall be two (2) Business Days.
(f) Seller shall, by 5:00 p.m. New York
time on the first Business Day after the day on which Seller received any written Acquisition Proposal, provide Buyer with a copy
of such Acquisition Proposal or, in connection with any non-written Acquisition Proposal, a written statement setting forth in
reasonable detail the material terms and conditions of such Acquisition Proposal. Seller shall furnish to Buyer copies of any written
proposals and draft documentation or, if drafted, written summaries of any material oral inquiries or discussions involving the
Acquisition Proposal. If Seller provides any non-public information to any party submitting an Acquisition Proposal that has not
previously been provided to Buyer, Seller shall provide a copy of such information to Buyer by 5:00 p.m. New York time on the first
Business Day after the time it is first provided to such other party.
(g) Nothing in this
Section 6.2
shall prevent the Board of Directors of Seller from taking, and disclosing to Seller’s stockholders,
a position contemplated by Rules 14d-9 and 14e-2 or Item 1012(a) of Regulation MA promulgated under the Exchange Act with respect
to any unsolicited tender offer publicly announced during the Applicable Period; provided that, any such disclosure, other than
(i) a “stop, look and listen” or similar communication of the type contemplated by Rule 14d-9(f) promulgated under
the Exchange Act, (ii) an express rejection of such tender offer or (iii) an express reaffirmation of the Seller’s Board
of Directors’ recommendation to Seller’s stockholders for approval of this Agreement, shall be deemed a Change in
Recommendation.
6.3
Preparation
of Proxy Statement; Stockholders Meeting
.
(a) As soon as practicable after the
date hereof, Seller shall prepare and file with the SEC a Proxy Statement. Seller and Buyer shall cooperate with each other in
the preparation of the Proxy Statement and without limiting the generality of the foregoing, Seller shall consult with Buyer prior
to filing the Proxy Statement (or any amendment or supplement thereto) with the SEC and shall include in the Proxy Statement any
comments reasonably proposed by Buyer relating thereto. The Proxy Statement shall include the Recommendation of the Board of Directors
of Seller that Seller’s stockholders authorize the Transactions contemplated by this Agreement and the Ancillary Agreements
(including, for the avoidance of doubt, the approval of the change of Seller’s corporate name as contemplated herein). The
Proxy Statement shall additionally include a copy of the Fairness Opinion.
(b) Seller shall use its commercially
reasonable efforts to respond promptly to any comments made by the SEC with respect to the Proxy Statement. Seller shall use its
commercially reasonable efforts to cause the Proxy Statement to be mailed to its stockholders as promptly as practicable following
the filing thereof with the SEC and the resolution of any comments thereon by the SEC. Seller shall advise Buyer promptly after
it receives notice of any request by the SEC for amendment of the Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information, and Seller shall consult with Buyer prior to responding to any of the foregoing
and shall consider in good faith including any reasonable comments of Buyer relating to any such responses. The Proxy Statement
and any amendments or supplements to the Proxy Statement will, when filed, comply as to form in all material respects with the
applicable requirements of the Exchange Act. The information supplied by Buyer for inclusion in the Proxy Statement or any amendment
or supplement to the Proxy Statement, will not, on the date it is first mailed to Seller’s stockholders, on the date Seller’s
stockholders vote on this Agreement and at the Closing, contain 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, and will
not at the time of the Seller Stockholders Meeting, omit to state any material fact necessary to correct any statement in any earlier
communication with respect to the Seller Stockholders Meeting that shall have become false or misleading in any material respect.
If at any time prior to the Closing Date any information relating to Seller or Buyer, or any of their respective Affiliates, officers
or directors, is discovered by Seller or Buyer that should be set forth in an amendment or supplement to the Proxy Statement, so
that the Proxy Statement 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 that discovers
such information shall promptly notify the other party and an appropriate amendment or supplement describing such information shall
be promptly filed with the SEC and, to the extent required by Law, disseminated to the stockholders of Seller.
(c) Seller shall,
as soon as practicable after the date hereof, and in accordance with Seller’s certificate of incorporation and bylaws and
Law, establish a record date (which will be as soon as practicable after the date hereof) for, duly call, and give notice of,
a meeting of its stockholders (the “
Seller Stockholders Meeting
”) for the purpose of considering and taking
action upon this Agreement and the Transactions.
(d) As soon as practicable
following the date on which the Proxy Statement is mailed to Seller’s stockholders, Seller shall convene and hold the Seller
Stockholders Meeting. Once the Seller Stockholders Meeting has been called and noticed, except pursuant to the following sentence,
Seller shall not postpone or adjourn the Seller Stockholders Meeting without the consent of Buyer. If a quorum of stockholders
has not been obtained by the scheduled date for the Seller Stockholders Meeting, or supplemental or amended proxy materials are
required to be filed with the SEC or disseminated to Seller’s stockholders prior to the Seller Stockholders Meeting, then
Seller shall postpone or adjourn the Seller Stockholder Meeting until such time as a quorum is obtained or a period complying
with Law is permitted for the filing or dissemination of such supplemental or amended proxy materials. In the event that the Seller
Stockholders Meeting is delayed to a date after the End Date (as defined in
Section 8.1(b))
as a result of any adjournment
or postponement pursuant to this
Section 6.3(d)
, then the End Date shall be extended to the fifth (5th) Business Day after
the date on which the Sellers Stockholder Meeting is convened and a vote by the stockholders of Seller on the proposal set forth
in the Proxy Statement is taken.
(e) Unless the Board
of Directors of Seller has effected a Change in Recommendation in accordance with
Section 6.2(c)
, Seller shall use its
reasonable best efforts to solicit from stockholders of Seller proxies in favor of the approval of this Agreement and the Transactions
and shall take all other action necessary or advisable to secure the Seller Stockholder Approval. Unless the Board of Directors
of Seller has effected a Change in Recommendation in accordance with
Section 6.2(c)
, Seller shall use its reasonable best
efforts, including by attending in person meetings, participating in phone conferences and providing requested information, to
cause any proxy advisory firms advising their clients in connection with the Seller Stockholders Meeting to recommend that client
stockholders vote in favor of the approval of this Agreement and the transactions contemplated hereby.
6.4
Access to
Records and Properties; Supplemental Information
.
(a) Between the date hereof and the Closing
Date, (i) Buyer shall be entitled, and Seller shall permit Buyer, to conduct such investigation of the business, operations, properties,
assets, prospects and condition (financial or otherwise) of Seller to the extent related to the Business as Buyer shall reasonably
request, and (ii) Seller shall during normal business hours and upon reasonable notice (A) provide Buyer and its agents and representatives,
including its independent accountants, internal auditors and attorneys, reasonable access to all the properties, facilities, offices,
assets and personnel of Seller to the extent related to the Business, and to all of the books and records and other documents of
Seller to the extent related to the Business, including books and records related to the Acquired Assets (including work papers
of any independent accountant), (B) furnish Buyer with such other financial and operating data and other information with respect
to the business, operations, properties, assets, prospects or condition (financial or otherwise) of Seller to the extent related
to the Business as Buyer shall reasonably request, and (C) permit Buyer to make such assessments thereof as Buyer may reasonably
require, provided such access, requests and assessments do not unreasonably interfere with the operation of the Business, except
that, in no event will Buyer be entitled to conduct invasive soil or ground water sampling upon the properties without Seller’s
prior written permission.
(b) Seller shall
give prompt notice to Buyer, and Buyer shall give prompt notice to Seller, of (i) any notice or other communication received by
such party from any Governmental Authority in connection with the Transactions or from any Person alleging that the consent of
such Person is or may be required in connection with the Transactions, if the subject matter of such communication or the failure
of such party to obtain such consent could be material to Seller, (ii) any actions, suits, claims, investigations or proceedings
commenced or, to such party’s knowledge, threatened against, relating to or involving or otherwise affecting such party
or any of its Subsidiaries which relate to the Transactions, (iii) the discovery of any fact or circumstance that, or the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which, would cause any representation or warranty made by such
party contained in this Agreement (A) that is qualified as to materiality or Material Adverse Effect to be untrue and (B) that
is not so qualified to be untrue in any material respect, and (iv) any material failure of such party to comply with or satisfy
any covenant or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this
Section 6.4(b)
shall not (x) cure any breach of, or non-compliance with, any other provision of this Agreement
or (y) limit the remedies available to the party receiving such notice.
(c) Notwithstanding
anything in this Agreement to the contrary, from time to time prior to or at the Closing and by notice given in accordance with
this Agreement, Seller may supplement or amend
Section 3.23
the Disclosure Schedules and any appropriately related section
of the Disclosure Schedules to reflect any development in the business of the Seller provided such development occurred in accordance
with Section 6.1. In such event, each written notice provided by Seller to Buyer pursuant to this
Section 6.4(c)
shall
be deemed (i) to have amended such sections of the Disclosure Schedules as of the date of such notice, (ii) to have added a description
of the development and qualified the representations and warranties of Seller in
Section 3.23
and such other appropriately
related section of the Disclosure Schedules as of the date of such notice and (iii) to have cured any breach that otherwise might
have existed hereunder by reason of such development; provided, however, that no such supplements or amendments, individually
or in the aggregate, shall indicate the occurrence of an event or change that constitutes or would be reasonably expected to constitute
a Material Adverse Effect.
6.5
Efforts to
Consummate Closing; Cooperation; Further Assurances
.
(a) Except as otherwise
expressly set forth in this Agreement, and subject to the terms hereof, Seller, Buyer Parent and Buyer each will use their reasonable
best efforts to cause the conditions set forth in
Sections 5.1
and
5.2
, respectively, to be satisfied by the Closing
Date.
(b) Buyer Parent, Buyer and Seller shall
cooperate with each other, and shall cause their respective Affiliates, officers, employees, agents and representatives to cooperate
with each other, to ensure the orderly transition of the Acquired Assets from Seller to Buyer. Prior to the Closing, Seller shall
cooperate with Buyer in making any required or, in Buyer’s reasonable discretion, necessary and proper, communications with
Employees regarding the Transactions and any employee benefit plans or other benefit arrangements.
(c) At any time and from time to time
after the Closing, at the request and expense of any Party, the other Parties (including for this purpose, Buyer Parent) shall
execute and deliver, or cause to be executed and delivered, all such deeds, assignments, and other documents, and take or cause
to be taken all such other actions, as the requested Party reasonably deems necessary or advisable in order to complete, perfect
or evidence any of the Transactions. Any out-of-pocket expenses related to any such request shall be paid by the requesting Party.
In furtherance, and not by way of limitation, of the foregoing, if after the Closing, either Seller or Buyer discovers that any
of the Assets or Liabilities were incorrectly or mistakenly characterized as an Acquired Asset, Retained Asset, Assumed Liability
or Retained Liability, as applicable, then Buyer or Seller, as applicable, will cooperate (and cause its Affiliates to cooperate)
with the other Party and its Affiliates in ascertaining whether any such characterization was incorrect or mistaken and, if so,
will promptly re-transfer or reassign such Assets or Liabilities to Seller or Buyer (or one of their designees), as applicable,
and execute and deliver any amendments or supplements to this Agreement or the Disclosure Schedules, as applicable, to reflect
such Assets or Liabilities as “Acquired Assets,” “Retained Assets,” “Assumed Liabilities” or
“Retained Liabilities” effective as of the Closing.
6.6
Restrictive
Covenants
.
(a)
Confidentiality
.
(i) Between
the date hereof and the Closing Date, the terms of the Confidentiality Agreement, effective February 27, 2014 by and between Buyer
and Seller (the “
Confidentiality Agreement
”), are hereby incorporated herein by reference.
(ii) From
and after the Closing Date, Seller will, and will cause its Affiliates to, keep confidential and not disclose or use in any manner
competitive to the Business any and all confidential or other proprietary information relating to the Business that remains in
or comes into its possession after the Closing. Notwithstanding anything to the contrary contained in this
Section 6.6(a)(ii)
,
the confidentiality obligations of
Section 6.6(a)(ii)
shall not apply to information: (A) which Seller is compelled to
disclose by judicial or administrative process, or, in the opinion of Seller’s outside counsel, by other mandatory requirements
of Law (subject to the following provisions of this section); (B) which can be shown to have been generally available to the public,
other than as a result of a breach of
Section 6.6(a)(ii)
; or (C) which can be shown to have been provided to Seller by
a third Person that is not known to Seller to be under an obligation to keep such information confidential.
(iii) If Seller or any of its Affiliates
is requested or required (by written or oral questions, interrogatories, requests for information or documents in legal, administrative,
arbitration or other formal proceedings, subpoena, civil investigative demand or other similar process) to disclose any such confidential
information, Seller will promptly notify Buyer of any such request or requirement so that Buyer may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of this section. If, in the absence of a protective order
or other remedy or the receipt of a waiver by Buyer, Seller or any of its Affiliates is required to disclose such information,
such Person, without Liability hereunder, may disclose that portion of such information which it is legally required to disclose.
(b)
Non-Competition
.
For a period commencing on the Closing Date and terminating 5 years after the Closing Date, Seller will not, and will cause the
Seller Subsidiaries not to, directly or indirectly engage in any Competing Business anywhere in the world. For purposes of this
Agreement, “
Competing Business
” means a business that competes with the Business as conducted by Seller immediately
prior to the Closing Date. Nothing in this
Section 6.6(b)
will restrict or prevent Seller or any Seller Subsidiary from
maintaining or undertaking passive investments in Persons engaged in a Competing Business so long as the aggregate interest represented
by such investments does not exceed five percent (5%) of any class of the outstanding debt or equity securities of any such Person.
(c)
Non-Solicitation
.
For a period commencing on the Closing Date and terminating 5 years after the Closing Date:
(i) Seller and its Affiliates will not,
directly or indirectly, solicit for hire any Person while such Person is, or was within the six-month period prior to his or her
solicitation or hiring, a Transferred Employee or any independent contractor or consultant of the Business whose Contract was included
in the Acquired Assets; provided, however, that the foregoing provision shall not prohibit Seller or any of its Affiliates from,
directly or indirectly, soliciting for hire or hiring any Transferred Employee whose employment is terminated by Buyer; and
(ii) Buyer,
Buyer Parent and their respective Subsidiaries will not, directly or indirectly, solicit for hire any Person while such
Person is, or was within the six-month period prior to his or her solicitation or hiring, an employee of Seller (other than a
Transferred Employee) or any independent contractor or consultant of Seller (other than such contractor or consultant whose
Contract was included in the Acquired Assets);
For the avoidance of doubt, a Person will not be deemed to have been solicited
for employment if such Person responds to a general public advertisement or other general solicitation of employment.
(d)
Non-Disparagement
.
From and after the Closing, Seller will not, and will cause its Subsidiaries, executive officers and directors not to, engage
in any conduct that involves the making or publishing of written or oral statements or remarks (including the repetition or distribution
of derogatory rumors, allegations, negative reports or comments) that are disparaging, deleterious or damaging to the integrity,
reputation or goodwill of the Business, Buyer or its Affiliates or their respective management, officers, employees, independent
contractors or consultants. From and after the Closing, Buyer and Buyer Parent will not, and will cause their respective Subsidiaries,
executive officers and directors not to, engage in any conduct that involves the making or publishing of written or oral statements
or remarks (including the repetition or distribution of derogatory rumors, allegations, negative reports or comments) that are
disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Retained Business, Seller or its Affiliates
or their respective management, officers, employees, independent contractors or consultants. This provision is not applicable
to (i) truthful testimony obtained through legal process, (ii) any truthful information provided pursuant to investigation by
any governmental body, or (iii) any truthful information provided pursuant to any legal action between the parties.
(e)
Acknowledgement
.
Each of Seller, Buyer Parent and Buyer acknowledges that the periods of restriction, the geographical areas of restriction and
the restraints imposed by the provisions of this
Section 6.6
, as applicable, are fair and reasonably required for the protection
of Buyer and Seller, respectively. If the final judgment of a court of competent jurisdiction declares that any term or provision
of this
Section 6.6
is invalid or unenforceable, the Parties agree that the court making the determination of invalidity
or unenforceability will 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 will
be enforceable against the Parties as so modified. Seller agrees that any violation of the covenants contained in this
Section
6.6
will cause irreparable damage to Buyer; therefore, in addition to any other remedies Buyer may have under this Agreement
or otherwise, Buyer will be entitled to an injunction from any court of competent jurisdiction restraining Seller from committing
or continuing any violation of this
Section 6.6
, without the requirement of posting any bond or other indemnity. Buyer
and Buyer Parent agree that any violation of the covenants contained in this
Section 6.6
will cause irreparable damage
to Seller; therefore, in addition to any other remedies Seller may have under this Agreement or otherwise, Seller will be entitled
to an injunction from any court of competent jurisdiction restraining Buyer and/or Buyer Parent from committing or continuing
any violation of this
Section 6.6
, without the requirement of posting any bond or other indemnity.
6.7
Maintenance
of Insurance
. Seller will maintain all policies of insurance in effect on the date hereof relating to the Business or the
Acquired Assets through and until the Closing.
6.8
Public Announcement
.
On or after the date hereof, Seller shall issue a press release regarding the terms of this Agreement, which press release shall
be approved by Buyer prior to its issuance (such approval not to be unreasonably withheld, delayed or conditioned). Seller, Buyer
Parent and Buyer shall consult with each other before issuing any press release or otherwise making any public statement or making
any other public (or non-confidential) disclosure (whether or not in response to an inquiry) regarding the terms of this Agreement,
and neither Seller on the one hand, nor Buyer Parent or Buyer on the other hand, shall issue any such press release or make any
such statement or disclosure without the prior approval of the other (which approval shall not be unreasonably withheld or delayed),
except as may be required by law or by obligations pursuant to any listing agreement with any national securities exchange or
over-the-counter exchange, in which case the Party proposing to issue any such press release or make such public statement or
disclosure shall use commercially reasonable efforts to consult with the other Party before issuing such press release or making
such public statement or disclosure and to cooperate with the other Party to accommodate any reasonable objections made thereto.
6.9
Employment
.
Effective as of the Closing Date, Buyer will offer to employ each employee of the Business set forth on
Schedule 6.9
(collectively,
“
Employees
”) who remains actively employed exclusively by the Business or on an approved leave of absence on
the Closing Date. The offers of employment for the Employees will provide for the same initial level of base salary as in effect
for such employee on the date of this Agreement, and with employee benefits substantially comparable to the employee benefits
offered to similarly situated employees of the Buyer. Notwithstanding the foregoing, nothing in this Agreement will, after the
Closing Date, impose on Buyer any obligation to retain any employee in its employment. Employees who accept Buyer’s offer
of employment and commence employment with Buyer as of the Closing Date shall be referred to as “
Transferred Employees
.”
To the extent Buyer is, for any reason, unable to enroll a Transferred Employee and, as applicable, their dependents, under Buyer’s
health insurance plan effective as of such Transferred Employee’s employment start date with Buyer, Buyer will provide notice
to such Transferred Employee as promptly as practicable and will pay or reimburse such Transferred Employee for all costs related
to such Transferred Employee obtaining COBRA coverage for themselves and their dependents, as applicable, through the date that
Buyer is able to migrate such Transferred Employee and their dependents, as applicable, to Buyer’s health insurance plan.
6.10
Employee
Benefit Matters
.
(a) As of the Closing
Date, all of the Transferred Employees will cease participation in all Employee Plans and fringe benefit programs maintained by
Seller. Effective as of the Closing Date, Transferred Employees will be eligible to participate in employee benefit plans and
fringe benefit plans provided by Buyer (collectively, “
Buyer Benefit Plans
”).
(b) Nothing contained in this Agreement,
express or implied, (i) is intended to confer or shall confer upon any individual or any legal representative of any individual
(including employees, retirees, or dependents or beneficiaries of employees or retirees) any right as a direct party to, or a third
party beneficiary of, this Agreement or (ii) shall be deemed to confer upon any such individual or legal representative any rights
under or with respect to any plan, program or arrangement described in or contemplated by this Agreement, and each such individual
or legal representative shall be entitled to look only to the express terms of any such plans, program or arrangement for his or
her rights thereunder.
(c) Nothing contained in this Agreement,
express or implied, shall prohibit Buyer from, subject to Law, adding, deleting or changing providers of benefits, changing, increasing
or decreasing co-payments, deductibles or other requirements for coverage or benefits (e.g., utilization review or pre-certification
requirements), and/or making other changes in the administration or in the design, coverage and benefits provided to Transferred
Employees. No provision of this Agreement shall be construed as a limitation on the right of Buyer to suspend, amend, modify or
terminate any Buyer Benefit Plan. Further, (i) no provision of this Agreement shall be construed as an amendment to any employee
benefit plan and (ii) no provision of this Agreement shall be construed as limiting Buyer’s discretion and authority to interpret
its respective employee benefit and compensation plans, agreements arrangements, and programs, in accordance with their terms and
Law.
6.11
Defined Contribution
Plans
. As of the Closing Date, Transferred Employees will cease participation in any Employee Plan that is a defined contribution
plan intended to be qualified under Section 401(a) of the Code and is maintained by or for the benefit of such Transferred Employees.
As of the Closing Date or as soon as practicable thereafter, each Transferred Employee will be permitted to elect a distribution
of his or her account balance in such Employee Plan and will be permitted to roll over (including a direct rollover) his or her
account balances (but not including any outstanding loans) in such Employee Plan (or any portion thereof) to a defined contribution
plan maintained by Buyer for 90 days after the Closing Date.
6.12
COBRA
.
As of the Closing Date, Buyer will assume the Liability for providing and administering all required notices and benefits under
COBRA and all Liabilities under COBRA with respect to Transferred Employees and their spouses and dependents for qualifying events
that occur after the Closing Date. Seller will retain any and all Liabilities under COBRA for qualifying events that occurred
on or prior to the Closing Date and will continue to maintain the applicable Employee Plans until such obligations to provide
COBRA continuation coverage for such qualifying events has ended.
6.13
Tax Matters
.
(a) Seller will prepare
and timely file all Tax Returns in respect of the Acquired Assets for all Tax periods ending on or prior to the Closing Date (each
a “
Pre-Closing Tax Period
”) that are due on or prior to the Closing Date. Buyer will prepare and timely file
all other Tax Returns that are required to be filed in respect of the Acquired Assets and the Business. Notwithstanding the foregoing,
for the avoidance of doubt, each Party will be responsible for preparing and filing its own Tax Returns.
(b) The Parties agree
that any Apportioned Obligation, or any refund, rebate or similar payment received by Seller or Buyer with respect to any Taxes
that are Apportioned Obligations, will be apportioned between Seller and Buyer (x) based upon the number of days in the applicable
Straddle Period falling on or before the Closing Date and the number of days in the applicable Straddle Period falling after the
Closing Date, if it relates to a Tax that is imposed on a periodic basis or (y) based on an interim closing of the books as of
the Closing Date, if it relates to all other Taxes. Seller will be responsible for the amount apportioned to the period ending
on the Closing Date, and Buyer will be responsible for the amount apportioned to the period beginning after the Closing Date.
Seller will pay Apportioned Obligations that are due and payable on or prior to the Closing Date and bill Buyer for any part of
that amount apportioned to Buyer, and Buyer will reimburse Seller for any such Taxes within fifteen (15) days of payment by Seller.
Buyer will pay Apportioned Obligations that are due and payable after the Closing Date and bill Seller for any part of that amount
apportioned to Seller, and Seller will reimburse Buyer for any such Taxes within fifteen (15) days of payment by Buyer. Notwithstanding
any other provision contained in this Agreement (including the limitations set forth in
Sections 7.2
and
7.3
hereof),
any obligation arising out of this
Section 6.13
will not be considered a Loss that is subject to the Threshold Amount,
Cap, or any survival period or other limit of time, and any loss for which Seller is responsible may be satisfied out of the Escrow
Amount or, thereafter, by Seller.
(c) If Buyer receives
a refund with respect to Taxes for which Seller is wholly or partially responsible under
Section 6.13(b)
hereof, Buyer
will pay, within 30 days following the receipt of such refund, the amount of such refund attributable to Seller. If Seller receives
a refund with respect to Taxes for which Buyer is wholly or partially responsible under
Section 6.13(b)
hereof, Seller
will pay, within 30 days following the receipt of such refund, the amount of such refund attributable to Buyer.
(d) Each Party will provide the other
Party with such assistance and non-privileged information relating to the Business and the Acquired Assets as may reasonably be
requested in connection with the preparation of any Tax Return or the conduct of any audit, examination or any other proceeding
by any Tax Authority. Each Party will retain and provide to the other Party all non-privileged records and other information which
may be relevant to any such Tax Return, audit, examination or any other proceeding. Without limiting the generality of the foregoing,
each Party will retain, for a period of six years from and after the Closing Date, copies of all Tax Returns, supporting work schedules
and other records relating to the Business and the Acquired Assets for all Pre-Closing Tax Periods and Straddle Periods, or (if
they will be retained for less than six years) will offer such records to the other Party prior to disposing of them.
(e) Each Party will
be responsible for the handling, disposition and settlement of any inquiry, proceeding or examination against it with respect
to its own federal, state or local income, franchise, net or gross receipts, estimated, alternative minimum, add-on and similar
Taxes. Buyer will exercise control over the handling, disposition and settlement of any inquiry, examination or proceeding by
a Tax Authority with respect to the Acquired Assets. However, if such proceeding could result in a determination with respect
to Taxes due or payable by Seller, Seller may elect to participate in the handling of such proceeding at its sole expense. Buyer
will notify Seller in writing promptly upon learning of any such inquiry, examination or proceeding. Notwithstanding the foregoing,
if such proceeding could give rise to an indemnification obligation on the part of Seller, Seller may elect to undertake and conduct
the handling, disposition and settlement of the inquiry, proceeding or examination in accordance with
Section 7.5(c)
.
(f) Each of Seller and Buyer will be
obligated to pay half of any amounts that are required to be paid in respect of any transfer, sales, use, recording, value-added
or similar Taxes (including any registration and/or stamp Taxes, levies and duties) that may be imposed by reason of the sale,
assignment, transfer and delivery of the Acquired Assets, and Buyer will timely file all Tax Returns required to be filed in connection
with such Taxes. Buyer and Seller will cooperate in timely filing all Tax Returns required to be filed in connection with the payment
of such Taxes, in obtaining all available exemptions from such Taxes, and in timely providing one another resale certificates and
any other documentation necessary to satisfy any such exemptions.
6.14
Assignability
and Consents
.
(a) As promptly as
practicable after the date hereof, (i) Seller will give all required notices to any third parties and will use commercially reasonable
efforts to obtain all consents, approvals and other authorizations set forth or required to be set forth on
Schedule 3.3
,
and (ii) Seller shall use its reasonable best efforts to obtain an extension of the Contract set forth on
Schedule 6.14
on the terms set forth on
Schedule 6.14
.
(b) Notwithstanding any other provisions
in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any Contract if an attempted assignment
thereof, without the consent of another party thereto or any Governmental Authority, would constitute a breach or violation of
any such Contract. Seller shall, at its expense, use commercially reasonable efforts and Buyer shall, at Seller’s expense,
use commercially reasonable efforts to assist Seller in obtaining all consents, novations and waivers and to resolve all impracticalities
of assignments, novations or transfers necessary to convey any Contract to Buyer at the earliest practicable date after the Closing.
Notwithstanding the foregoing, any fees and expenses incurred by the Parties in connection with obtaining an assignment, novation
or transfer of any Contract will be paid by the Party incurring such expense.
(c) In the case of Contracts included
in the Acquired Assets, if such consents, novations or waivers are not obtained on or prior to the Closing Date, or if an attempted
assignment would be ineffective, until such consent, novation or waiver is obtained, Seller shall use commercially reasonable efforts
to (A) provide to Buyer the benefits of each such Contract; (B) cooperate in any reasonable and lawful arrangement designed to
provide such benefits to Buyer and (C) enforce, at the request and expense of Buyer and for the account of Buyer, any rights
of Seller arising from any such Contract; and Seller will promptly pay to Buyer when received all monies received by Seller under
such Contract. To the extent Buyer is provided the benefit of any such Contract, Buyer will perform or discharge, on behalf of
Seller, Seller’s obligations and liabilities under each such Contract in accordance with the provisions thereof except for
any obligations and liabilities under any such Contract that constitute a Retained Liability. Once a necessary consent, novation
or waiver is obtained, the applicable Contract will be deemed to have been automatically transferred to Buyer on the terms set
forth in this Agreement with respect to the other Contracts transferred and assumed at the Closing, and consistent with the foregoing,
the obligations pursuant to the applicable Contract will be deemed to be Assumed Liabilities, and the rights pursuant to the applicable
Contract will be deemed to be Acquired Assets.
6.15
Litigation
Support
. In the event and for so long as either Party is actively contesting or defending against any third party charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand in connection with any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act or transaction involving the
Business, the other Party will reasonably cooperate with the contesting or defending Party and its counsel in the contest or defense,
make available its personnel at reasonable times and upon reasonable notice and provide such testimony and access to its books
and records to the extent related to the Business as may be reasonably requested in connection with the contest or defense and
in each case to the extent commercially reasonable for such other Party, at the sole cost and expense of the contesting or defending
Party (unless such contesting or defending Party is entitled to indemnification therefor under
Article VII
in which case,
the costs and expense will be borne by the Parties as set forth in
Article VII
).
6.16
Seller’s
Obligation to Change Name. Prior to the Closing
, Seller will take any and all action necessary to change the name of Seller
and MB Sub, effective no later than as of the Closing, to a name that does not include or relate to and is not based on or likely
to be confused with the name “Mediabistro.” Beginning immediately following the Closing, Seller will, and will cause
its Affiliates to, cease using any trademark, brand name, trade name, corporate name, domain name or other indication of source
or origin, that includes, is based on, relates to or is likely to be confused with or is confusingly similar to the term Mediabistro
or any other similar terms or derivatives thereof.
6.17
Seller Status
.
Following the Closing, Seller intends to continue to operate and develop the Retained Business. Seller further intends to remain
a publicly traded company and to file reports with the SEC pursuant to the provisions of the Exchange Act. At or promptly following
the Closing, Seller may use a portion of the Closing Payment to repay outstanding indebtedness of Seller (the exact amount of
such repayment, which shall be determined by the Seller’s Board of Directors, the “
Initial Debt Payment
”).
Seller will use commercially reasonable efforts to ensure that, after the Initial Debt Payment, (i) at least $2.5 million of the
Closing Payment remains, and is reserved, for working capital purposes, and (ii) Seller will not prepay any other outstanding
indebtedness until at least six (6) months following the Closing; provided, that the foregoing shall not limit the Seller’s
right and ability to repay indebtedness (or interest on such indebtedness) that becomes due and payable during such period.
6.18
Contract
Renewal
. Between the date hereof and the Closing Date, Buyer, Buyer Parent and Seller shall use commercially reasonable efforts
to coordinate the renewal of the Contract set forth on
Schedule 6.18
in accordance with the terms set forth on
Schedule
6.18
.
ARTICLE VII
INDEMNIFICATION
7.1
Survival of
Representations, Warranties and Covenants
. The representations and warranties of Seller (including representations and warranties
made on behalf of the Seller Subsidiaries) contained in this Agreement or in any certificates delivered pursuant to
Article
V
shall survive the Closing until the eighteen (18) month anniversary of the Closing Date, except that (a) the representations
and warranties set forth in
Section 3.14
(Intellectual Property) shall survive the Closing until the three (3) year anniversary
of the Closing Date, (b) the representations and warranties set forth in
Sections 3.16
(Taxes) and
3.21
(Compliance
with Laws) shall survive until thirty (30) days after the expiration of the applicable statute of limitations (including any waivers
or extensions thereof) to which the underlying matter relates, the representations and warranties set forth in the first sentence
of
Section 3.10
(Acquired Assets) and the representations and warranties set forth in
Sections 3.1
(Corporate Organization
and Standing),
3.2
(Authorization),
3.3
(No Conflict or Violation),
3.5
(Absence of Undisclosed Liabilities),
3.20
(Brokers; Finders),
3.24
(Agreements with Affiliates),
3.25
(Information in Proxy Statement),
3.26
(Opinion of Financial Advisor) and 3.28 (Subsidiaries) shall survive forever and (c) the representations and warranties set
forth in
Sections 4.1
(Corporate Organization and Standing),
4.2
(Authorization),
4.3
(No Conflict or
Violation) and
4.5
(Brokers, Finders) shall survive forever. The representations and warranties identified in clause
(b) of the first sentence of this
Section 7.1
are referred to herein as the “
Fundamental Representations
.”
The covenants contained in this Agreement shall survive the Closing and remain in full force and effect until fully performed
in accordance with their terms. Notwithstanding the foregoing, any claim made under and in accordance with this
Article VII
prior to the expiration of the applicable period set forth above shall survive until such claim is finally resolved.
7.2
Indemnification
by Seller
.
(a) Subject to the
provisions of this
Article VII
, from and after the Closing, Seller shall indemnify Buyer, its Affiliates and their respective
officers, directors, attorneys, accountants, representatives and agents (the “
Buyer Indemnified Parties
”) for
all losses, Liabilities, Taxes, damages (including punitive damages solely to the extent such punitive damages are actually recovered
by a Third Party pursuant to a Third Party Claim), costs, interest, awards, judgments, penalties and expenses, including reasonable
attorneys’ and accountants’ fees and expenses (herein individually a “
Loss
” and collectively “
Losses
”)
that any Buyer Indemnified Party suffers, sustains or incurs and that result from, arise out of, relate to, or are caused by,
any of the following:
(i) any
breach or inaccuracy of any representation or warranty of the Sellers contained in this Agreement or in any certificates delivered
pursuant to
Article V
, other than the Fundamental Representations;
(ii) any breach or inaccuracy of any
of the Fundamental Representations;
(iii) any failure by Seller to perform
or comply with any covenant or agreement contained in this Agreement;
(iv) the ownership or operation of the
Retained Assets;
(v) the Retained Liabilities;
(vi) any
Third Party Claim related to the foregoing that alleges facts that, if true, would entitle the Buyer Indemnified Parties to recovery
under this
Article VII
;
(vii) the
matters set forth on
Schedule 7.2(a)
(subject to the limitations set forth therein); and
(viii) any fraud committed by or on behalf
of Seller related to this Agreement or any Ancillary Agreement.
(b) Notwithstanding
anything in this Agreement to the contrary, in the absence of a showing of fraud by or on behalf of Seller related to this Agreement
or any Ancillary Agreement, (i) no Buyer Indemnified Party shall be entitled to indemnification for any Losses under
Section
7.2(a)(i)
or
(iii)
unless and until one or more claims identifying such Losses in excess of $75,000 in the aggregate
(the “
Deductible Amount
”) has or have been delivered to Seller, and such amount is payable in accordance with
this
Article VII
, whereupon only the aggregate amount of such Losses in excess of the Deductible Amount shall thereafter
be recoverable in accordance with the terms hereof and (ii) the aggregate amount of Losses in excess of the Deductible Amount
for which the Buyer Indemnified Parties shall be entitled to indemnification pursuant to
Section 7.2(a)(i)
shall not
exceed $2,000,000 (the “
Cap
”).
(c) The aggregate
amount of Losses in excess of the Deductible Amount for which the Buyer Indemnified Parties shall be entitled to indemnification
pursuant to
Section 7.2(a)(ii)
and
(iii)
shall not exceed $8,000,000.
7.3
Indemnification
by Buyer
. Subject to the provisions of this
Article VII
, from and after the Closing, Buyer shall indemnify Seller and
its officers, directors, Affiliates, attorneys, accountants, representatives and agents (the “
Seller Indemnified Parties
”)
for all Losses that any Seller Indemnified Party may suffer, sustain or incur and that result from, arise out of, relate to, or
are caused by any of the following:
(a) any breach or inaccuracy of any representation
or warranty of Buyer contained in this Agreement;
(b) any failure by Buyer to perform or
comply with any covenant or agreement contained in this Agreement;
(c) any Assumed Liability;
(d) the conduct of the Business after
the Closing; and
(e) any fraud committed by or on behalf
of Buyer related to this Agreement or any Ancillary Agreement.
7.4
Payment Source
.
All amounts owing to the Buyer Indemnified Parties pursuant to this
Article VII
shall be first paid through distributions
from the then remaining balance of the Escrow Fund (if any) in accordance with this Agreement and the Escrow Agreement and second,
following the earlier of the termination or exhaustion of the Escrow Fund, paid by Seller.
7.5
Procedures
for Indemnification
.
(a) No Party shall
be liable for any claim for indemnification under this
Article VII
unless written notice of a claim for indemnification
is delivered by the Party seeking indemnification (the “
Indemnified Party
”) to the Party from whom indemnification
is sought (the “
Indemnifying Party
”) prior to the expiration of any applicable survival period set forth in
Section 7.1
(in which event the claim shall survive until resolved). If any third party notifies the Indemnified Party
with respect to any matter which may give rise to a claim for indemnification (a “
Third Party Claim
”) against
the Indemnifying Party under this
Article VII
, then the Indemnified Party shall notify the Indemnifying Party within 10
Business Days thereof in writing; provided that no delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder except to the extent that the Indemnifying Party is actually
and materially prejudiced thereby. All notices given pursuant to this
Section 7.5(a)
shall describe with reasonable specificity
the nature of the claim, the amount of the claim (to the extent then known) and the basis of the Indemnified Party’s claim
for indemnification.
(b) Following receipt
of notice in accordance with
Section 7.5(a)
(other than a notice of a Third Party Claim against the Indemnified Party,
in which case
Section 7.5(c)
below shall apply), the Indemnifying Party shall have thirty (30) days from the date it receives
such notice (the “
Dispute Period
”) to make such investigation of the claim as the Indemnifying Party deems
necessary or desirable. For purposes of such investigation, the Indemnified Party shall make available to the Indemnifying Party
all the information related to such claim relied upon by or in possession or control of, the Indemnified Party. If the Indemnifying
Party disagrees with the validity or amount of all or a portion of such claim made by the Indemnified Party, the Indemnifying
Party shall deliver to the Indemnified Party written notice thereof (the “
Dispute Notice
”) prior to the expiration
of the Dispute Period. If no Dispute Notice is received by the Indemnified Party within the Dispute Period or the Indemnifying
Party provides notice that it does not have a dispute with respect to such claim, such claim shall be deemed approved and consented
to by the Indemnifying Party (such claim, an “
Approved Indemnification Claim
”). If a Dispute Notice is received
by the Indemnified Party within the Dispute Period and the Indemnified Party and the Indemnifying Party do not agree to the validity
and/or amount of such disputed claim, no payment shall be made until such disputed claim is resolved, whether by adjudication
of such matter, agreement between the Indemnified Party and the Indemnifying Party, or otherwise (and upon any such resolution,
such claim shall be deemed to be an Approved Indemnification Claim). Each Approved Indemnification Claim shall be paid no later
than five (5) Business Days after the date on which the subject claim became an Approved Indemnification Claim, in each case by
wire transfer of immediately available funds to the account designated in writing by the party entitled to such payment.
(c) After the Indemnified
Party has given notice of a Third Party Claim to the Indemnifying Party pursuant to
Section 7.5(a)
, the Indemnifying Party
may, at its election, undertake and conduct the defense of such Third Party Claim; provided that the Indemnifying Party fully
acknowledges in writing its indemnification obligations to the Indemnified Party. In such case, the Indemnified Party may continue
to participate in the defense of such Third Party Claim; provided, however, that following the Indemnifying Party’s assumption
of the defense of such Third Party Claim, all legal or other expenses subsequently incurred by the Indemnified Party shall be
borne by the Indemnified Party unless the Indemnified Party reasonably concludes that the Indemnifying Party and the Indemnified
Party have conflicting interests, in which case the Indemnified Party shall be indemnified for the reasonable fees and expenses
of one counsel to the Indemnified Party (including one local counsel). If the Indemnifying Party assumes the defense of any Third
Party Claim, the Indemnifying Party shall not settle or consent to judgment with respect to such Third Party Claim without the
written consent of the Indemnified Party, which consent shall not be unreasonably withheld, conditioned or delayed. If (i) the
Indemnifying Party has failed to assume the defense of such Third Party Claim within ten (10) days of the Indemnified Party’s
delivery of notice of such Third Party Claim to the Indemnifying Party, (ii) such Third Party Claim involves criminal or quasi-criminal
allegations or (iii) the Third Party Claim includes a claim for injunctive relief, then the Indemnified Party shall have
the right to assume the defense of such Third Party Claim. The Indemnified Party and the Indemnifying Party shall render to each
other such assistance as may reasonably be required of each other in order to ensure proper and adequate defense of any Third
Party Claim subject to this
Section 7.5
. To the extent that the Indemnified Party or the Indemnifying Party does not participate
in the defense of a particular Third Party Claim, the Party so proceeding with such Third Party Claim shall keep the other party
informed of all material developments and events relating to such Third Party Claim. No Indemnified Party shall settle or consent
to judgment with respect to any Third Party Claim without the written consent of the Indemnifying Party, which consent shall not
be unreasonably withheld, conditioned or delayed. In the event that the Indemnifying Party has consented to any settlement or
consented to any judgment and except as otherwise provided in such settlement or judgment, such Indemnifying Party shall not have
any power or authority to object to any claim by any Indemnified Person under this
Article VII
or against the Escrow Fund
for indemnity in the amount of such settlement or judgment.
7.6
Determination
of Loss Amount
. If an indemnifiable matter is identified and noticed prior to the end of any applicable period set forth in
Section 7.1
, all Losses incurred or paid in connection with such matter shall remain subject to indemnification hereunder.
7.7
Tax Treatment
.
Any payment under
Article VI
I of this Agreement shall be treated by the parties for federal, state, local and foreign income
Tax purposes as an adjustment to the Purchase Price unless otherwise required by Law.
7.8
Other Exclusions
.
In the event that any Person alleges that they are entitled to indemnification hereunder, and that Person’s claim is covered
under more than one provision of this Agreement, such Person shall be entitled to elect the provision or provisions under which
it may bring a claim for indemnification. Any entitlement of an Indemnified Party to make a claim under this Agreement shall be
determined without duplication of recovery by reason of the state of facts giving rise to such claim constituting a breach or
inaccuracy of more than one representation, warranty, covenant or agreement.
7.9
Remedies Exclusive
.
Except (a) for remedies that cannot be waived as a matter of Applicable Law, (b) for specific performance, injunctive relief or
other equitable remedies, or (c) in respect of claims based on fraud, willful misconduct or criminal acts committed by or on behalf
of Seller, the indemnification provisions of this
Article VII
shall be the sole and exclusive remedy for any breach of
this Agreement from and after the Closing.
7.10
Additional
Limitations, Mitigation, Subrogation
.
(a) For purposes
of this
Article VII
only, the amount of any Loss shall be reduced by any insurance proceeds or other third party recovery
actually received by the Indemnified Party with respect to such Loss. If an indemnification payment is received by the Indemnified
Party and the Indemnified Party later receives insurance proceeds or other third party recoveries specifically in respect of the
related Loss, the Indemnified Party shall promptly pay the indemnifying party a sum equal to the lesser of (y) the actual amount
of insurance proceeds or other third party recoveries specifically in respect of the related Loss and (z) the actual amount of
the indemnification payment previously paid to the Indemnified Party with respect to such Loss.
(b) Any Indemnified Party shall act in
good faith and in a commercially reasonable manner to mitigate any Losses it suffers, incurs or otherwise becomes subject to as
a result of or in connection with any inaccuracy in or breach of any representation, warranty, covenant or obligation under this
Agreement.
(c) In the event of any indemnification
payment by Seller under this Agreement, Seller shall be subrogated to the extent of such payment to all of the rights of recovery
of the Buyer Indemnified Party, who shall execute all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable Seller to bring suit to enforce such rights.
ARTICLE VIII
TERMINATION
8.1
Termination
.
This Agreement and the Transactions may be terminated at any time prior to the Closing as follows:
(a) by mutual written consent of Seller
and Buyer;
(b) by either Seller
or Buyer if the Closing shall not have occurred on or before November 1, 2014 (the “
End Date
”); provided, however,
that the right to terminate this Agreement under this
Section 8.1(b)
shall not be available to any Party whose failure
to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing
to occur on or prior to such date;
(c) by Buyer if:
(i) Seller shall have breached any of its representations, warranties or obligations hereunder to an extent that would cause the
conditions set forth in
Sections 5.1(b)
or
(c)
not to be satisfied and such breach shall not have been cured within
20 Business Days of receipt by Seller of written notice of such breach (provided that the right to terminate this Agreement
by Buyer shall not be available to Buyer if Buyer is at that time in material breach of this Agreement or if such breach has not
had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect); (ii) Seller’s
board of directors shall have withdrawn or modified the Recommendation in any manner adverse to Buyer or shall have resolved to
do so; or (iii) Seller’s board of directors shall (x) have recommended, endorsed, accepted or agreed to a Acquisition Proposal
or shall have resolved to do so, or (y) not have sent to holders of shares of Seller’s outstanding equity stock within 10
Business Days after the commencement of any tender or exchange offer or solicitation made in connection with any Acquisition Proposal,
a statement recommending rejection of such offer or solicitation;
(d) by Seller at
any time prior to the Closing Date, if Buyer shall have breached any of its representations, warranties or obligations hereunder
to an extent that would cause the conditions set forth in
Sections 5.2(b)
or
(c)
not to be satisfied and such breach
shall not have been cured within 20 Business Days of receipt by Buyer of written notice of such breach (provided that the right
to terminate this Agreement by Seller shall not be available to Seller if Seller is at that time in material breach of this Agreement);
(e) by Seller or Buyer, if consummation
of the Transactions would violate any non-appealable final order, decree, ruling or judgment of any court or Governmental Authority
having competent jurisdiction;
(f) by either Seller or Buyer if the
Seller Stockholder Approval shall not have been obtained at the Seller Stockholders Meeting or any postponement or adjournment
thereof;
(g) by Seller, if
at any time prior to receipt of the Seller Stockholder Approval, it concurrently enters into a definitive agreement providing
for a Superior Acquisition Proposal in accordance with
Section 6.2(e)
; provided, however, that prior thereto or concurrently
therewith Seller shall have paid or caused to be paid the Termination Fee to Buyer in accordance with
Section 8.2
of this
Agreement (and such termination of this Agreement by Seller shall not take effect unless and until the Termination Fee shall have
been so paid); or
(h) by Buyer, if since the date hereof
any event has occurred or failed to occur, the result of which constitutes a Material Adverse Effect.
8.2
Effect of
Termination
. If this Agreement is terminated pursuant to
Section 8.1
, this Agreement shall thereafter become void
and have no further force and effect and all further obligations of the Parties under this Agreement shall terminate without further
Liability of the Parties, except that (a) the obligations of the Parties under
Section 6.6(a)
and under the Confidentiality
Agreement shall survive such termination and remain in full force and effect, (b) the provisions of this
Section 8.2
,
Section 8.3
and
Article IX
shall survive such termination and remain in full force and effect, and (c) such
termination shall not constitute a waiver by either Party of any claim it may have for damages caused by reason of, or relieve
either Party from Liability for, any breach of this Agreement prior to its termination under
Section 8.1
. Notwithstanding
the foregoing, nothing set forth in this
Section 8.2
shall be deemed to modify, affect or diminish either Party’s
right to terminate this Agreement pursuant to
Section 8.1
.
8.3
Expenses and
Termination Fee
.
(a) In the event
that Buyer shall terminate this Agreement pursuant to Section 8.1(c)(ii) or (iii), or in the event that Seller shall terminate
this Agreement pursuant to
Section 8.1(g)
, Seller shall pay the Termination Fee to Buyer and reimburse Buyer’s Transaction
Expenses.
(b) In the event
that (A) either (i) Buyer shall terminate this Agreement pursuant to
Section 8.3(c)(i)
, or
(ii)
Buyer or Seller
shall terminate this Agreement pursuant to
Section 8.1(e)
or
(f)
, (B) prior to the time of such termination there
shall have been an Acquisition Proposal with respect to Seller, and (C) within twelve months after such termination of this Agreement,
either (i) a definitive agreement is entered into by Seller with respect to an Acquisition Proposal or (ii) an Acquisition Proposal
is consummated, Seller shall pay the Termination Fee to Buyer and reimburse Buyer’s Transaction Expenses.
(c) In the event
that either Buyer or Seller shall terminate this Agreement pursuant to
Section 8.1(f)
, and no Acquisition Proposal has
been made prior thereto, Seller shall reimburse Buyer’s Transaction Expenses.
(d) In the event
that Seller must pay a Termination Fee to Buyer or reimburse Buyer’s Transaction Expenses, Seller shall pay such amounts:
(i) within ten (10) days after the date of termination, in the event that the Termination Fee and Buyer’s Transaction Expenses
are due pursuant to
Section 8.3(b)
, (ii) at the earlier of the time that a definitive agreement is entered into by Seller
or the time the Acquisition Proposal is consummated, in the event that the Termination Fee and Buyer’s Transaction Expenses
are due pursuant to
Section 8.3(a)
, or (iii) within five (5) days after the date of termination, in the event that the
Buyer’s Transaction Expenses are due pursuant to
Section 8.3(c)
.
(e) In the event
that Seller fails to pay either the Termination Fee or the Buyer’s Transaction Expenses or both when due under this
Section
8.3
and Buyer commences a suit which results in a judgment against Seller for such overdue amount, then (i) Seller shall reimburse
Buyer for all costs and expenses (including disbursements and reasonable fees of counsel) incurred in connection with such suit
and the collection of such overdue amount and (ii) Seller shall pay to Buyer interest on such overdue amount (for the period commencing
as of the date such overdue amount was originally required to be paid and ending on the date such overdue amount is actually paid
to Buyer in full) at the rate of 7% per annum.
ARTICLE IX
MISCELLANEOUS
9.1
Expenses
.
Except as otherwise specifically set forth in this Agreement or on
Schedule 9.1
, Buyer shall pay all costs and expenses
incurred by it on its behalf, and Seller shall pay all costs and expenses incurred by it on its behalf, in connection with this
Agreement and the Transactions, including fees and expenses of their respective financial consultants, accountants and legal counsel.
Seller shall pay the amount of any Covered Buyer Expenses incurred during the period from the date of this Agreement through the
six month anniversary of the Closing Date to the extent they exceed, in the aggregate, the Covered Buyer Expense Deductible; provided
that any Covered Buyer Expenses incurred as of the Closing Date that result in a reduction of the Escrow Amount pursuant to
Section
1.5(b)
shall be deemed paid by virtue of such Escrow Amount reduction. Expenses incurred in connection with preparing, filing,
printing and distributing the Proxy Statement shall be expenses of Seller.
9.2
Notices
.
Any notice, request, instruction or other document to be given hereunder will be sent in writing and delivered personally, sent
by reputable, overnight courier service (charges prepaid), sent by registered or certified mail, postage prepaid, or by facsimile,
according to the instructions set forth below. Such notices will be deemed given: at the time delivered by hand, if personally
delivered; one Business Day after being sent, if sent by reputable, overnight courier service; at the time received, if sent by
registered or certified mail; and at the time when confirmation of successful transmission is received by the sending facsimile
machine, if sent by facsimile.
If to Seller:
Mediabistro Inc.
475 Park Avenue South
New York, NY 10016
Attn: Alan M. Meckler
Fax (203) 831-0233
With a copy (which shall not constitute notice) to:
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail
Suite 300
Raleigh, North Carolina 27607
Attn: David L. Wilke, Esq.
Fax: ( 919) 781-4865
If to Buyer or Buyer Parent:
PGM-MB Holdings LLC
c/o Prometheus Global Media, LLC
770 Broadway, 15th Floor
New York, NY 10003
Attention: Jeffrey Wilbur
Fax: (212) 493-4266
With a copy (which shall not constitute notice) to:
Prometheus Legal Department
330 Madison Ave
New York, NY 10017
Fax: (212) 644-8107
and
Jenner & Block LLP
919 Third Avenue
New York, NY 10022
Attention: Tobias L. Knapp
Fax: (212) 891-1699
or to such other address or to the attention of such other party
that the recipient Party has specified by prior written notice to the sending Party in accordance with the proceeding.
9.3
Counterparts
.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
9.4
Entire Agreement
.
This Agreement, the Disclosure Schedules, the Exhibits hereto and the Ancillary Agreements constitute the entire agreement of
the Parties with respect to the subject matter hereof and thereof and supersede all prior negotiations, agreements and understandings,
whether written or oral, of the Parties.
9.5
Interpretation
.
Words used in this Agreement in the singular number shall include the plural, and vice versa, unless the context requires otherwise.
Words of gender used in this Agreement may be read as masculine, feminine or neuter as the context may require. Unless the context
clearly requires otherwise, the terms “this Agreement,” “hereto,” “herein,” “hereby,”
“hereunder,” “hereof,” “hereafter” and similar expressions refer to this Agreement (including
the Disclosure Schedules and Exhibits hereto) in its entirety and not to any particular provision or portion of this Agreement.
When a reference is made to Sections, Schedules or Exhibits, such reference shall be to a Section of, or a Disclosure Schedules
to or an Exhibit to, this Agreement, unless otherwise indicated. Whenever the words “include,” “includes”
or “including” are used herein, they shall be deemed to be followed by the words “without limitation.”
If any period of days referred to in this Agreement shall end on a day that is not a Business Day, then the expiration of such
period shall be automatically extended until the end of the first succeeding Business Day.
9.6
Headings
.
The headings contained in this Agreement and in the Disclosure Schedules and Exhibits hereto are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
9.7
Assignment;
Amendment
. This Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns
of the Parties. Neither this Agreement nor any of the rights, interests or obligations provided by this Agreement may be assigned
by either Party or Buyer Parent (whether by operation of Law or otherwise) without the prior written consent of (a) Buyer, in
the case of a proposed assignment by Seller, and (b) Seller, in the case of a proposed assignment by Buyer or Buyer Parent;
provided,
however
, that Buyer shall be permitted, upon notice to Seller but without the consent of Seller, to assign any or all of its
rights and interests (but not its obligations) hereunder and under any Ancillary Agreement to one or more of Buyer’s Affiliates.
This Agreement may be amended only by a written instrument, duly executed and delivered by each of Seller and Buyer.
9.8
Governing
Law
.
(a) This Agreement, the Ancillary Agreements
and all other agreements, documents and instruments delivered pursuant hereto and incorporated herein, unless otherwise expressly
provided therein, shall be governed by, and construed in accordance with, the substantive Laws of the State of Delaware applicable
to agreements made and to be performed entirely within such State, without reference to the conflicts of laws rules of such State.
(b) Each of the Parties (including for
this purpose, Buyer Parent) irrevocably consents to the exclusive jurisdiction and venue of any state court located within New
Castle County, State of Delaware in connection with any matter based upon or arising out of this Agreement or the Transactions,
agrees that process may be served upon them in any manner authorized by the laws of the State of Delaware for such persons and
waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and process.
Each Party (including for this purpose, Buyer Parent) hereby agrees not to commence any legal proceedings relating to or arising
out of this Agreement or the Transactions in any jurisdiction or courts other than as provided herein.
9.9
No Third-Party
Rights
. This Agreement is not intended, and shall not be construed, to create any rights in any parties other than Buyer and
Seller, their respective successors and permitted assigns and the Indemnified Persons, and no other Person shall assert any rights
as third-party beneficiary hereunder.
9.10
Non-Waiver
.
At any time prior to the Closing, either Party may extend the time for performance of or waive compliance with any of the covenants
or agreements of the other Party, and may waive any breach of the representations or warranties of such other Party. No agreement
extending or waiving any provision of this Agreement will be valid or binding unless it is in writing and is executed and delivered
by or on behalf of the Party against which it is sought to be enforced. The failure in any one or more instances of a Party hereto
to insist upon performance of any of the terms, covenants or conditions of this Agreement, to exercise any right or privilege
in this Agreement conferred, or the waiver by said Party of any breach of any of the terms, covenants or conditions of this Agreement
shall not be construed as a subsequent waiver of any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver had occurred.
9.11
Severability
.
If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions is not affected in any manner adverse to any Party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith
to modify this Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner to
the end that the Transactions are fulfilled to the extent possible.
9.12
Incorporation
of Exhibits and Schedules
. The Exhibits and Disclosure Schedules are incorporated into this Agreement and shall be deemed
a part hereof as if set forth herein in full. In the event of any conflict between the provisions of this Agreement and any such
Exhibit or Disclosure Schedules, the provisions of this Agreement shall control.
9.13
Remedies
.
Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any
one remedy will not preclude the exercise of any other remedy.
9.14
Specific
Performance
. Each of the Parties (including for this purpose, Buyer Parent) acknowledges and agrees that any other Party would
be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each Party (including for this purpose, Buyer Parent) agrees that any other Party,
without any requirement to post a bond or other security, shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having jurisdiction over the Parties (including for this purpose,
Buyer Parent) and the matter (subject to the provisions set forth in
Section 9.8
), in addition to any other remedy to which
they may be entitled, at law or in equity.
9.15
WAIVER OF
JURY TRIAL
. EACH OF BUYER, BUYER PARENT AND SELLER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF BUYER, BUYER PARENT OR SELLER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
OF THIS AGREEMENT.
ARTICLE X
BUYER PARENT GUARANTEE
10.1
Buyer Parent
Guarantee.
Buyer Parent, intending to be legally bound, hereby irrevocably guarantees (a) prior to and at the Closing, the
full and punctual payment and performance of all obligations of Buyer (or any transferee of Buyer pursuant to
Section 9.7
)
set forth herein , including without limitation the payment by Buyer of the Initial Purchase Payment, (b) from and after the Closing,
Buyer’s payment, performance or other discharge of the Assumed Liabilities and (c) from and after the Closing, Buyer’s
payment of the amounts payable to Seller pursuant to
Appendix B
of the Transition Services Agreement (collectively, the
“
Guaranteed Obligations
”). Buyer Parent acknowledges and agrees that the obligations of Buyer Parent under
his
Section 10.1
shall be unconditional and absolute and no release or extinguishments of Buyer’s (or any Transferee’s)
obligations or Liabilities (other than in accordance with the terms of this Agreement), whether by decree in any bankruptcy proceeding
or otherwise, shall affect the continuing validity and enforceability of this guarantee; provided, however, that Buyer Parent
shall be entitled to assert as a defense to any claim for payment or performance of any Guaranteed Obligations any and all of
the rights, defenses, counterclaims, exculpations, set-offs, indemnities and limitations on liability to which Buyer (or any transferee
of Buyer pursuant to
Section 9.7
) may be entitled to assert under this Agreement or the Transition Services Agreement,
including that (i) such Guaranteed Obligations are not currently due under the terms of this Agreement, or (ii) that such Guaranteed
Obligations have previously been paid or performed in full. The foregoing guarantee shall remain in full force and effect until
the earlier of (x) the termination of this Agreement in accordance with
Article VIII
and (y) the date on which each Guaranteed
Obligation has been completely performed and/or paid in full, as applicable. In any Proceeding to enforce rights under this
Section
10.1
, the prevailing party will be entitled to recover its reasonable attorneys fees.
10.2
Buyer Parent
Representations and Warranties
. Buyer Parent hereby represents and warrants to Seller, as of the date hereof and as of the
Closing Date:
(a) Buyer Parent is a limited liability
company duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite limited
liability company power and authority to enter into and perform its obligations under this Agreement. Buyer Parent is duly qualified
to do business as a foreign limited liability company in each jurisdiction in which the nature of its business as now being conducted
by it or the property owned or leased by it makes such qualification necessary.
(b) This Agreement has been duly authorized,
executed and delivered by Buyer Parent, and this Agreement is the legal, valid and binding obligation of Buyer Parent, enforceable
against Buyer Parent in accordance with its terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar
Laws affecting the enforcement of creditors’ rights generally. All necessary consents, approvals and authorizations have
been provided by the manager of Buyer Parent in connection with this Agreement and the Transactions.
(c) Neither the execution and delivery
of this Agreement nor the consummation of the Transactions will (a) violate, conflict with or result in a breach of or constitute
a default under any provision of Buyer Parent’s certificate of formation or operating agreement, (b) violate, conflict
with or result in a breach of or constitute a default under any judgment, order, decree, rule or regulation of any court or Governmental
Authority to which Buyer Parent or its business is subject, or (c) violate, conflict with or result in a breach of any Law.
(d) Buyer Parent has, as of the date
of this Agreement, and will have on the Closing Date, sufficient immediately available funds to guarantee, in cash, the payment
by Buyer of the Initial Purchase Payment.
(e)
Buyer Parent
has delivered to Seller
the unaudited balance sheet of Buyer Parent as of April 30, 2014. Such balance sheet was prepared
in accordance with GAAP applied on a basis consistent throughout the period indicated (except as otherwise stated in such balance
sheet) and fairly presents in all material respects the assets and liabilities of Buyer Parent as of April 30, 2014.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have
duly executed and delivered this Agreement as of the date first written above.
SELLER:
Medibistro Inc.
By:
/s/ Alan Meckler
Name: Alan Meckler
Title: Chief Executive Officer
BUYER:
PGM-MB Holdings LLC
By:
/s/ Jeffrey
Wilbur
Name: Jeffrey Wilbur
Title: Chief Financial Officer
BUYER PARENT (solely with respect
to
Sections 6.5
,
6.6
,
6.8
and
6.18
the applicable pr*ovisions of
Article IX
, and
Article
X
):
Prometheus Global Media, LLC
By:
/s/ Jeffrey
Wilbur
Name: Jeffrey Wilbur
Title: Chief Financial Officer
EXHIBIT A
As used in the Agreement,
the following terms shall have the following meanings:
“
Acquired Assets
”
has the meaning set forth in
Section 1.1
.
“
Acquisition
Proposal
” means any bona fide written proposal, made by a party to acquire beneficial ownership (as defined under Rule
13(d) promulgated under the Exchange Act) of all or a material portion of the assets of, or any material equity interest in, Seller
pursuant to a merger, consolidation or other business combination, sale of shares of capital stock, sale of assets, licensing transaction,
tender or exchange offer or similar transaction involving Seller, including any single or multi-step transaction or series of related
transactions that is structured to permit such party to acquire beneficial ownership of any material portion of the assets of,
or any material equity interest in, Seller. For purposes of the definition of Acquisition Proposal, a material portion of the assets
of, or material equity interest in, Seller means greater than 20% of the assets of, or equity interest in, Seller.
“
Affiliate
”
means, with respect to any Person, any other Person which directly, or indirectly through one or more intermediaries, Controls,
is Controlled by, or is under common Control with, the first Person. “
Control
” means the right to exercise,
directly or indirectly, 25% or more of the voting rights attributable to the stock of, or other ownership interest in, any entity,
or the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such
entity. For the avoidance of doubt, Alan Meckler is deemed an “Affiliate” of Seller for purposes of this Agreement.
“
Agreement
”
has the meaning set forth in the preamble.
“
Allocation
Statement
” has the meaning set forth in
Section 1.6(a)
.
“
Ancillary Agreement(s)
”
means (a) the Bill of Sale and Assignment and Assumption Agreement, (b) the IP Assignments (c) the Escrow Agreement, (d) the Transition
Services Agreement, (e) the Noncompete Agreement and (f) any and all other documents and agreements delivered in connection with
the Transactions.
“
Apportioned
Obligations
” means (a) any Tax (including any additional Tax determined subsequent to the Closing Date other than additional
Tax resulting from a breach by Buyer of Section 6.13(e)) relating to any Acquired Asset, and (b) all rents, royalties, utilities
and other periodic charges with respect to the Acquired Assets, that are due or become due without acceleration for any Straddle
Period or Pre-Closing Tax Period.
“
Approved Indemnification
Claim
” has the meaning set forth in
Section 7.5(b)
.
“
Acquired Assets
”
has the meaning set forth in
Section 1.1
.
“
Applicable
Period
” has the meaning set forth in
Section 6.2(b)
.
“
Assets
”
of any Person means all of such Person’s right, title and interest in and to all assets and properties of every kind, nature,
character and description (whether real, personal or mixed, whether tangible or intangible and wherever situated), including Contracts
and Intellectual Property Rights.
“
Assumed Liabilities
”
has the meaning set forth in
Section 1.3
.
“
Bill of Sale
and Assignment and Assumption Agreement
” has the meaning set forth in
Section 2.2(a)
.
“
Business
”
has the meaning set forth in the Recitals.
“
Business Day
”
means any day, other than a Saturday, Sunday or a day on which banks located in New York, New York shall not be authorized or required
by Law to transact business.
“
Business IP
”
means all Intellectual Property Rights owned (whether exclusively, jointly with another Person, or otherwise) by Seller (or any
of Seller’s Subsidiaries), which are used, held or intended for use in or related to the operation of the Business as currently
conducted or currently contemplated to be conducted, including all Intellectual Property Rights in or pertaining to the Business
Products.
“
Business IP
Contract
” means any Contract to which any Seller Party is a party or by which any Seller Party is bound, or to which
any Business IP is subject, which contains any assignment or license of, or covenant not to assert or enforce, any Intellectual
Property Right or that relates to any Business IP.
“
Business Privacy
Policy
” means each privacy policy of a Seller Party relating to the Business in effect at any time within the two-year
period preceding the Closing Date, including any policy relating to (i) the privacy of users of the Business Products or other
users of the Business or of any of the Websites or (ii) the collection, storage, disclosure and transfer of any User Data
or Personal Data.
“
Business Product
”
means any product or service that is (i) marketed, distributed, licensed or sold by or on behalf of a Seller Party in connection
with the Business as presently conducted or (ii) currently under development by or on behalf of a Seller Party and intended
by Seller to be marketed, distributed, licensed or sold by or on behalf of a Seller Party in connection with the Business as presently
conducted.
“
Business Trademarks
”
has the meaning set forth in
Section 3.14(g)(ii)
of this Agreement.
“
Buyer
”
has the meaning set forth in the preamble.
“
Buyer Parent
”
has the meaning set forth in the preamble.
“
Buyer Benefit
Plans
” has the meaning set forth in
Section 6.10(a)
.
“
Buyer Indemnified
Parties
” has the meaning set forth in
Section 7.2(a)
.
“
Buyer’s
Transaction Expenses
” means all of the fees and expenses incurred by Buyer or its Affiliates in connection with the negotiation,
documentation and consummation of the Transactions, including all fees, expenses, disbursements and other similar amounts paid
to attorneys, financial advisors or accountants, provided that in no event shall the Buyer’s Transaction Expenses exceed
$320,000 in the aggregate for purposes of Seller’s reimbursement obligations set forth in
Section 8.3
.
“
Cap
”
has the meaning set forth in
Section 7.2(b)
.
“
Change in Recommendation
”
has the meaning set forth in
Section 6.2(c)
.
“
Closing
”
has the meaning set forth in
Section 2.1
.
“
Closing Consents
”
means those consents, approvals, authorizations, orders, filings, registrations and qualifications set forth on
Schedule 3.3
which are designated by an asterisk.
“
Closing Date
”
has the meaning set forth in
Section 2.1
.
“
Closing Payment
”
has the meaning set forth in
Section 1.5(a)
.
“
Copyrights
”
means all works of authorship, and all copyrights therein.
“
Covered Buyer
Expenses
” means any out of pocket losses, Liabilities, damages, costs, interest, awards, judgments, penalties and expenses,
including reasonable and documented attorneys’ and accountants’ fees and expenses incurred by any Buyer Indemnified
Parties as a result of a Covered Expense Event.
“
Covered Buyer
Expense Deductible
” means the first One Hundred Thousand Dollars ($100,000) of Covered Buyer Expenses.
“
Covered Expense
Event
” has the meaning provided in
Schedule 9.1
.
“
Databases
” means
all proprietary databases and other data sets and compilations, whether written, electronic or in another form, and all documentation
relating to the foregoing, including manuals, memoranda and records.
“
COBRA
”
means the continuation coverage requirements of
Section 601
et
seq
. of ERISA and Section 4980B of
the Code.
“
Code
”
means the Internal Revenue Code of 1986, as amended, together with all rules and regulations promulgated thereunder.
“
Competing Business
”
has the meaning set forth in
Section 6.6(b)
.
“
Confidentiality
Agreement
” has the meaning set forth in
Section 6.6(a)(i)
.
“
Contracts
”
has the meaning set forth in
Section 1.1(c)
.
“
Deductible
Amount
” has the meaning set forth in
Section 7.2(b)
.
“
Disclosure
Schedules
” means the disclosure schedules accompanying this Agreement.
“
Dispute Notice
”
has the meaning set forth in
Section 7.5(b)
.
“
Dispute Period
”
has the meaning set forth in
Section 7.5(b)
.
“
Employee
”
has the meaning set forth in
Section 6.9(b)
.
“
Employee Pension
Benefit Plan
” has the meaning set forth in Section 3(2) of ERISA.
“
Employee Plans
”
has the meaning set forth in
Section 3.17(a)
.
“
Employee Welfare
Benefit Plan
” has the meaning set forth in Section 3(1) of ERISA.
“
Encumbrance
”
means any security interest, pledge, hypothecation, mortgage, lien, lease, license, option, exception, reservation, limitation,
impairment, imperfection of title, condition or restriction of any nature or similar encumbrance.
“
End Date
”
has the meaning set forth in
Section 8.1(b)
.
“
Environmental
Law
” means any Law
regulating, relating to, or imposing Liability or standards of conduct
concerning, pollution, the preservation of the environment or natural resources, or the promotion of worker health and safety,
including any Law relating to Hazardous Materials. Without limiting the generality of the foregoing, the term encompasses each
of the following statutes and the regulations promulgated thereunder, and any similar Law, each as amended: (a) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, (b) the Solid Waste Disposal Act, (c) the Hazardous Materials Transportation
Act, (d) the Toxic Substances Control Act, (e) the Clean Water Act, (f) the Clean Air Act, (g) the Safe Drinking Water Act, (h)
the National Environmental Policy Act of 1969, (i) the Superfund Amendments and Reauthorization Act of 1986, (j) the Emergency
Planning and Community Right to Know Act, (k) the Federal Insecticide, Fungicide and Rodenticide Act, (l) the Oil Pollution Act,
(m) the Uranium Mill Tailings Radiation Control Act, (n) the Atomic Energy Act, and (o) the Occupational Safety and Health Act
of 1970, and all state and local counterpart or related Law.
“
Equipment
”
has the meaning set forth in
Section 3.9
.
“
ERISA
”
means the Employee Retirement Income Security Act of 1974, as amended.
“
Escrow Agent
”
has the meaning set forth in
Section 1.5(b)
.
“
Escrow Agreement
”
has the meaning set forth in
Section 1.5(b)
.
“
Escrow Amount
”
has the meaning set forth in
Section 1.5(b)
.
“
Escrow Fund
”
has the meaning set forth in
Section 1.5(b)
.
“
Exchange Act
”
means the Securities Exchange Act of 1934, as amended.
“
Fairness Opinion
”
has the meaning set forth in
Section 3.26
.
“
FCPA
”
has the meaning set forth in
Section 3.22(c)
.
“
Financial Statements
”
has the meaning set forth in
Section 3.4(b)
.
“
Fundamental
Representations
” has the meaning set forth in
Section 7.1
.
“
GAAP
”
means United States generally accepted accounting principles in effect from time to time as consistently applied.
“
Governmental
Authority
”
means any government or governmental or regulatory entity, body thereof, or political
subdivision thereof, whether federal, state, local or foreign, or any agency, or authority thereof or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions or pertaining to government, including any department,
board, commission, court or tribunal.
“
Guaranteed
Obligations
” has the meaning set forth in
Section 10.1
.
“
Hazardous Materials
”
means
any element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance
(a) that is defined, determined or identified as hazardous or toxic (or by any similar term) under any Environmental Law or (b)
the presence of which may give rise to Liability under any Environmental Law; without limiting the generality of the foregoing,
Hazardous Materials include (i) “hazardous substances” as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, and regulations promulgated thereunder, each as amended, (ii) “extremely hazardous substance”
as defined in the Emergency Planning and Community Right to Know Act and regulations promulgated thereunder, each as amended, (iii)
“hazardous waste” as defined in the Solid Waste Disposal Act and regulations promulgated thereunder, each as amended,
(iv) “hazardous materials” as defined in the Hazardous Materials Transportation Act and the regulations promulgated
thereunder, each as amended, (v) “chemical substance or mixture” as defined in the Toxic Substances Control Act and
regulations promulgated thereunder, each as amended, (vi) petroleum and petroleum products and byproducts, (vii) asbestos, (viii)
radioactive materials, (ix) mold, and (x) lead.
“
Indebtedness
”
means the aggregate amount of all borrowings and indebtedness in the nature of borrowings (including financing, acceptance credits,
discounting or similar facilities, finance or capital leases (but not operating leases), bonds, debentures, notes, sale and lease
back arrangements, obligations incurred in connection with the acquisition of, or as the deferred purchase price for, property,
assets or businesses, overdrafts, net obligations under any accounts receivable financing or securitization transactions, or net
obligations arising from hedging arrangements in respect of interest rates, currencies or raw materials or other commodities, whether
or not accounted for on the balance sheet), together with accrued interest on such amounts and all fees, expenses and premiums
payable in connection with the repayment or settlement of the foregoing, in each case calculated in accordance with GAAP but excluding
(i) office equipment leases, and (ii) open or blanket purchase orders. For the avoidance of doubt, “Indebtedness”
shall include all amounts Seller owes to Alan Meckler.
“
Indemnified
Party
” has the meaning set forth in
Section 7.5(a)
.
“
Indemnifying
Party
” has the meaning set forth in
Section 7.5(a)
.
“
Initial Purchase
Price
” has the meaning set forth in
Section 1.5(a)
.
“
Intellectual
Property Rights
” means any and all intellectual property rights and other similar proprietary rights in any jurisdiction,
whether registered or unregistered, whether owned or held for use under license, including all rights and interests pertaining
to or deriving from: (a) Patents, inventions, invention disclosures, discoveries and improvements, whether or not patentable; (b)
Software; (c) Copyrights; (d) Trade Secrets; (e) Trademarks; (f) Databases; (g) Internet Properties; (h) publicity rights; and
(i) moral rights; including in each case of (a) through (i) any registrations of, applications to register, and renewals and extensions,
continuations, continuations-in-part, counterparts, divisions, or reissues of, and applications for, any of the foregoing with
or by any governmental authority in any jurisdiction.
“
Internet Properties
”
means all rights to uniform resource locators and domain names.
“
Inventory
”
means all inventory and spare parts, whether located at the Leased Real Property or in transit, supplies, storehouse stocks, raw
materials, work in process, scrap, containers and spare parts, in each case used, held or intended for use in or related to the
conduct of the Business.
“
IP Assignments
”
has the meaning set forth in
Section 2.2(b)
.
“
Knowledge
”
with respect to Seller means any fact, matter or circumstance of which Alan Meckler, Thomas Kitt or Mark Scarinzi had actual knowledge
after due inquiry.
“
Law
”
has the meaning set forth in
Section 3.3
.
“
Leased Real
Property
” means all real property the subject of the Leases.
“
Leases
”
has the meaning set forth in
Section 3.6(a)
.
“
Liability
”
means any debt, liability, guarantee, assurance, commitment or obligation, whether known or unknown, fixed, absolute or contingent,
matured or unmatured, accrued or unaccrued, liquidated or unliquidated, asserted or unasserted, due or to become due, whenever
or however arising (including whether arising out of any Contract or tort based on negligence or strict liability) and whether
or not the same would be required by GAAP to be stated in financial statements or disclosed in the notes thereto.
“
Licenses and
Permits
” has the meaning set forth in
Section 3.12
.
“
Lien
”
means any security interest, lien, encumbrance, mortgage, pledge, equity, charge, assessment, easement, covenant, restriction,
reservation, defect in title, encroachment, license, ownership interest of another Person and other burden.
“
Losses
”
has the meaning set forth in
Section 7.2(a)
.
“
Material Adverse
Effect
” means any circumstance, change, event, development or effect that is, individually or in the aggregate, material
and adverse to (i) the Business, the Acquired Assets, or the Business’ liabilities, operations or financial performance or
(ii) the ability of Seller to consummate the Transactions; provided, however, that none of the following shall be deemed to constitute,
or be taken into account in determining whether there has been, a Material Adverse Effect: (a) changes in conditions in the U.S.
or global economy or capital or financial markets generally, including changes in interest or exchange rates, (b) changes after
the date hereof in any applicable Law or in GAAP, (c) changes resulting from the announcement or pendency of this Agreement or
the Transactions, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, vendors or
employees, (d) acts of war, armed hostilities, sabotage or terrorism occurring after the date of this Agreement, or any escalation
or worsening of any such acts of war, armed hostilities, sabotage or terrorism threatened or underway as of the date of this Agreement,
(e) acts of God such as lightning, earthquakes, floods, storms, hurricanes, freezes, cyclones, tidal waves, tornadoes, unusual
weather conditions, epidemics, or plagues, (f) any failure by Seller to meet any internal or external projections, forecasts or
estimates of revenues or earnings, in and of itself, for any period ending on or after the date hereof; provided, however, that
the exceptions in this clause (f) shall not apply to facts and circumstances underlying any such failure, (g) any action by Buyer
or any of its Affiliates or the omission of an action that was required to be taken by Buyer or any of its Affiliates, (h) changes
after the date hereof in the industry in which the Business is operated or (i) any action taken by Seller or its Affiliates at
the request or with the consent of Buyer (but only if with respect to the foregoing effects in (a), (b), (d), (e) or (h), the Business
is not disproportionately affected thereby relative to other Persons in the industry in which Seller and its Subsidiaries are engaged).
For the avoidance of doubt, any material adverse effect solely and exclusively on any business or division of Seller other than
the Business shall not be taken into account in determining whether a Material Adverse Effect exists.
“
Material Contract
”
has the meaning set forth in
Section 3.7(l)
.
“
MB Sub
”
has the meaning set forth in
Section 2.2(j)
.
“
Multiemployer
Plan
” means a multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA.
“
Noncompete
Agreement
” has the meaning set forth in
Section 2.2(l)
.
“
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 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.
“
Ordinary Course
of Business
” means, with respect to the operation by the Seller Parties of the Business, the operation thereof in the
ordinary course of business consistent with prior practices with respect to the operation thereof.
“
Parties
”
means Buyer and Seller.
“
Party
”
means Buyer or Seller.
“
Patents
”
means
all patents and patent applications.
“
Permitted Liens
”
has the meaning set forth in
Section 3.10
.
“
Person
”
means any individual, corporation, limited liability company, partnership, trust or other entity or organization.
“
Personal Data
”
means a natural person’s name, street address, telephone number, e-mail address, photograph, social security number, driver’s
license number, passport number, or customer or account number, or any other piece of information that allows the identification
of a natural person.
“
Policies
”
has the meaning set forth in
Section 3.23
.
“
Pre-Closing
Tax Period
” has the meaning set forth in
Section 6.13(a)
.
“
Proceeding
”
means any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate
proceeding and any informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation commenced,
brought, conducted or heard by or before, or that otherwise has involved or may involve, any Governmental Authority or any arbitrator
or arbitration panel.
“
Proxy Statement
”
means a definitive form proxy statement relating to Seller Stockholders Meeting to be held in connection with the Transactions.
“
Purchase Price
”
means the Initial Purchase Price, as adjusted pursuant to
Article VII
.
“
Recommendation
”
means a recommendation of the Board of Directors of Seller that the stockholders of Seller authorize the Transactions.
“
Registered
Business IP
” means all Business IP that is Registered IP.
“
Registered
IP
” means (a) all Intellectual Property Rights that are registered, filed, or issued under the authority of any Governmental
Authority, including all Patents, registered Copyrights and registered Trademarks, (b) all Internet Properties and (c) all applications
for any of the foregoing.
“
Release
”
means any releasing, spilling, emitting, leaking, pumping, pouring, emptying, injecting, depositing, disposing, discharging, dispersing,
leaching, dumping, storing, escaping, discarding, burying, abandoning or migrating of Hazardous Materials into the environment.
“
Retained Assets
”
has the meaning set forth in
Section 1.2
.
“
Retained Businesses
”
means the meaning set forth in the Recitals.
“
Retained Liabilities
”
has the meaning set forth in
Section 1.4
.
“
SEC
”
means the Securities and Exchange Commission.
“
Securities
Act
” means the Securities Act of 1933, as amended.
“
Seller
”
has the meaning set forth in the preamble.
“
Seller Indemnified
Parties
” has the meaning set forth in
Section 7.3
.
“
Seller Parties
”
means Seller and the Seller Subsidiaries.
“
Seller SEC
Documents
” has the meaning set forth in
Section 3.4(a)
.
“
Seller Stockholder
Approval
” means the affirmative vote of the holders of at least a majority of the votes of the outstanding shares of
Seller’s equity stock entitled to vote thereon to approve the Transactions.
“
Seller Stockholders
Meeting
” has the meaning set forth in
Section 6.3(c)
.
“
Seller Subsidiaries
”
means the Subsidiaries of Seller.
“
Seller Transaction
Expenses
” means (i) all of the fees and expenses incurred by Seller or its Affiliates in connection with the negotiation,
documentation and consummation of the Transactions, including all fees, expenses, disbursements and other similar amounts paid
to attorneys, financial advisors or accountants, (ii) all payments required to obtain third party consents in connection with the
consummation of the Transactions, (iii) all deferred compensation, severance, stock appreciation, phantom stock or similar payments
due by Seller to any Person and (iv) all stay, change of control, severance, bonus or similar payments due by Seller to any Person
and other accelerations or increases in rights or benefits of any Seller’s employees under any Employee Plan which obligation,
in each case, either (x) arises at or prior to the Closing or (y) is payable or becomes due in whole or in part as a result of
the consummation of the Transactions, including all Taxes that are payable by Seller in connection with or as a result of the payment
of such Liability.
“
Software
”
means all software of any type (including firmware), including all related databases, data collections and data files, algorithms,
application programming interfaces, user interfaces, source code, object code, executable code, and specifications and documentation,
and all rights therein.
“
Straddle Period
”
means any taxable period beginning on or before the Closing Date and ending after the Closing Date.
“
Subsidiary
”
means, with respect to any Person, any and all corporations, partnerships, limited liability companies, joint ventures, associations
and other entities controlled by such Person.
“
Subscription
Agreement
” means any Contract or license between a Subscriber and Seller pursuant to which the Subscriber uses the services
provided by the Business.
“
Superior Acquisition
Proposal
” means any unsolicited Acquisition Proposal made by a third party for consideration to Seller’s stockholders
or Board of Directors providing for the payment or exchange of cash and/or securities for a material equity interest in, or a material
portion of the assets (including the Acquired Assets) of, Seller, which the Board of Directors of Seller, acting in its good faith
judgment in accordance with
Section 6.2(h)
, determines (a) is superior to Seller’s stockholders from a financial point
of view to the transactions contemplated by this Agreement and (b) is reasonably likely to be consummated on its terms, taking
into account all legal, financial, regulatory and other aspects of the proposal.
“
Tax
”
and “
Taxes
” means a tax or taxes of any kind or nature, or however denominated, including liability for federal,
state, canton, provincial, local or foreign sales, use, transfer, registration, business and occupation, value added, excise, severance,
stamp, premium, windfall profit, customs, duties, real property, personal property, capital stock, social security, unemployment,
workers’ compensation, health insurance, disability, payroll, license, employee or other withholding, income (which includes
any income, alternative minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth or gross receipts
taxes) or other tax, of any kind whatsoever, imposed by a Tax Authority, including any estimated tax, interest, penalties, fines
or additions to tax or additional amounts in respect to the foregoing, including any transferee or secondary liability for a tax
and any liability assumed by agreement or arising as a result of being or ceasing to be a member of any affiliated group, or being
included or required to be included in any Tax Return relating thereto.
“
Tax Authority
”
means any Governmental Authority having the power to regulate, impose or collect Taxes, including the Internal Revenue Service
and any state Department of Revenue.
“
Tax Returns
”
means, with respect to any Tax, any information return for such Tax, and any return, report, statement, declaration, claim for
refund or document filed or required to be filed under Law for such Tax, and any amendment thereto.
“
Termination
Fee
” means $80,000.
“
Third Party
”
means any Person or group other than a Party hereto.
“
Third Party
Claim
” has the meaning set forth in
Section 7.5(a)
.
“
Trademarks
”
means all registered, unregistered and common law trademarks, trade names, service marks, certification marks, service names, brands,
trade dress and logos, trademark and service mark registrations and applications, and the goodwill associated therewith.
“
Trade Secrets
”
means all trade secrets, business, technical and know-how information, non-public information and confidential information and
rights to limit the use or disclosure thereof by any Person.
“
Transactions
”
means the transactions contemplated by this Agreement and the Ancillary Agreements.
“
Transferred
Employees
” has the meaning set forth in
Section 6.9(b)
.
“
Transition
Services Agreement
” has the meaning set forth in
Section 2.2(c)
.
“
User Data
”
means any Personal Data or other data or information collected by or on behalf of any Seller Party from users of the Business Products
or of any Website.
“
WARN Act
”
means the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2102 - 2109, as amended.
ANNEX B
VOTING AGREEMENT
This Voting Agreement
(this “
Agreement
”), dated as of May 28, 2014 between Alan M. Meckler (“
Stockholder
”) of Mediabistro
Inc., a Delaware corporation (the “
Seller
”), and PGM-MB Holdings LLC, a Delaware limited liability company (“
Buyer
”).
WHEREAS, concurrently
with the execution of this Agreement, Seller, Buyer and Prometheus Global Media, LLC have entered into an Asset Purchase Agreement
(as the same may be amended from time to time, the “
Purchase Agreement
”), providing for, among other things,
Buyer’s acquisition of substantially all of Seller’s assets (other than the Retained Assets) and the change of Seller’s
corporate name (the “
Transactions
”) pursuant to the terms and conditions of the Purchase Agreement; and
WHEREAS, in order to
induce Buyer to enter into the Purchase Agreement, Stockholder is willing to make certain representations, warranties, covenants
and agreements with respect to the voting securities of Seller (“
Seller Stock
”) beneficially owned by Stockholder
and set forth on
Exhibit A
(the “
Original Shares
” and, together with any additional shares of Seller
Stock pursuant to Section 6 hereof, the “
Shares
”).
NOW, THEREFORE, in
consideration of the premises and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1.
Definitions
.
For purposes of this
Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Purchase Agreement.
2.
Representations
of Stockholder
.
Stockholder represents
and warrants to Buyer that:
(a) (i) Stockholder
owns beneficially (as such term is defined in Rule 13d-3 under the Exchange Act) all of the Original Shares free and clear of all
Liens, and (ii) except pursuant hereto and as disclosed on
Exhibit A
, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which Stockholder is a party relating to the pledge, disposition or voting of any
of the Original Shares and there are no voting trusts or voting agreements with respect to the Original Shares.
(b) Stockholder
does not beneficially own any shares of Seller Stock other than (i) the Original Shares and (ii) any options, warrants or other
rights to acquire any additional shares of Seller Stock or any security exercisable for or convertible into shares of Seller Stock,
set forth on Exhibit A (collectively, “
Options
”).
(c) Stockholder
has full corporate power and authority and legal capacity to enter into, execute and deliver this Agreement and to perform fully
Stockholder’s obligations hereunder (including the proxy described in
Section 3(b)
below)). This Agreement has been
duly and validly executed and delivered by Stockholder and constitutes the legal, valid and binding obligation of Stockholder,
enforceable against Stockholder in accordance with its terms.
(d) None of the
execution and delivery of this Agreement by Stockholder, the consummation by Stockholder of the transactions contemplated hereby
or compliance by Stockholder with any of the provisions hereof will conflict with or result in a breach, or constitute a default
(with or without notice of lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument or Law applicable to Stockholder or to Stockholder’s property
or assets.
(e) No consent,
approval or authorization of, or designation, declaration or filing with, any Governmental Authority or other Person on the part
of Stockholder is required in connection with the valid execution and delivery of this Agreement. No consent of Stockholder’s
spouse is necessary under any “community property” or other laws in order for Stockholder to enter into and perform
his obligations under this Agreement.
3.
Agreement to
Vote Shares; Irrevocable Proxy
.
(a) Stockholder
agrees during the term of this Agreement to vote the Shares, and to use reasonable efforts to cause any holder of record of Shares
to vote: (i) in favor of the Transactions and the Purchase Agreement, at every meeting of the stockholders of Seller at which such
matters are considered and at every adjournment or postponement thereof; (ii) against (A) any Acquisition Proposal, (B) any action,
proposal, transaction or agreement which could reasonably be expected to result in a breach of any covenant, representation or
warranty or any other obligation or agreement of Seller under the Purchase Agreement or of Stockholder under this Agreement and
(C) any action, proposal, transaction or agreement that could reasonably be expected to impede, interfere with, delay, discourage,
adversely affect or inhibit the timely consummation of the Transactions or the fulfillment of Buyer’s or Seller’s conditions
under the Purchase Agreement or change in any manner the voting rights of any class of shares of the Seller (including any amendments
to Seller’s certificate of incorporation or bylaws).
(b) Stockholder
hereby appoints Buyer and any designee of Buyer, and each of them individually, its proxies and attorneys-in-fact, with full power
of substitution and resubstitution, to vote during the term of this Agreement with respect to the Shares in accordance with
Section
3(a)
. This proxy and power of attorney is given to secure the performance of the duties of Stockholder under this Agreement.
Stockholder shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this
proxy. This proxy and power of attorney granted by Stockholder shall be irrevocable during the term of this Agreement, shall be
deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies
granted by Stockholder with respect to the Shares. The power of attorney granted by Stockholder herein is a durable power of attorney
and shall survive the dissolution, bankruptcy, death or incapacity of Stockholder. The proxy and power of attorney granted hereunder
shall terminate upon the termination of this Agreement.
(c) Subject to the
proxy granted under Section 3(b) above, Stockholder retains at all times the right to vote or exercise Stockholder’s
right to consent with respect to the Shares in such Stockholder’s sole discretion and without any other limitation on those
matters other than those set forth in Section 3(b) that are at any time or from time to time presented for consideration to
the Company’s stockholders generally;
provided
that such vote or consent would not reasonably be expected to frustrate
the purposes, or prevent or delay consummation, of the Transactions.
4.
No Voting Trusts
or Other Arrangement
.
Stockholder agrees
that Stockholder will not, and will not permit any entity under Stockholder’s control to, deposit any of the Shares in a
voting trust, grant any proxies with respect to the Shares or subject any of the Shares to any arrangement with respect to the
voting of the Shares other than agreements entered into with Buyer.
5.
Transfer and
Encumbrance
.
Stockholder agrees
that during the term of this Agreement, Stockholder will not, directly or indirectly, transfer, sell, offer, exchange, assign,
pledge or otherwise dispose of or encumber (“
Transfer
”) any of the Shares or enter into any contract, option
or other agreement with respect to, or consent to, a Transfer of, any of the Shares or Stockholder’s voting or economic interest
therein. Any attempted Transfer of Shares or any interest therein in violation of this
Section 5
shall be null and void.
This
Section 5
shall not prohibit a Transfer of the Shares by Stockholder to any member of Stockholder’s immediate
family, or to a trust for the benefit of Stockholder or any member of Stockholder’s immediate family, or upon the death of
Stockholder; provided, that a Transfer referred to in this sentence shall be permitted only if, as a precondition to such Transfer,
the transferee agrees in a writing, reasonably satisfactory in form and substance to Buyer, to be bound by all of the terms of
this Agreement. If requested by Buyer, Stockholder agrees to cause all certificates representing Shares to bear a prominent legend
stating that such Shares are subject to the transfer, voting and other restrictions described in this Agreement.
6.
Additional Shares
.
Stockholder agrees
that all shares of Seller Stock that Stockholder purchases, acquires the right to vote or otherwise acquires beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act, but excluding shares of Seller Stock underlying unexercised Options) of after
the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Shares for all purposes of
this Agreement.
7.
Termination
.
This Agreement shall
terminate upon the earliest to occur of (i) the Closing and (ii) the date on which the Purchase Agreement is terminated in accordance
with its terms.
8.
No Agreement
as Director or Officer
.
Stockholder makes no
agreement or understanding in this Agreement in Stockholder’s capacity as a director or officer of the Seller or any of its
subsidiaries (if Stockholder holds such office), and nothing in this Agreement: (a) will limit or affect any actions or omissions
taken by Stockholder in stockholder’s capacity as such a director or officer, including in exercising rights under the Purchase
Agreement, and no such actions or omissions shall be deemed a breach of this Agreement or (b) will be construed to prohibit, limit
or restrict Stockholder from exercising Stockholder’s fiduciary duties as an officer or director to the Seller or its stockholders.
9.
No Solicitation
.
Stockholder agrees
that, during the period from the date of this Agreement through the termination of this Agreement in accordance with
Section
7
above, Stockholder shall not, directly or indirectly, take any action which would cause a breach of Section 6.2 of the Purchase
Agreement. Stockholder shall immediately cease and discontinue any existing discussions with any Person that relate to any Acquisition
Proposal.
10.
Specific Performance
.
The parties agree that
irreparable damage would occur in the event that any of the provisions of this Agreement (including the proxy set forth herein)
were not performed in accordance with its specific terms or were otherwise breached. Stockholder agrees that, in the event of any
breach or threatened breach by Stockholder of any covenant or obligation contained in this Agreement (including the proxy set forth
herein), Buyer shall be entitled (in addition to any other remedy that may be available to it, including monetary damages) to seek
and obtain (a) a decree or order of specific performance to enforce the observance and performance of such covenant or obligation,
and (b) an injunction restraining such breach or threatened breach. Stockholder further agrees that neither Buyer nor any other
Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining
any remedy referred to in this
Section 10
, and Stockholder irrevocably waives any right he or it may have to require the
obtaining, furnishing or posting of any such bond or similar instrument.
11.
Entire Agreement
.
This Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof and thereof and supersede all prior negotiations,
agreements and understandings, whether written or oral, of the parties.
12.
Notices
.
Any notice, request,
instruction or other document to be given hereunder will be sent in writing and delivered personally, sent by reputable, overnight
courier service (charges prepaid), sent by registered or certified mail, postage prepaid, or by facsimile, according to the instructions
set forth below. Such notices will be deemed given: at the time delivered by hand, if personally delivered; one Business Day after
being sent, if sent by reputable, overnight courier service; at the time received, if sent by registered or certified mail; and
at the time when confirmation of successful transmission is received by the sending facsimile machine, if sent by facsimile.
If to Stockholder:
Alan M. Meckler
c/o Mediabistro Inc.
475 Park Avenue South
New York, NY 10016
Fax (203) 831-0233
With a copy (which shall not constitute notice)
to Seller’s counsel:
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail
Suite 300
Raleigh, North Carolina 27607
Attn: David L. Wilke, Esq.
Fax: (919) 781-4865
If to Buyer:
PGM-MB Holdings LLC
770 Broadway, 15th Floor
New York, NY 10003
Attention: Jeffrey Wilbur
Fax:
(212)
493-4266
With a copy (which shall not constitute notice)
to:
Prometheus Legal Department
330 Madison Ave
New York, NY 10017
Fax: (212) 644-8107
and
Jenner & Block LLP
919 Third Avenue
New York, NY 10022
Attention: Tobias L. Knapp
Fax: (212) 891-1699
or to such other address
or to the attention of such other party that the recipient party has specified by prior written notice to the sending party in
accordance with the proceeding.
13.
Miscellaneous
.
(a) This Agreement
and all other agreements, documents and instruments delivered pursuant hereto and incorporated herein, unless otherwise expressly
provided therein, shall be governed by, and construed in accordance with, the substantive Laws of the State of Delaware applicable
to agreements made and to be performed entirely within such State, without reference to the conflicts of laws rules of such State.
(b) Each of the
parties irrevocably consents to the exclusive jurisdiction and venue of any state court located within New Castle County, State
of Delaware in connection with any matter based upon or arising out of this Agreement or the Transactions, agrees that process
may be served upon them in any manner authorized by the laws of the State of Delaware
for such persons and waives
and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and process. Each
party hereby agrees not to commence any legal proceedings relating to or arising out of this Agreement or the Transactions in any
jurisdiction or courts other than as provided herein.
(c) EACH PARTY ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND,
THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL
ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
Section 13(c)
.
(d) If any term
or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in any manner adverse to any Party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify
this Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner to the end that
the Transactions are fulfilled to the extent possible.
(e) Any provision
of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by the parties hereto or, in the case of a waiver, by the party or parties against whom the waiver is to be effective.
Any party to this Agreement may in accordance with the preceding sentence, (i) extend the time for the performance of any of the
obligations or other acts of the other party; or (ii) waive compliance with any of the agreements of the other party or conditions
to such obligations contained herein. Notwithstanding the foregoing, no failure or delay by any party hereto in exercising any
right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or future
exercise of any other right hereunder. The failure of any party hereto to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
(f) This Agreement
may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute
one and the same instrument.
(g) Each party hereto
shall execute and deliver such additional documents as may be necessary or desirable to effect the transactions contemplated by
this Agreement.
(h) All Section
headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall
be derived therefrom.
(i) Neither party
to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other
party hereto, except that Buyer may assign, in its sole discretion, all or any of its rights, interests and obligations hereunder
to any of its Affiliates. Any assignment contrary to the provisions of this
Section 13(i)
shall be null and void.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties
hereto have executed and delivered this Agreement as of the date first written above.
|
PGM-MB Holdings LLC
|
|
By /s/ Jeffrey Wilbur
Name: Jeffrey Wilbur
Title: Chief Financial Officer
|
|
Alan M. Meckler
|
|
By /s/ Alan M. Meckler
|
Exhibit A
Original Shares
Title of Security
|
Amount of Securities Beneficially Owned
|
Ownership Form: Direct (D) or Indirect (I)
|
Nature of Indirect Beneficial Ownership
|
|
|
|
|
Common Stock
|
1,738,480
|
D
|
|
Common Stock
|
401,194
|
I
(1)
|
By Spouse
|
Common Stock
|
35,050
|
I
(1)
|
Herman Meckler Family Trust #1
|
Common Stock
|
9,871
|
I
(1)
|
Herman Meckler Family Trust #2
|
Common Stock
|
75,176
|
I
(1)
|
The Meckler Foundation
|
Common Stock
|
49,493
|
I
(1)
|
Alan M. Meckler 2010 Grantor Retained Annuity Trust
|
Notes:
|
1. Mr. Meckler indirectly owns 570,784 shares: 49,493 are held in the Alan M. Meckler 2010 Grantor Retained Annuity Trust, 37,000 shares donated by Mr. Meckler to the Meckler Foundation, a non-profit charitable foundation founded by Mr. Meckler and for which he acts as a trustee, 38,176 shares purchased by the Meckler Foundation, 401,194 shares purchased by Mr. Meckler's wife and 44,921 shares held in trust for the benefit of Mr. Meckler's mother. Mr. Meckler exercises shared voting and investment control over all of these shares except the shares held by the 2010 Grantor Retained Annuity Trust, over which Mr. Meckler exercises investment control but not voting control.
|
Options
Title of Derivative Security
|
Date Exercisable and Expiration Date
(Month/Day/Year)
|
Title and Amount of Underlying Securities
|
Number of Derivative Securities Beneficially Owned
|
Ownership Form of Derivative Security: Direct (D) or Indirect (I)
|
|
Date Exercisable
|
Expiration Date
|
Title
|
Amount or Number of Shares
|
|
|
Employee Stock Option (right to buy)
|
(2)
|
03/04/2014
|
Common Stock
|
25,000
|
25,000
|
D
|
Employee Stock Option (right to buy)
|
(2)
|
12/09/2014
|
Common Stock
|
42,858
|
42,858
|
D
|
Employee Stock Option (right to buy)
|
(3)
|
09/27/2020
|
Common Stock
|
42,858
|
42,858
|
D
|
Employee Stock Option (right to buy)
|
(4)
|
09/08/2021
|
Common Stock
|
21,429
|
21,429
|
D
|
Employee Stock Option (right to buy)
|
(2)
|
11/14/2021
|
Common Stock
|
142,858
|
142,858
|
D
|
Employee Stock Option (right to buy)
|
(5)
|
12/12/2021
|
Common Stock
|
21,429
|
21,429
|
D
|
Employee Stock Option (right to buy)
|
(6)
|
12/04/2022
|
Common Stock
|
10,000
|
10,000
|
D
|
Employee Stock Option (right to buy)
|
(7)
|
12/16/2023
|
Common Stock
|
20,000
|
20,000
|
D
|
Warrants (right to buy)
|
11/14/2013
|
11/13/2018
|
Common Stock
|
301,124
|
301,124
|
D
|
Notes
|
2. Option is 100% vested.
|
3. Option vested 33.33% ratably over a three-year period on 09/27/2011, 09/27/2012 and 09/27/2013.
|
4. Option vests 33.33% ratably over a three-year period on 09/08/2012, 09/08/2013 and 09/08/2014.
|
5. Option vests 33.33% ratably over a three-year period on 12/12/2012, 12/12/2013 and 12/12/2014.
|
6. Option vests 33.33% ratably over a three-year period on 12/05/2013, 12/05/2014 and 12/05/2015.
|
7. Option vests 33.33% ratably over a three-year period on 12/17/2014, 12/17/2015 and 12/17/2016.
|
ANNEX C
|
INVESTMENT
BANKING
JANNEY
MONTGOMERY SCOTT
1717
Arch Street
Philadelphia,
PA 19103
www.janney.com
|
May 28, 2014
The Board of Directors
Mediabistro Inc.
475 Park Avenue South
4th Floor
New York, NY 10016
Members of the Board of Directors:
We understand that Mediabistro Inc. (the “Company”
or the “Seller”), a Delaware corporation, intends to enter into an Asset Purchase Agreement (“the Agreement”)
with PGM-MB Holdings LLC (“Buyer”), a Delaware limited liability company and an affiliate of Prometheus Global Media,
LLC, a Delaware limited liability company (“PMG;” PMG is a guarantor of Buyer’s obligations under the Agreement),
pursuant to which, among other things, the Seller intends to sell, assign, transfer, convey and deliver to Buyer, and Buyer shall
purchase and acquire from Seller, all right, title and interest of Seller in and to certain assets and liabilities as described
in the Agreement (the “Target”) (such purchase and sale, the “Transaction”).
Pursuant to the Agreement, as a result of the
Transaction, at the Closing, Buyer will pay to Seller in cash, U.S. $8,000,000 (the “Transaction Consideration”). An
aggregate amount of U.S. $1,500,000 of the Transaction Consideration will be deposited into an escrow account at closing in order
to secure the Sellers’s indemnification obligations pursuant to the Agreement (the “Escrow Amount”). Such Escrow
Amount may be decreased in the event Seller is required to pay certain expenses of Buyer that arise during the period between signing
of the Agreement and closing of the Transaction. Pursuant to the terms of the Escrow Agreement to be entered into by the parties,
the Escrow Amount will be reduced to $1,000,000 six months after closing, with the remainder of the Escrow Amount to be paid out
12 months after closing, subject in each instance to hold backs for claims submitted during the applicable period. You have requested
the opinion of Janney Montgomery Scott LLC (“Janney,” “we,” “our” or “us”), as
of the date hereof, whether the Transaction Consideration is fair, from a financial point of view, to the stockholders of the Company.
Janney, as part of its investment banking business,
engages in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate
transactions.
For the purposes of rendering our opinion,
we have undertaken such review and inquiries as we deemed necessary or appropriate under the circumstances, including the following:
|
(a)
|
reviewed a draft, dated May 28, 2014 of the Agreement as provided to us as of such date;
|
|
(b)
|
reviewed certain financial statements of the Company and certain other business, financial and
operating information relating to the Company provided to Janney by the management of the Company, including without limitation
an unaudited balance sheet as of March 31, 2014 and the related statements of income for the three months then ended;
|
|
(c)
|
reviewed certain business, financial and other information relating to the Company, including financial
forecasts for the Company through December 31, 2018 provided to or discussed with Janney by the management of the Company, and
discussed with Company management the operations of the Target and the Target’s industry, history and current and future
prospects;
|
|
(d)
|
reviewed certain publicly available business and financial information relating to the Company;
|
|
(e)
|
reviewed certain publicly available business and financial information relating to the industries
in which the Company operates;
|
|
(f)
|
reviewed certain financial and stock trading data and information for the Company and compared that data and information with corresponding data and information for companies with publicly traded securities that Janney deemed relevant;
|
|
(g)
|
compared the financial terms of the proposed Transaction with the financial terms of certain other
business combinations and other transactions that Janney deemed relevant and which have recently been effected or announced;
|
|
(h)
|
discussed with certain members of senior management of the Company the strategic aspects of the
Transaction; and
|
|
(i)
|
considered such other information, financial studies, analyses and investigations and financial,
economic and market criteria that Janney deemed relevant, including a discounted cash flow analysis.
|
Several analytical methodologies have been
employed and no one method of analysis should be regarded as critical to the overall conclusion we have reached. Each analytical
technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular
techniques. The overall conclusions we have reached are based on all the analysis and factors presented, taken as a whole, and
also on application of our own experience and judgment. Such conclusions may involve significant elements of subjective judgment
and qualitative analysis. We therefore give no opinion as to the value or merit standing alone of any one or more parts of the
analyses.
In rendering our opinion, we have assumed at
your direction and relied upon the accuracy and completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company or its representatives or that was otherwise reviewed by us. We
have further relied on the assurances of management of the Company that it is not aware of any facts or circumstances that would
make any of such information inaccurate or misleading. We have not been asked to and have not undertaken any independent verification
of any of such information and we do not assume any responsibility or liability for the accuracy or completeness thereof. Furthermore,
in connection with this opinion, we have not been requested to make, and have not made, any physical inspection or independent
appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party.
We did not estimate, and express no opinion regarding, the liquidation value of any entity.
We have assumed at your direction that all
financial projections and other information provided to us by the Company or its agents, as the case may be, were reasonably prepared
or obtained on bases reflecting the best currently available information, estimates and good faith judgments of the persons preparing
or obtaining the same as to the future financial performance of the Company, including the Target. We express no opinion as to
such financial projections or other information or the information or assumptions upon which they were based.
We have also assumed that there has been no
change in the Company’s assets, financial condition, results of operations, business or prospects since the date of the most
recent financial statements made available to us. We have assumed in all respects material to our analysis that the Company will
remain as a going concern for all periods relevant to our analysis, that all of the representations and warranties contained in
the Agreement and all related agreements are true and correct, that each party to such agreements will perform all of the covenants
required to be performed by such party under such agreements and that the conditions precedent to the Agreement are not waived.
With your consent, we have relied on the advice that the Company has received from its legal, accounting and tax advisors as to
all legal, accounting and tax matters relating to the Transaction and the other transactions contemplated by the Agreement.
1717 Arch Street
Philadelphia, PA 19103-1675
Tel 215.665.6180
Fax 215.665.6197
Members New York Stock Exchange, Inc.
Other Principal Exchanges
In rendering our opinion, we have assumed that
in connection with obtaining the necessary approvals for the Transaction, no restrictions or conditions will be imposed that would
have a material adverse effect on the contemplated benefits of the Transaction.
Our opinion speaks only as of the date hereof,
is based on the conditions as they exist and information which has been provided to us as of the date hereof and is without regard
to any market, economic, financial, legal or other circumstances or event of any kind or nature which may exist or occur after
such date. In addition, we express no recommendation as to how the stockholders of the Company should vote at the stockholders’
meeting held in connection with the Transaction.
We have been engaged by the Board of Directors
of the Company for the purpose of rendering this opinion and will receive a fee for our services, which fee is not contingent on
the successful completion of the Transaction. The Company has agreed to indemnify us for certain liabilities arising out of rendering
this opinion.
In the ordinary course of our business, we
may, from time to time, act as a market maker and broker in the publicly traded securities of the Company and receive customary
compensation, and we may also actively trade securities of the Company for our own account or the account of customers and, accordingly,
may hold a long or short position in such securities. We do not currently have, and have not had at any time in the past thirty
six (36) months, any material relationship with the Buyer, PMG, Guggenheim Partners, LLC or any person or entity that, to our knowledge,
is an affiliate of any of the foregoing parties.
Our opinion is directed to the Board of Directors
of the Company in connection with its consideration of the Transaction and does not constitute a recommendation to any stockholder
as to how such stockholder should vote when considering the Transaction. Our opinion is directed only to the fairness, from a financial
point of view, of the Transaction Consideration to the Company’s stockholders and does not address the underlying business
decision of the Company to engage in the Transaction, the relative merits of the Transaction as compared to any other alternative
business strategies that might exist for the Company, the effect of any other transaction in which Company might engage or the
value of the assets that will be retained by the Company after the closing of the Transaction. Other than with regard to the Agreement
and the proxy statement, our opinion is not to be quoted or referred to, in whole or in part, in any other document, nor shall
this opinion be used for any other purposes, without our prior written consent. This opinion has been approved by our fairness
opinion committee.
On the basis of and
subject to the foregoing, we are of the opinion that as of the date hereof, the Transaction Consideration pursuant to the Agreement
is fair, from a financial point of view, to the stockholders of the Company.
Very truly yours,
JANNEY MONTGOMERY
SCOTT LLC
1717 Arch Street
Philadelphia, PA 19103-1675
Tel 215.665.6180
Fax 215.665.6197
Members New York Stock Exchange, Inc.
Other Principal Exchanges