ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of September 8, 2015 (the “Agreement Date”), by and among MGT Sports, Inc., a Delaware corporation (“MGT” or “Seller”), MGT Capital Investment, Inc., a Delaware corporation (“MGT Parent”), DraftDay Gaming Group, Inc. a Delaware corporation (“DDGG” or “Purchaser”) and Viggle Inc. (“Viggle”). MGT, DDGG, Viggle and MGT Parent (as defined below) shall collectively be referred to as the “Parties.”
RECITALS
WHEREAS, Seller is the owner of a daily fantasy sports website called draftday.com (the “Website”) that offers daily fantasy sports tournaments and provides a daily fantasy sports white label platform for partners (collectively, the “Business”); and
WHEREAS, Seller desires to sell to Viggle, and Viggle desires to purchase from Seller, the Purchased Assets (as defined below), in exchange for (i) Viggle Promissory Notes (the “Promissory Notes”); (ii) shares of Common Stock of Viggle (the “VGGL Common Stock”); and (iii) shares of Common Stock of DDGG (the “DDGG Common Stock”), on the terms and conditions set forth in this Agreement. The Purchased Assets will be transferred to DDGG, which, prior to the transactions contemplated hereby, is a wholly-owned subsidiary of Viggle.
NOW, THEREFORE, in consideration of the promises, covenants and other agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS; INTERPRETATION.
1.1 Definitions. For purposes of this Agreement, the following terms are defined as follows:
“Action” means any action (including declaratory judgment actions), suit, litigation, controversy, mediation, hearing, claim, charge, complaint, arbitration, reexamination, interference, reissue, investigation, pending inquiry, audit or other proceeding at law or in equity or of, in, by or before any Governmental Authority, mediator or arbitrator.
“Affiliate” means, with respect to any Person, a Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person; and “control” (including the terms “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Applicable Law” means, with respect to any Person, any federal, state, local, municipal, foreign or other Law, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by any Governmental Authority that applies to such Person, its business and its properties.
“Consents” means the consents of any third parties or any Governmental Authorities necessary to transfer the Purchased Assets to the Purchaser or to otherwise consummate the transactions contemplated by this Agreement.
“Employee Plan” means each employee benefit plan that has been maintained by Seller which constitutes an “employee pension benefit plan” under ERISA.
“Governmental Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or similar governing entity.
“Intellectual Property” means any and all patents, patent applications, ideas, inventions, designs, expressions and works of authorship, copyrights, copyrightable works (including, without limitation, all software, middleware and firmware), semiconductor topography, source code of any software or program, trademarks, trade names, moral rights, database rights, mask works, applications therefor, registrations thereof and licenses thereof, royalty rights, any and all goodwill associated with the Purchased Assets, proprietary and/or confidential information (including technical information relating to development, design, manufacture, scheduling, installation, assembly or testing, Trade Secrets, secret processes and procedures, know how, business and financial information, and all confidential information of any nature, and any other similar property, whether or not embodied in tangible form (including technical drawings and specifications, shop drawings, manuals, forms, working notes and memos, market studies, consultants’ reports, technical and laboratory data, notebooks, samples and prototypes)).
“Knowledge” or words of similar import (e.g. “knowledge,” “known,” or “aware”) with respect to: (i) any individual, shall mean the actual knowledge of such individual; (ii) any corporate entity, shall mean the knowledge of all directors, officers and managers of such corporate entity.
“Law” means all laws, statutes, rules, regulations, ordinances and orders of any Governmental Authority.
“Lien” means any mortgage, lien, claim, pledge, charge, security interest, preemptive right, right of first refusal, option, judgment, restriction or encumbrance of any kind, or any exceptions, reservations, restrictions, rights-of-way, easements or other matters affecting title, whether arising by contract, law or otherwise.
“Material Adverse Effect” means any change, event, violation, inaccuracy, circumstance or effect that, individually or taken together with all other effects, is, or is reasonably likely to, be or become materially adverse in relation to the value, validity, effectiveness or enjoyment of the Purchased Assets; provided, however, that none of the following shall be deemed in itself, or in any combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: (a) any adverse change, effect, event, occurrence, state of facts or development attributable to the announcement or pendency of the transactions contemplated by this Agreement; (b) any adverse change, effect, event, occurrence, state of facts, act of God, natural disaster or development attributable to conditions affecting the industry in which Seller participates, the United States economy as a whole or the capital markets in general or the markets in which Seller operates, which such adverse change, effect, event, occurrence, or development does not and would not reasonably be expected to have a materially disproportionate effect on Seller; (c) any adverse change, event, development, or effect arising from or relating to changes in law, rules, regulations, orders, or other binding directives issued by any Governmental Authority, which such adverse change, event, development or effect does not and would not reasonably be expected to have a materially disproportionate effect on Seller; (d) any adverse change, effect, event, occurrence, or development resulting from or relating to compliance with the terms of, or the taking of any action required by, this Agreement; or (e) any adverse change, effect, event, occurrence, or development arising from or relating to the commencement, continuation or escalation of a war, material armed hostilities or other material international or national calamity or act of terrorism directly or indirectly involving the United States of America.
“Permit” means any permit, application, notice, waiver, qualification, license, import licenses, export license, franchise, consent, certificate, certificate of occupancy, order, exemption, registration, filing, authorization, approval or registration.
“Person” means and includes any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or any Governmental Authority or any department, agency or political subdivision thereof.
“Player Deposits” means the aggregate of the Seller’s cash obligations to the players in respect of the player accounts as of the Closing Date, and referred to on the financial statements of the Seller as “player deposit liability.”
“Securities” means the Promissory Notes, the VGGL Common Stock and the DDGG Common Stock.
“Software” means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code form, (ii) databases, compilations, and any other electronic data files, including any and all collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts, technical and functional specifications, and other work product used to design, plan, organize, develop, test, troubleshoot and maintain any of the foregoing, (iv) without limitation to the foregoing, the software technology supporting any functionality contained on all Internet website(s), owned and operated by the Seller or MGT Parent in the Business, (v) all computer-aided design software, including the underlying data, and (vi) all documentation, including technical, end-user, training and troubleshooting manuals and materials, relating to any of the foregoing.
“Trade Secrets” means all product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, research and development, manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including both source code and object code), databases, interfaces, computer software and database technologies, systems, structures and architectures (and related processes, formulae, composition, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods and information), and any other information, however documented, that is a trade secret within the meaning of the applicable trade-secret protection law.
“Transaction Agreements” shall mean and include this Agreement, and all consents, releases, assignment and assumption agreements, bills of sale and other instruments (each in form and substance satisfactory to Purchaser) which are necessary in order to duly and properly transfer the Purchased Assets to the Purchaser.
The following terms are defined in the following sections of this Agreement:
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Term
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Section
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Agreement
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Preamble |
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Agreement Date
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Preamble |
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Asset Purchase
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3.1 |
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Assumed Liabilities
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3.2(b) |
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Business
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Recitals |
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Closing
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4.1 |
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Closing Date
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4.1 |
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DDGG Common Stock
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Recitals |
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Employees
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6.7(a) |
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Exchange Act
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5.6 |
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Indemnification Notice
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8.4 |
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Indemnifying Party
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8.4 |
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Indemnitees
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8.3 |
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Losses
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8.2
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DDGG
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Preamble
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DDGG Indemnitees
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8.2 |
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Parties
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Preamble
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Promissory Notes
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Recitals |
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Purchased Assets
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3.1 |
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Purchase Price
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3.4 |
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Purchaser
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Preamble |
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Retained Liabilities
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3.2(a) |
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SEC
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5.6
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Securities Act
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3.3 |
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Seller
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Preamble
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Seller Indemnitees
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8.3 |
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Termination Date
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4.5(b) |
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Third Party Claim
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8.8 |
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Threshold Amount
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8.9 |
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Transferred Contracts
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3.1(c) |
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Transferred Employees
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2.2 |
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VGGL Common Stock
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Recitals |
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Website
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Recitals |
1.2 Interpretation. Unless the context otherwise requires, the terms defined in Section 1.1 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms defined herein. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The use of the neuter gender herein shall be deemed to include the masculine and feminine genders wherever necessary or appropriate, the use of the masculine gender herein shall be deemed to include the neuter and feminine gender wherever necessary or appropriate and the use of the feminine gender herein shall be deemed to include the neuter and masculine genders wherever necessary or appropriate.
2. PRE-CLOSING AGREEMENTS.
2.1 Conduct of the Business. During the period from the Agreement Date and continuing until the earlier of (x) the termination of this Agreement and (y) the Closing, without the prior written consent of Purchaser:
(a) Seller will conduct the Business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and in material compliance with all Applicable Law (except to the extent expressly provided otherwise in this Agreement).
(b) Seller will (i) pay or perform all of its Business related obligations when due, and (ii) continue to develop the Business consistent with past practice.
(c) Seller will not engage in any practice, take any action, fail to take any action, or enter into any transaction as a result of which a Material Adverse Effect is likely to occur; provided, however, that the failure to make additional capital investments or hire additional employees will not in any case result in a Material Adverse Effect.
(d) Seller will confer with the Purchaser concerning matters of a material nature to the Business, but subject to reasonable restrictions necessary to preserve confidential information from being disclosed to Purchaser or to prevent Seller from relinquishing the attorney-client privilege.
(e) Seller shall cause the Employees to be available to Purchaser to discuss the Business during regular business hours.
(f) Any expenses relating to the Business outside the ordinary course of business in excess of $5,000 shall be approved in advance by DDGG.
2.2 Offers of Employment. At any time prior to or on the Closing Date, the Purchaser may offer at-will employment to any of the Employees. The Purchaser is hereby permitted to hire and offer to hire such Employees effective on the Closing Date on such terms and conditions as the Purchaser shall in its sole discretion deem appropriate. The Employees who accept and commence employment with the Purchaser are hereinafter collectively referred to as the “Transferred Employees.” Seller will not take, and will cause each of its Affiliates not to take, any action which would impede, hinder, interfere or otherwise compete with the Purchaser’s effort to hire any Transferred Employees. The Purchaser shall assume no liability for any obligations of Seller or any other Person to any Employee unless and until such Employee becomes a Transferred Employee, and in that case, only to the extent agreed in writing by the Purchaser and only with respect to the period after such Employee becomes a Transferred Employee. For purposes of clarity, any such offer of employment shall be contingent on the Closing occurring and shall terminate and be of no force and effect if this Agreement is terminated pursuant to Section 4.5.
3. PURCHASE AND SALE OF ASSETS.
3.1 Purchase and Sale of Purchased Assets. Upon the terms and subject to the conditions set forth herein, effective as of the Closing, MGT Parent and Seller hereby irrevocably sell, assign, grant, transfer and deliver to the Purchaser and its successors and assigns, free and clear of all Liens whatsoever, and the Purchaser hereby accepts, the Purchased Assets (the “Asset Purchase”). The “Purchased Assets” shall mean the following:
(a) All of MGT Parent’s and Seller’s right, title and interest in and to the Business, including without limitation all Intellectual Property related to the website www.draftday.com, and including the Intellectual Property described on Schedule 3.1(a) hereto, the user mailing list (including current and former users), player data and source code;
(b) All of MGT Parent’s and Seller’s rights in property, tangible or intangible, used solely in the Business, including all leasehold improvements, supplies, furnishings, office equipment, IT equipment and other tangible personal property located at Suite 204, 500 Mamaroneck Avenue, Harrison, New York 10528, and located at 620 W. Coliseum Blvd, Fort Wayne, IN 46808, including the property listed or described on Schedule 3.1(b);
(c) All of Seller’s rights under the following contracts:
(i) License Agreement, between MGT and STATS LLC, dated May 1, 2014, as amended;
(ii) RotoWire Fantasy Service Agreement, between MGT and Roto Sports, Inc., dated February 1, 2015;
(iii) Colocation Service Order Agreement, between MGT and Indiana Data Center, LLC, dated May 30, 2014 (collectively, the “Transferred Contracts”);
(iv) those additional contracts set forth on Schedule 3.1(c);
(d) Cash in an amount equal to the Player Deposits; and
(e) All books and records, tangible or intangible, relating solely to the Purchased Assets.
The Purchased Assets shall not include any assets or property other than as set forth in Section 3.1.
3.2 Liabilities Assumed and Not Assumed.
(a) Other than the Assumed Liabilities, neither Viggle nor the Purchaser shall assume any debts, obligations, contracts, leases or liabilities of MGT Parent or Seller or any of their Affiliates, and will not be obligated to pay, perform or discharge, any debts, obligations, contracts, leases or liabilities of MGT Parent, Seller or any of their Affiliates, whether arising out of occurrences prior to, at or after the Closing Date (the “Retained Liabilities”). MGT Parent and Seller shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Retained Liabilities. For the avoidance of doubt, (i) Seller shall pay all amounts owing under the Transferred Contracts through the Closing Date, (ii) Seller shall retain all obligations to fund or otherwise provide benefits accrued before and through the Closing Date by Employees under the Employee Plans, and (iii) Seller shall retain any liabilities or obligations relating to: (i) current or former Employees accrued as of the Closing Date, and (ii) former Employees (that are not Transferred Employees) following the Closing Date.
(b) “Assumed Liabilities” means (i) Seller’s obligations under the Transferred Contracts arising on and after the Closing Date, (ii) all obligations of the Seller related to Player Deposits and non-cash items such as bonus funds existing as of the Closing Date, and (iii) Seller’s obligations related to the Purchased Assets that arise on or after the Closing Date.
3.3 Issuance of Promissory Notes, VGGL Common Stock and DDGG Common Stock. At the Closing, in connection with the Asset Purchase described in Section 3.1 above, Viggle shall:
(a) deliver a Promissory Note due on or before September 29, 2015 in the amount of Two-hundred Thirty-Four Thousand Three Hundred and Severnty-Five USD ($234,375) in substantially the form attached hereto as Exhibit A (the “30 day Note”), and
(b) deliver a Promissory Note due six months from the Closing Date in the amount of One Million Eight Hundred and Seventy-Five Thousand USD ($1,875,000) in substantially the form attached hereto as Exhibit B (the “Six Month Note”), and
(c) deliver instructions to its transfer agent, American Stock Transfer, to issue 1,269,342 shares of Viggle Common Stock (the “Viggle Shares”), par value $0.001 per share;
(d) cause DDGG to issue 2,550,000 shares of DDGG Common Stock (the “DDGG Shares”), and
(e) The stock certificates representing both the VGGL Common Stock and the DDGG Common Stock shall bear a legend stating that they have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and such other restrictions described in Section 6.4(b) hereof.
3.4 Purchase Price; Allocation of the Purchase Price. The purchase price for the Purchased Assets shall be the sum of the Promissory Notes and the value of the DDGG Common Stock and the VGGL Common Stock issued pursuant to Section 3.3 (collectively, the “Purchase Price”). The Purchase Price shall be allocated in accordance with Schedule 3.4. Each of Seller and the Purchaser shall report the purchase and sale of the Purchased Assets for all tax purposes in a manner consistent with such allocation, and neither of them shall take a position inconsistent with such allocation on any tax return, before any taxing authority or in any judicial proceeding that is, in any manner, inconsistent with such allocation without the consent of the other unless specifically required pursuant to a determination by an applicable taxing authority.
4. CLOSING.
4.1 Closing. Unless this Agreement is earlier terminated in accordance with Section 4.5, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on September 8, 2015, or on such earlier or later date when each of the conditions set forth in this Article 4 have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), or at such other time as the Parties may agree (the “Closing Date”). The Closing shall take place remotely by the electronic exchange of documents and signatures, or at such location as the Parties hereto agree.
4.2 Conditions to Closing.
(a) Conditions to Obligations Common to Both Parties. The respective obligations of each Party hereto to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions:
(i) No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation of the Asset Purchase shall be in effect, nor shall any action have been taken by any Governmental Authority seeking any of the foregoing, and no statute, rule, regulation or order shall have been enacted, entered, enforced or deemed applicable to the Asset Purchase, which makes the consummation of the Asset Purchase illegal; and
(ii) Purchaser and Seller shall have timely obtained from each Governmental Authority all approvals, waivers and consents, if any, necessary for consummation of, or in connection with, the Asset Purchase and the other transactions contemplated hereby.
(b) Additional Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (it being understood that each such condition is solely for the benefit of Seller and may be waived by Seller in writing in its sole discretion without notice, liability or obligation to any Person):
(i) The representations and warranties of DDGG in this Agreement shall be true and correct in all material respects (except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) on and as of the Agreement Date and on and as of the Closing Date as though such representations and warranties were made on and as of such date (except for representations and warranties which address matters only as to a specified date, which representations and warranties shall be true and correct with respect to such specified date). DDGG shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it at or prior to the Closing.
(ii) Seller shall have received each of the deliveries required to be made by DDGG to Seller pursuant to Section 4.3.
(c) Additional Conditions to Obligations of the Purchaser. The obligations of the Purchaser to consummate the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (it being understood that each such condition is solely for the benefit of the Purchaser and may be waived by the Purchaser in writing in its sole discretion without notice, liability or obligation to any Person):
(i) The representations and warranties of Seller in this Agreement shall be true and correct in all material respects (except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) on and as of the Agreement Date and on and as of the Closing Date as though such representations and warranties were made on and as of such date (except for representations and warranties which address matters only as to a specified date, which representations and warranties shall be true and correct with respect to such specified date). Seller shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it at or prior to the Closing.
(ii) DDGG shall have received each of the deliveries required to be made by Seller to DDGG pursuant to Section 4.3.
(iii) There shall not have occurred a Material Adverse Effect with respect to the Purchased Assets since the Agreement Date.
4.3 Closing Deliverables and Actions. At the Closing:
(a) Seller shall execute and deliver to DDGG a certificate dated as of the Closing Date, executed on behalf of Seller by its President, to the effect that (i) the condition set forth in Section 4.2(c)(i) has been satisfied, and (ii) there shall not have occurred a Material Adverse Effect with respect to the Purchased Assets since the Agreement Date;
(b) DDGG shall execute and deliver to Seller a certificate dated as of the Closing Date, executed on behalf of DDGG by its President, to the effect that the condition set forth in Section 4.2(b)(i) has been satisfied;
(c) Each Party shall execute and deliver to the other Party a signature page to each of the Transaction Agreements to which such Party is a party;
(d) Seller shall deliver to DDGG evidence that all required Consents, if any, have been obtained;
(e) Seller shall pay to Purchaser cash in an amount equal to the Player Deposits, together with written evidence of the amount of the Player Deposits and non-cash items such as bonus funds existing as of the Closing Date;
(f) Seller shall deliver, cause to be delivered, or make available in a manner satisfactory to the Purchaser, the source code underpinning the Website, player data and user mailing lists;
(g) Seller shall deliver, cause to be delivered, or make available in a manner satisfactory to the Purchaser, the book and records solely related to the Purchased Assets;
(h) Viggle shall deliver to Seller a Promissory Note representing the 30 Day Note;
(i) Viggle shall deliver to Seller a Promissory Note representing the Six Month Note;
(j) Viggle shall deliver to its transfer agent, American Stock Transfer, instructions to deliver Seller a certificate representing the VGGL Common Stock;
(k) DDGG shall issue to Seller a certificate of Common Stock representing the DDGG Shares;
(l) DDGG shall execute and deliver that certain Management Services Agreement by and between DDGG and Sportech Racing, LLC,
(m) Purchaser and Seller shall have each executed a Stockholders Agreement in the form on Exhibit C attached hereto;
(n) Seller and MGT Parent shall execute and deliver a bill of sale in form and substance reasonably satisfactory to Purchaser (the "Bill of Sale") and duly executed by Seller, transferring the tangible personal property included in the Purchased Assets to Buyer;
(o) Seller shall deliver an assignment and assumption agreement in form and substance reasonably satisfactory to Purchaser (the "Assignment and Assumption Agreement") and duly executed by Seller, effecting the assignment to and assumption by Purchaser of the Purchased Assets;
(p) MGT Parent and Seller shall deliver assignments in form and substance reasonably satisfactory to Purchaser (the "Intellectual Property Assignments") and duly executed by Seller, transferring all of Seller's right, title and interest in and to the Intellectual Property assets to Purchaser;
(q) Seller and Purchaser shall have each delivered signature pages to a Transition Services Agreement by and between Seller and Purchaser; and
(r) All other previously undelivered items required to be delivered at or prior to the Closing pursuant to this Agreement or otherwise required in connection herewith shall have been delivered, unless delivery has been waived in writing by the intended recipient thereof.
4.4 Effect of Closing. All transactions contemplated herein and by the other Transaction Agreements to occur on and as of the Closing Date shall be deemed to have occurred simultaneously and to be effective as of the close of business on the Closing Date.
4.5 Termination. At any time prior to the Closing, this Agreement may be terminated and the transactions contemplated hereby abandoned by authorized action taken by the terminating Party:
(a) by mutual written consent duly authorized by DDGG and Seller;
(b) by either DDGG or Seller, if the Closing shall not have occurred on or before September 15, 2015 or such other date that Purchaser and Seller may agree upon in writing (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 4.5(b) shall not be available to any Party whose breach of this Agreement has resulted in the failure of the Closing to occur on or before the Termination Date;
(c) by either DDGG or Seller, if any permanent injunction or other order of a Governmental Authority preventing the consummation of the transactions contemplated hereby shall have become final and nonappealable;
(d) by DDGG, if Seller shall have breached any representation, warranty, covenant or agreement contained herein and such breach shall not have been cured within five business days after receipt by Seller of written notice of such breach (provided, however, that no such cure period shall be available or applicable to any such breach which by its nature cannot be cured) and if not cured within the timeframe above and at or prior to the Closing, such breach would result in the failure of any of the conditions set forth in Section 4.2(c) to be satisfied; or
(e) by Seller, if DDGG shall have breached any representation, warranty, covenant or agreement contained herein and such breach shall not have been cured within five business days after receipt by DDGG of written notice of such breach (provided, however, that no such cure period shall be available or applicable to any such breach which by its nature cannot be cured) and if not cured within the timeframe above and at or prior to the Closing, such breach would result in the failure of any of the conditions set forth in Section 4.2(b) to be satisfied.
4.6 Effect of Termination. In the event of termination of this Agreement as provided in Section 4.5, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of the Purchaser, Seller, or their respective officers, directors, stockholders or Affiliates; provided, however, that the provisions of this Section 4.6 (Effect of Termination), Section 7.2 (Public Announcements), Section 7.3 (Confidentiality), and Article 9 (Miscellaneous) shall remain in full force and effect and survive any termination of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents and warrants to Seller as follows:
5.1 Incorporation; Authority. The Purchaser (i) is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and is duly qualified as a foreign corporation in any other jurisdiction in which it does business; and (ii) has all requisite power and authority to own, lease and operate the Purchased Assets and to carry on its business as presently conducted and to execute, deliver and perform its obligations under this Agreement and each other Transaction Agreement to which the Purchaser is a party.
5.2 Execution; Validity of Agreement; Due Authorization. This Agreement and each other Transaction Agreement to which the Purchaser is a party has been duly executed and delivered by the Purchaser and this Agreement and each other Transaction Agreement to which the Purchaser is a party constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its respective terms. The execution and delivery of this Agreement by the Purchaser and the performance by the Purchaser of its obligations hereunder have been duly authorized by all necessary corporate action on the part of the Purchaser.
5.3 Consents and Approvals; No Violations. None of the execution, delivery or performance of this Agreement or any other Transaction Agreement by the Purchaser, the consummation by the Purchaser of the transactions contemplated hereby or thereby, or the compliance by the Purchaser with any of the provisions hereof or thereof will (a) require (i) any filing with or notice to any Governmental Authority or other Person, (ii) the obtaining of any Permit or (iii) the expiration or termination of any statutory or regulatory waiting period, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or require any payment) under, any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Purchaser is a party or by which the Purchaser or any of the Purchaser’s properties or assets is bound, (c) violate any Applicable Laws, or (d) result in the creation of any Lien upon any of the Purchased Assets.
5.4 DDGG Common Stock and VGGL Common Stock. The DDGG Common Stock and the VGGL Common Stock, when issued and paid for in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable securities of the Purchaser and Viggle, Inc., respectively.
5.5 Broker’s Fee. No agent, broker, investment banker, firm, or other Person, acting on behalf of or under the authority of the Purchaser or any of its Affiliates, is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee or expense, directly or indirectly, in connection with any of the transactions contemplated by this Agreement or any of the other Transaction Agreements.
6. REPRESENTATIONS AND WARRANTIES REGARDING SELLER AND THE PURCHASED ASSETS. Seller and MGT Parent hereby represent and warrant to the Purchaser and Viggle as follows, and the Purchaser and Viggle, in agreeing to consummate the transactions contemplated by this Agreement, have relied upon such representations and warranties:
6.1 Incorporation; Authority. Seller and MGT Parent (i) are each duly incorporated and validly existing corporations in good standing under the laws of the State of Delaware and are duly qualified as a foreign corporations in any other jurisdiction in which they do business; and (ii) have all requisite power and authority to own, lease and operate their property and to carry on its business as presently conducted and to execute, deliver and perform their obligations under this Agreement and each other Transaction Agreement to which they are a party. A true and correct copy of the Certificate of Incorporation of Seller, as amended to date, has been delivered to DDGG and is in full force and effect as of the Agreement Date.
6.2 Execution; Validity of Agreement; Due Authorization. This Agreement and each other Transaction Agreement to which Seller or MGT Parent is a party has been duly executed and delivered by Seller or MGT Parent, as the case may be, and this Agreement and each other Transaction Agreement to which Seller or MGT Parent, as the case may be, is a party constitutes a legal, valid and binding obligation of Seller, enforceable against Seller or MGT parent, as the case may be, in accordance with their respective terms. The execution and delivery of this Agreement by Seller and MGT Parent and the performance by Seller and MGT Parent of their obligations hereunder have been duly authorized by all necessary corporate action on the part of Seller and MGT Parent.
6.3 Consents and Approvals; No Violations. Except as set forth on Schedule 6.3, none of the execution, delivery or performance of this Agreement or any other Transaction Agreement by Seller and MGT Parent, the consummation by Seller and MGT Parent of the transactions contemplated hereby or thereby, or the compliance by Seller and MGT Parent with any of the provisions hereof or thereof will (a) require (i) any filing with or notice to any Governmental Authority or other Person, (ii) the obtaining of any Permit or (iii) the expiration or termination of any statutory or regulatory waiting period, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or require any payment) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Seller or MGT Parent is a party or by which Seller or MGT Parent or any of Seller’s or MGT Parent’s properties or assets is bound, (c) violate any Applicable Laws, or (d) result in the creation of any Lien upon any of the Purchased Assets.
6.4 Investment Representations.
(a) Seller understands that the issuance of the Securities hereunder is not being registered under the Securities Act or any state securities laws by reason of specific exemptions under the provisions thereof;
(b) Seller understands that the Securities are “restricted securities” under applicable securities laws which provide, in substance, that the such shares of stock may only be disposed of pursuant to an effective registration statement under the Securities Act and applicable state securities laws or an exemption from such registration, (ii) the Purchaser has no obligation or intention to effect any registration of the shares of the Securities, and (iii) the Purchaser may endorse any certificates representing the Securities with a legend describing the restrictions referenced in clause (i) of this Section 6.4(b);
(c) Seller represents that, both at the time that it was offered the Securities and upon the execution of this Agreement, it is an accredited investor, as defined in Rule 501 of Regulation D of the U.S. Securities and Exchange Commission (17 CFR Section 230.501 et seq.);
(d) Seller represents that it is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of the Securities. Seller is acquiring the Securities in the ordinary course of its business. Seller acknowledges that it is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling them or any part thereof in violation of the Securities Act of 1933 (the “Securities Act”) or any applicable state securities law, has no present intention of distributing any of the Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of the Securities in violation of the Securities Act or any applicable state securities law. Seller represents that it, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Seller is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. Seller represents that it has read and understands the Risk Factors set forth in Viggle’s latest Quarterly Report on Form 10-Q. Seller acknowledges that it has had the opportunity to review all of Viggle’s reports as filed with the Securities and Exchange Commission and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of Viggle and the Purchaser concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about Viggle and the Purchaser and their respective financial conditions, results of operations, businesses, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that Viggle or the Purchaser possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Seller acknowledges and agrees that neither Viggle, the Purchaser nor any of their representatives has provided Seller with any information or advice with respect to the Securities nor is such information or advice necessary or desired. None of Viggle, the Purchaser nor any of their representatives has made or makes any representation as to Viggle, the Purchaser or the quality of the Securities. In connection with the issuance of the Securities to Seller, none of Viggle, the Purchaser nor any of their representatives has acted as a financial advisor or fiduciary to Seller. Seller is not acquiring the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
6.5 Purchased Assets. Prior to giving effect to the transactions contemplated herein:
(a) Seller and MGT Parent are the exclusive, true and lawful owner of all right, title, and interest in and to the Purchased Assets and have good and valid title thereto. The Purchased Assets are free and clear of any Liens, licenses or other encumbrances and no rights, licenses, covenants not to sue or similar rights have been granted with respect to the Purchased Assets. The Purchased Assets are all of the assets and properties used in connection with the conduct of the Business and are sufficient to operate the Business as presently operated.
(b) The Purchased Assets have not been the subject of any Action and, to Seller’s Knowledge, there is no Action pending, asserted or threatened by or against Seller or MGT Parent concerning the ownership, use of, misappropriation, or licensed right to use, any of the Purchased Assets.
(c) All of the inventors of the Purchased Assets have assigned their rights in the Purchased Assets to the Seller and all such rights are included in the Purchased Assets. No inventor of the Purchased Assets is in default or breach of any term of any employment agreement, non-disclosure agreement, assignment of invention agreement or similar agreement relating to the protection, ownership, development, use or transfer of the Purchased Assets. To the extent that any Purchased Asset has been conceived, developed or created for Seller by any other Person, Seller has executed valid and enforceable written agreements with such Person with respect thereto transferring to Seller the entire right, title and interest therein and thereto by operation of law or by valid written assignment.
(d) Except as set forth in Schedule 6.5, there are no inventors of the Purchased Assets other than the named inventors of the Purchased Assets. There are no asserted or unasserted claims of ownership of the Purchased Assets by any Person other than the named owners of the Purchased Assets, and all such rights are being transferred to DDGG pursuant to this Agreement.
(e) All documents, agreements, prototypes, models, product samples, books, notebooks, certificates, licenses, files and any other diligence materials that Seller has provided to the Purchaser in connection with the Purchaser’s evaluation of the Purchased Assets are true, correct and complete originals (if originals were provided by Seller) or copies of such materials.
(f) The Seller has provided to the Purchaser all information pertaining to the player data (including, without limitation, player registrations, deposits, active users, mailing lists) and such information is accurate and correctly reflects the information as it relates to the Business.
(g) Seller owns or has the right to use all Software material to the Business, including, but not limited to, the operation of draftday.com, and Seller is hereby transferring all such rights as part of the Purchased Assets
(h) Seller has sufficient readily available cash-on-hand to consummate the transactions contemplated by this Agreement and to pay to Purchaser cash in an amount equal to the Player Deposits.
(i) Section 6.5(i) of the Disclosure Schedule lists all registrations of Intellectual Property used in the Business, and all such registrations are in good standing. Seller or MGT Parent owns all right, title and interest in and to the Intellectual Property assets used in the Business free and clear of Liens. Except as set forth in Section 6.5(i) of the Disclosure Schedule, none of MGT Parent, the Seller, the Purchased Assets or the Business as currently or formerly owned, licensed or used, have not and do not infringe, violate or misappropriate the Intellectual Property of any Person. To Seller’s Knowledge, no person or entity has infringed, violated or misappropriated, or is infringing, violating or misappropriating, any Intellectual Property assets included in the Purchased Assets.
6.6 Litigation. There are no actions, lawsuits, judgments, claims, investigations or legal or administrative proceedings, pending or threatened against Seller or MGT Parent. There is no judgment, order, injunction, decree or award (whether rendered by a court, administrative agency or by arbitration) to which Seller or MGT Parent is a party.
6.7 Employees.
(a) As of the date of this Agreement, Seller employs seven (7) employees and one (1) consultant in operating the Business. The names, job titles and rates of compensation (including wages, salaries and bonuses, including anticipated or contingent bonuses (if any), and deferred compensation (if any) of such employees and consultant are listed on Schedule 6.7 (collectively, the “Employees”).
(b) There are no written employment agreements with any Employees that are not terminable on the giving of reasonable notice in accordance with Applicable Law. To Seller’s Knowledge, no Employee is in violation of any term of any employment contract, confidentiality or other proprietary information disclosure agreement or any other contract relating to the right of any such Person to be employed by, or otherwise perform services for, Seller.
(c) No Employee or former employee of the Seller or of any prior owner of the Purchased Assets has any right or claim to any of the Purchased Assets.
(d) Seller has never maintained any Employee Plan which has been subject to title IV of ERISA or Code Section 412 or ERISA Section 302. No assets or liabilities with respect to the Employees shall be transferred as a result of this Agreement from any Employee Plan to any plan maintained by the Purchaser.
6.8 Contracts. The Transferred Contracts represent all of the contracts, agreements and commitments, whether written or oral, of Seller or MGT Parent used in the Business. Seller has previously delivered to Purchaser a correct and complete copy of each such written agreement and contract of Seller or MGT Parent used in the Business (as amended to date) and a written summary setting forth the material terms and conditions of each oral agreement of Seller or MGT Parent used in the Business. Each such agreement is legal, valid, binding, enforceable, and in full force and effect. Neither Seller nor MGT Parent is in breach or default under such agreements, and, to Seller’s Knowledge, no event has occurred which with notice or lapse of time would constitute a breach or default of such agreements, or permit termination, modification, or acceleration, under such agreements. There is no agreement, order, or other instrument binding upon the Seller, MGT Parent or the Business which restricts or prohibits the Business from competing with any other Person, from engaging in any business or from conducting activities in any geographic area, or which otherwise restricts or prohibits the conduct of the Business.
6.9 Bankruptcy. Neither MGT Parent nor Seller has committed nor does it currently intend to commit any act of bankruptcy, is not insolvent, has not proposed nor currently intends to propose a compromise or arrangement to its creditors generally, has not had nor currently intends to have any petition for a receiving order in bankruptcy filed against it, has not made nor currently intends to make a voluntary assignment in bankruptcy, has not initiated nor intends to initiate any proceeding to have itself declared bankrupt or wound-up, has not initiated nor intends to initiate any proceeding to have a receiver appointed to any part of its assets, has not had any creditor take nor currently anticipates that any creditor will take possession of any of its property, nor has it had any of the foregoing become enforceable nor currently anticipates that any of the foregoing will become enforceable upon any of its property or the Purchased Assets.
6.10 Compliance with Laws; Permits.
(a) The Seller and MGT Capital have been and are in compliance with all Applicable Laws, Permits, judgments, decrees, and reporting requirements applicable to the Business and the Purchased Assets. Not in limitation of the foregoing, the Seller has posted a privacy policy and terms of use to all consumers of the Business, which privacy policies and terms of use comply with all Applicable Laws, and the Seller has only used data collected from consumers in compliance with the terms of such privacy policy. Not in limitation of the foregoing, the Seller and MGT Parent have filed all tax returns for any periods prior to the Closing that are required to be filed. Such tax returns are or will be true, complete and correct in all material respects. All taxes due and owing by Seller or MGT Parent (whether or not shown on any tax return) have been, or will be, timely paid. MGT Parent and Seller have withheld and paid each tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law, and have otherwise complied with all employment laws, including maintaining all workers compensation insurance, unemployment insurance and disability insurance. Seller is not a "foreign person" as that term is used in Treasury Regulations Section 1.1445-2.
(b) The Seller and MGT Parent has all Permits from Governmental Authorities required for the operation of the Business and the ownership of the Purchased Assets, each of which will be in full force and effect on the Closing Date. All such Permits are set forth on Schedule 6.10 attached hereto. No registrations, filings, applications, notices, transfers, consents, approvals, orders, qualifications, waivers or other actions of any kind are required by virtue of the assignment of such Permits to the Purchaser as contemplated hereby.
6.11 Financial Statements.
(a) The following financial statements of the Business are set forth on Schedule 6.11(a) hereto: (i) statement of profits and losses for the periods ended December 31, 2014 and June 30, 2015, (ii) a balance sheet as of December 31, 2014 and June 30, 2015, and (iii) player deposit information, including related assets and liabilities, as of June 30, 2015. Such financial statements of the Business fairly present in all material respects the financial position and results of operations and cash flows of the Business as at the dates and for the periods presented therein.
(b) The Business has no liabilities, except (i) those liabilities reflected, disclosed or reserved against on the financial statements of the Business referenced in Section 6.11(a)(ii) above, (ii) liabilities resulting from the obligations set forth in this Agreement and the other Transaction Agreements, (iii) liabilities under the Transferred Contracts, and (iv) liabilities incurred in the ordinary course of business since June 30, 2015 and which are not, in the aggregate, material in amount
(c) Since June 30, 2015, no event or condition of any character has had, or is reasonably likely to result in, a Material Adverse Effect on the Business.
(d) All existing Player Deposits represent valid deposits of customers of the Business arising from bona fide transactions entered into in the ordinary course of business.
6.12 Books and Records. All books and records of the Seller relating to the Business, including, but not limited to, records and lists of past, present or prospective customers, suppliers, or personnel, marketing plans, sales literature and promotional literature and other books, ledgers, files, reports, operating records, records relating to the Player Deposits and records relating to the Assumed Liabilities are accurate and have been maintained in a manner consistent with customary industry practices and in compliance with Applicable Law. All financial and accounting books, ledgers and accounts of the Seller relating to the Business have been properly and accurately kept and completed in all material respects, and do not contain any material inaccuracies or discrepancies of any kind.
6.13 Data Room. To the best of the Seller’s Knowledge, all information and documentation contained in the electronic data room prepared by the Seller, to which the Purchaser and Viggle have been provided access, is true and accurate and correctly reflects the subject matter to which it relates, as well as the Business. No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Purchaser or Viggle pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.
6.14 Consents and Approvals. No Consents or notices to, or filings, registrations, or qualifications with any Person or Governmental Authority and no Consents or waivers from, or notices to, any other party are required for the consummation by Seller or MGT Parent of the transactions contemplated by this Agreement and the other Transaction Agreements, except for Consents from Seller’s and MGT Parent’s board of directors.
6.15 Broker’s Fee. No agent, broker, investment banker, firm, or other Person, acting on behalf of Seller or any of its Affiliates, or under the authority of Seller or any of its Affiliates, is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee or expense, directly or indirectly, in connection with any of the transactions contemplated by this Agreement or any of the other Transaction Agreements.
7. ADDITIONAL AGREEMENTS.
7.1 Seller Non-compete and Non-Solicit. From and for five (5) years after the Closing Date, neither Seller, nor MGT Parent nor any of their Affiliates will, directly or indirectly: (a) own, manage, operate, join, finance, provide advice or services to, control, or be connected in any manner with any business or activity which is competitive with the Business, as conducted by Seller and/or MGT immediately prior to the Closing, (b) cause or encourage any Transferred Employee to discontinue his or her relationship with the Purchaser, or (c) cause or encourage any customer of the Business to discontinue its relationship with the Purchaser. Notwithstanding the preceding sentence, nothing herein shall prevent Seller or MGT Parent at any time from acquiring minority equity interests of no more than 10 percent (10%) in any such Business. MGT Parent and Seller, on their own behalf and on behalf of their respective Affiliates and all of their respective legal successors, heirs and assignees, covenants not to sue Viggle Inc., Purchaser, their Affiliates, or any of their customers, as well as each of their respective successors, assigns, current and former shareholders, officers, directors, employees, agents, attorneys, and any other representatives for any direct or indirect infringement of any patents owned by Seller, MGT Parent or any of their Affiliates.
7.2 Public Announcements. Purchaser or Viggle may issue a press release or other public statement with respect to this Agreement or the transactions contemplated hereby without the prior approval of Seller. Seller also acknowledges that Viggle Inc. may file an 8-K regarding this agreement and make such other references to this agreement in its filings as it deems appropriate. MGT Parent may file an 8-K regarding this Agreement and make such other references to this Agreement in its SEC filings.
7.3 Confidentiality. Except for any press release or public announcement previously issued or issued in accordance with Section 7.2, all terms of this Agreement, the other Transaction Agreements and the transactions contemplated hereby and thereby shall remain confidential, except as disclosure may be required by Law. No Party hereto shall disclose to anyone the negotiations, any information concerning the contemplated transactions, or anything contained herein, except to their accountants, employees, bankers and attorneys in connection with the transactions contemplated by this Agreement, without the prior written approval of the other Party. Seller and MGT Parent agree that from and after the Closing Date, they will, and will cause their Affiliates to, keep secret and retain in the strictest confidence, and will not use for the benefit of itself or others, any proprietary information with respect to the Purchased Assets; provided, however, proprietary information in intangible form and not reduced to writing may be retained and used by Persons who have access to such information.
7.4 Further Assurances. The Purchaser and Seller and MGT Parent shall, at any time and from time to time after the Agreement Date, do or cause to be done all such further acts, and to execute, acknowledge, deliver and file, or cause to be executed, acknowledged, delivered or filed, all such deeds, transfers, conveyances, assignments or assurances as may be reasonably requested by another Party for: (i) transferring, conveying and assigning the Purchased Assets to the Purchaser; and (ii) otherwise effectuating the transactions contemplated by this Agreement. To the extent related to the Purchased Assets, the Purchaser and Seller shall, at any time and from time to time after the Agreement Date, provide such information or documentation as is reasonably requested by another Party in connection with completing any tax returns or audits.
7.5 Post-Closing Deliverable. MGT Parent covenants and agrees that by Friday, September 18, 2015 at 5:00 pm Eastern Time, it will deliver an opinion of counsel, which counsel shall be reasonably acceptable to Viggle, and which opinion will be addressed to the MGT Parent, to Viggle and to DDGG. Viggle agrees to pay $25,000 on September 9, 2015 directly to the firm designated by MGT Parent for such purpose. Viggle acknowledges and agrees that Sichenzia, Ross Friedman Ference LLP is acceptable to them. Such opinion will conclude, on a reasoned basis, to Viggle’s commercially reasonable satisfaction, that the transactions contemplated by this Agreement do not require the approval of MGT Parent’s stockholders. In the event that such opinion does not, to Viggle’s commercially reasonable satisfaction, conclude, on a reasoned basis, that the transactions contemplated hereby do not require the approval of the stockholders of MGT Parent under Delaware law or other Applicable Law, or if MGT Parent fails to provide the requisite opinion, then Viggle may, within ten (10) business days thereafter, elect to exercise a right to rescind the purchase of the Purchased Assets (the “Rescission Right”). Viggle acknowledges that the firm rendering such opinion may rely on facts as presented to the firm by MGT Parent but without independently verifying such facts, as long as such reliance is in good faith; and MGT Parent represents that all information provided for such purpose will be true and accurate; and provided further that the firm rendering such opinion will review MGT parent’s filings with the Securities and Exchange Commission. In the event that Viggle exercises the Rescission Right, the parties will rescind the purchase and sale of the Purchased Assets, such that Viggle and DDGG will return to MGT Parent and Seller the Purchased Assets transferred to them, and MGT Parent and Seller will: return all consideration provided by Viggle or DDGG in connection herewith, including (a) returning the 30 Day Note for cancellation, (b) returning the Six Month Note for Cancellation, (c) returning the Viggle Shares for cancellation, (d) returning the DDGG Common Stock for cancellation and (e) returning the Warrant that is issued to Seller pursuant to the Transition Services Agreement. In addition, if Viggle elects to exercise the Rescission Right, MGT Parent will pay Viggle and DDGG each $25,000, for a total of $50,000, in compensation for expenses incurred in connection with the negotiation and consummation of the transactions contemplated hereby.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION.
8.1 Survival of Representations, Warranties and Covenants. All representations and warranties set forth or made in this Agreement and any other Transaction Agreement shall survive the Closing until the date that is two years after the Closing Date. All covenants and agreements of the Parties set forth in this Agreement and the other Transaction Agreements to be performed after the Closing shall survive the Closing in accordance with their respective terms. Any claim pending on the expiration date of any applicable survival period for which a notification of claim has been made pursuant to Section 8.4 below on or before such expiration date may continue to be asserted and indemnified against until finally resolved.
8.2 Indemnification Obligations of Seller. Seller and MGT Parent agree to indemnify, defend and hold harmless Viggle, DDGG and their respective shareholders, officers, directors, managers, representatives, agents, employees and Affiliates (collectively, the “DDGG Indemnitees”) from and against any claim, suit, action, liability, loss, damage, deficiency, fee, cost or expense of any nature whatsoever (including, without limitation, any interest, penalties, investigation expenses and fees through trial and appeals, and disbursements of counsel and accountants (collectively, “Losses”) arising out of, based upon or resulting from: (i) the breach of any representation or warranty of Seller or MGT Parent which is contained in this Agreement, any other Transaction Agreement or any exhibits or schedules hereto or thereto; (ii) any breach or failure to perform any of the covenants, agreements or undertakings of Seller or MGT Parent contained in this Agreement, any other Transaction Agreement or any exhibit or schedule hereto or thereto; (iii) any claims by Transferred Employees for compensation or benefits or other matters under an Employee Plan accrued prior to the Closing Date and any claims of any nature whatsoever (whether accruing before or after Closing) by any Employee who is not hired by the Purchaser; (iv) any failure to comply with any “bulk sales,” “bulk transfer” or similar laws of any State, if applicable; (v) any and all obligations and liabilities that do not form part of the Assumed Liabilities; and (vi) any and all costs and expenses (including reasonable legal and accounting fees) incident to the enforcement of the indemnification rights of the DDGG Indemnitees under this Section 8.2.
8.3 Indemnification Obligations of DDGG. DDGG agrees to indemnify, defend and hold harmless Seller and its shareholders, officers, directors, managers, representatives, agents, employees and Affiliates (collectively, the “Seller Indemnitees”) from and against any Losses arising out of, based upon or resulting from: (i) the breach of any representation or warranty of DDGG which is contained in this Agreement, any other Transaction Agreement or any exhibits or schedules hereto or thereto; (ii) any breach or failure to perform any of the covenants, agreements or undertakings of DDGG contained in this Agreement, any other Transaction Agreement or any exhibits or schedules hereto or thereto; and (iii) any and all costs and expenses (including reasonable legal and accounting fees) incident to the enforcement of the indemnification rights of the Seller Indemnitees under this Section 8.3.
8.4 Notification of Claims. In the event that any Party asserts a claim for indemnification hereunder, such Party shall (a) provide the indemnifying Party (“Indemnifying Party”) with prompt written notice of the nature of such claim (an “Indemnification Notice”), (b) make available to the Indemnifying Party all relevant information which is material to the claim and which is in the possession of the Seller Indemnitee or DDGG Indemnitee (as the case may be) (“Indemnitee”) and (c) otherwise reasonably cooperate with the Indemnifying Party with respect to such claim; provided, however, that the failure of an Indemnitee to deliver an Indemnification Notice under this Section 8.4 shall not relieve the Indemnifying Party of its indemnification obligations under this Article 8 unless and only to the extent that such Indemnifying Party is materially prejudiced by such failure.
8.5 Objections to Claims for Indemnification. In the case of claims made by the DDGG Indemnitees, the Seller or MGT Parent may object to the claim made pursuant to Section 8.4 within 30 days after the Seller’s receipt of such notice, or (ii) in the case of claims made by the Seller, DDGG may object to the claim made pursuant to Section 8.4 within 30 days after DDGG’s receipt of such notice. If the Indemnifying Party does not object in writing within such 30-day period, such failure to so object shall be an irrevocable acknowledgment by the Indemnifying Party that the Indemnified Party is entitled to the full amount of the claim for Losses set forth in the notice, and payment in respect of such Losses shall thereafter be made in accordance with this Article 8.
8.6 Resolution of Conflicts.
(a) In case the Indemnifying Party delivers an objection in accordance with Section 8.5, the parties shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims. If the parties should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties.
(b) If the parties, notwithstanding such good faith effort, fail to resolve such dispute within 30 days after the Seller advises the Purchaser of its objections, then such dispute shall be resolved in accordance with the provisions of Section 9.4.
8.7 Investigation. The right to indemnification, payment of Losses or any other remedy based on the representations, warranties and the covenants hereunder will not be affected by any investigation conducted with respect to, or any knowledge acquired, or capable of being acquired at any time, whether before or after the Closing Date, with respect to the accuracy or inaccuracy of, or compliance with, any such representation, warranty or covenant. Furthermore, no information or knowledge obtained in any investigation pursuant this Agreement or any other Transaction Agreement shall affect or be deemed to modify any representation, warranty or covenant contained herein or therein.
8.8 Third-Party Claims. The obligations and liabilities of an Indemnifying Party under this Article 8, with respect to Losses resulting from a claim brought by any third party (a “Third-Party Claim”) shall be subject to the following terms and conditions:
(a) Promptly after delivery of an Indemnification Notice in respect of a Third-Party Claim, the Indemnifying Party may elect, by written notice to the Indemnitee within ten (10) days of an Indemnification Notice, to undertake the investigation and defense thereof with counsel reasonably satisfactory to the Indemnitee, at the sole cost and expense of the Indemnifying Party. If the Indemnifying Party chooses to defend any Third-Party Claim, the Indemnitee shall cooperate with all reasonable requests of the Indemnifying Party and shall make available to the Indemnifying Party any books, records or other documents within its control that are necessary or appropriate for such defense.
(b) In the event that the Indemnifying Party, within ten (10) days after receipt of an Indemnification Notice, does not so elect to defend such Third-Party Claim, the Indemnitee will have the right to undertake the investigation and defense of such Third-Party Claim for the account of the Indemnifying Party. The Indemnitee shall not settle or compromise any Third-Party Claim, or consent to the entry of a judgment, whether or not the Indemnifying Party shall elect to defend such Third-Party Claim, without the written consent of the Indemnifying Party.
8.9 Payment and Limitations On Indemnification. Absent fraud or any breach of the representations and warranties contained in Section 6.5 (Purchased Assets), (i) Seller shall have no obligation to indemnify the DDGG Indemnitees under Section 8.2(i) unless and until the aggregate amount of all Losses incurred by the DDGG Indemnitees in respect thereof exceeds $5,000 (the “Threshold Amount”), whereupon Seller shall be obligated in respect of all Losses so identified without regard to the Threshold Amount from the first dollar of such Losses, and (ii) Seller shall have no obligation to indemnify the DDGG Indemnitees under Section 8.2(i) for aggregate Losses exceeding the Purchase Price. Absent fraud, (x) Purchaser shall have no obligation to indemnify the Seller Indemnitees under Section 8.3(i) unless and until the aggregate amount of all Losses incurred by the DDGG Indemnitees in respect thereof exceeds the Threshold Amount, whereupon DDGG shall be obligated in respect of all Losses so identified without regard to the Threshold Amount from the first dollar of such Losses, and (y) Purchaser shall have no obligation to indemnify the Seller Indemnitees under Section 8.3(i) this Agreement for aggregate Losses exceeding the Purchase Price.
9. MISCELLANEOUS.
9.1 Costs and Attorneys’ Fees. The Parties agree that in the event it becomes necessary for any Party to institute litigation or obtain the services of an attorney in order to enforce its rights under the provisions of this Agreement, then, in that event, the prevailing Party as determined by a court of competent jurisdiction, may be awarded reasonable attorneys’ fees and costs expended in pursuit of such litigation, including appellate litigation.
9.2 Notices. All notices, requests, claims, demands, waivers, instructions, documents and other communications to be given pursuant to this Agreement shall be in writing and shall be delivered personally, faxed, or sent by nationally-recognized overnight courier to a Party at the address set forth below for such Party or to such other address as the Party to whom notice is to be given may have furnished to the other Party hereto in writing in accordance herewith. Any such notice or communication shall be deemed to have been delivered and received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of faxing, on the date sent (or on the first business day following the date sent if the date sent is not a business day) if confirmation of successful transmission is received, and (c) in the case of a nationally-recognized overnight courier, on the first business day after the date when sent for overnight delivery:
If to Purchaser, to:
DraftDay Gaming Group, Inc.
902 Broadway, 11th Floor
New York, NY 10010
Attention: John Small
with a copy (which will not constitute notice) to:
DraftDay Gaming Group, Inc.
902 Broadway, 11th Floor
New York, NY 10010
Attention: Tom McLean
With a copy (which will not constitute notice) to:
DraftDay Gaming Group, Inc.
c/o Sportech, Inc.
555 Long Wharf Drive, 11th Floor
New Haven, CT 06511
Attention: Frank Chesky
If to Seller or MGT Parent, to:
MGT Sports, Inc.
500 Mamaroneck Avenue – Suite 204
Harrison, NY 10528
Attention: Robert Ladd, President
Fax: (914) 630-7532
9.3 Entire Agreement. This Agreement (including the exhibits and schedules hereto), and the other Transaction Agreements constitute the entire agreement among the Parties with respect to the subject matter hereto and supersede all prior agreements and understandings, both oral and written, among the Parties with respect to the subject matter of this Agreement.
9.4 Governing law; Consent to Jurisdiction.
(a) This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without regard to the conflict of laws rules thereof.
(b) The Parties hereto irrevocably: (i) agree that any suit, action or other legal proceeding arising out of this Agreement shall be brought within the State of Delaware, (ii) consent to the jurisdiction of each such court in any suit, action or proceeding, (iii) waive any objection which they, or any of them, may have to the laying of venue of any such suit, action or proceeding in any of such courts, and (iv) agree that service of process by overnight courier or registered or certified mail, at the addresses listed in Section 9.2 shall be good and sufficient service of process. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PDDGGCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
9.5 Binding effect. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, personal representatives, successors and permitted assigns. This Agreement may not be assigned by any Party hereto without the prior written consent of the other Party, which consent may be withheld at the discretion of each Party whose consent is requested and any purported assignment, unless so consented to, shall be void and without effect.
9.6 Waivers and Amendments. This Agreement may be amended, superseded, cancelled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the Parties hereto or, in the case of a waiver, by the Party waiving compliance. Any Party may waive any misrepresentation by any other Party, or any breach of warranty by, or failure to perform any covenant, obligation or agreement by any other Party, provided that mere inaction or failure to exercise any right, remedy or option under this Agreement, or any delay in exercising the same, will not operate as nor shall be construed as a waiver, and no waiver will be effective unless set forth in writing and only to the extent specifically stated therein, and no single or partial exercise of any such right, power or privilege will preclude any further exercise thereof or the exercise of any other such right, power or privilege.
9.7 Recitals, Exhibits and Schedules. The recitals to this Agreement and all exhibits and schedules attached hereto are hereby incorporated by reference into, and made a part of, this Agreement.
9.8 Headings. The descriptive headings in this Agreement are inserted for convenience only and do not constitute a part of this Agreement.
9.9 Severability. If any provision of this Agreement is determined to be illegal or unenforceable, such provision will be deemed amended to the extent necessary to conform to Applicable Law, or, if it cannot be so amended without materially altering the intention of the Parties, it will be deemed stricken and the remainder of this Agreement will remain in full force and effect.
9.10 Specific Performance. Each of the Parties hereto acknowledges and agrees that the other Party hereto would be irreparably damaged in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that there would be no adequate remedy at law or in monetary damages to compensate for any such breach. Accordingly, each Party hereto agrees that, in addition to any remedy to which such Party may be entitled at law or in equity, they each shall be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof, in each case without being required to post a bond or other security.
9.11 Fees and Expenses. Subject to Section 9.1, the parties shall each pay their own expenses incidental to the preparation and negotiation of this Agreement and the consummation of the transactions contemplated hereby.
9.12 Legal Representation of the Parties. Each of the Parties hereto has had the opportunity to have its own legal counsel independently advise such Party with respect to the transactions contemplated by this Agreement and the other Transaction Agreements. The Parties expressly agree that the language used in this Agreement shall be deemed to be the language chosen by the Parties hereto to express their mutual intent, and no provision of this Agreement should be construed against or interpreted to the advantage of any Party hereto by reason of such Party or its legal counsel having drafted or participated in the drafting thereof.
9.13 Payment of Transfer Costs and Expenses. All stamp, transfer, documentary, sales, use, bulk, registration and other such taxes and fees (including penalties and interest) which may be imposed in any jurisdiction in connection with, or arising from, any of the transactions set forth herein shall be paid by the Purchaser.
9.14 No Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties hereto and their successors and permitted assigns and, except with respect to the rights of the DDGG Indemnitees and Seller Indemnitees under Article 8, this Agreement shall not be deemed to confer upon any third party any remedy, claim, reimbursement or other right in addition to those which may exist without regard to this Agreement.
9.15 Counterparts; Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together will constitute one and the same instrument. This Agreement and any amendments hereto, to the extent executed and delivered by means of a facsimile machine or e-mail of a PDF file containing a copy of an executed agreement (or signature page thereto), shall be treated in all respects and for all purposes as an original agreement or instrument and shall have the same binding legal effect as if it were the original signed version thereof.
[Remainder of Page Intentionally Blank–Signature Page Follows]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.
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MGT SPORTS, INC.
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By:
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/s/ Robert Ladd |
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Name: Robert Ladd |
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Title: President |
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MGT CAPITAL INVESTMENTS, INC.
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By:
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/s/ Robert Ladd |
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Name: Robert Ladd |
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Title: President |
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VIGGLE INC.
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By:
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/s/ John Small |
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Name: John Small |
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Title: Chief Financial Officer |
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DRAFTDAY GAMING GROUP, INC.
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By:
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/s/ John Small |
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Name: John Small |
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Title: Chief Financial Officer |
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[Signature Page to Asset Purchase Agreement]
STOCKHOLDERS' AGREEMENT
DRAFTDAY GAMING GROUP, INC.
(a Delaware corporation)
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement") is made as of September 8, 2015, by and among (i) DraftDay Gaming Group, Inc. (hereinafter referred to as the "Company"), a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and (ii) the holders of common stock listed on Exhibit A (the "Common Holders"). The Common Holders are hereinafter sometimes together referred to as the "Stockholders" and sometimes each individually referred to as a "Stockholder".
WHEREAS, the Company has an authorized capital stock as more fully set forth in that certain Certificate of Incorporation (the "Certificate"), consisting of Fifty Million (50,000,000) shares of common stock, par value $0.01 (which Common Stock is hereinafter sometimes referred to as the "Common Stock" or "Stock" and shares of Common Stock are hereinafter referred to as "Common Shares" or "Shares").
WHEREAS, the Stockholders are the legal and beneficial owners of all of the issued and outstanding Common Shares, consisting of Twenty-Two Million Nine Hundred Fifty Thousand (22,950,000) shares of Common Stock, set forth on Exhibit A.
WHEREAS, the parties hereto believe that it is in the best interests of the Company and of the Stockholders to make provision for the management of the Company and future dispositions of shares of Stock and certain other matters; and
WHEREAS, the parties hereto desire to set forth in writing their understandings and agreements.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises hereinafter set forth, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Article I
Restrictions on Stock
1.01. Scope of Agreement. This Agreement shall apply to all Shares of Stock, now or hereafter issued by the Company and owned by any present or future Stockholder, whether voluntary, involuntary, or by operation of law, whether resulting from death, bankruptcy, insolvency, or otherwise.
1.02. Restrictions on Transfer by Stockholder. Except as otherwise provided in this Agreement or as agreed upon by the prior written consent of the Viggle Stockholder and one of the Sportech Stockholder or the MGT Stockholder (each as defined in Exhibit A), no Stockholder shall or may sell, exchange, deliver or assign, dispose of, bequeath or gift, pledge, mortgage, hypothecate or otherwise encumber, transfer, or permit to be transferred, whether voluntarily, involuntarily, or by operation of law (including, without limitation, the laws of bankruptcy, insolvency, intestacy, descent, and distribution and succession), all or any of the Shares now owned or hereafter acquired by such Stockholder. Any transfer or attempted transfer of Shares in violation of this Section 1.02 shall, to the fullest extent permitted by law, be null and void ab initio, and the Company shall not, and shall instruct its transfer agent and other third parties not to, record or recognize any such purported transaction on the stock register of the Company.
1.03. Agreement Binding upon Transferees. In the event that, at any time or from time to time, any Shares are transferred to any party, other than the Company or other Stockholders, pursuant to any provision hereof, the transferee shall take such Shares pursuant to all provisions, conditions, and covenants of this Agreement, and, as a condition precedent to the transfer of such Shares, the transferee shall agree, for and on behalf of himself or itself, his or its legal representatives, and his or its transferees and assigns, in writing by the execution of a joinder agreement in the form of Exhibit B to be bound by all provisions of this Agreement as a party hereto and in the capacity of a Stockholder, and the parties hereto shall amend Exhibit A to reflect such party's Share ownership. In the event that there shall be any transfer to any person or entity pursuant to any provision of this Agreement and in compliance with the provisions of this Section 1.03, all references herein to the Stockholders or to any Stockholder shall thereafter be deemed to include such transferee.
1.04. Stock Transfer Record. The Company shall keep a stock transfer book in which shall be recorded the name and address of each Stockholder. No transfer or issuance of any shares of Stock shall be effective or valid unless and until recorded in the stock transfer book. The Company agrees not to record any transfer or issuance of shares of Stock in the stock transfer book unless the transfer or issuance is in strict compliance with all provisions of this Agreement. Each Stockholder agrees that, in the event he desires to make a transfer within the provisions hereof, he shall furnish to the Company such evidence of his compliance with this Agreement as may be reasonably required by the Board of Directors of, or counsel for, the Company.
1.05. Endorsement on Stock Certificates. Each certificate representing shares of Stock of the Company now or hereafter held by any Stockholder shall bear any legend or legends required by applicable securities laws and, in addition thereto, shall bear a statement in substantially the following form:
The voluntary or involuntary encumbering, transfer, or other disposition (including without limitation, any disposition pursuant to the laws of bankruptcy, intestacy, descent and distribution or succession) of the shares of stock evidenced by the within Certificate is restricted under the terms of a Stockholders' Agreement, dated as of September 8, 2015, by and among the Company and its Stockholders, a copy of which Agreement is on file at the principal office of the Company. Upon written request of any such Stockholder of the Company, the Company shall furnish, without charge to such Stockholder, a copy of such Agreement. The holder of this certificate, by acceptance of this certificate, agrees to be bound by all of the provisions of such Stockholders' Agreement.
1.06. Agreements by the Company. The Company agrees, for and on behalf of itself and its successors and assigns, that:
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It shall not issue, transfer, or reissue any shares of Stock in violation of the provisions of this Agreement.
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B.
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All certificates representing shares of Stock issued by the Company and held by a Stockholder shall bear an endorsement in substantially the form specified in Section 1.05 hereof.
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1.07. Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to seek specific performance of the terms hereof (including the provisions herein restricting transfer of the Shares), in addition to any other remedy to which they are entitled at law or in equity, without any requirement to post or provide any bond or other security in connection therewith to prevent breaches of this Agreement by any Party hereto, and to enforce specifically the terms and provisions hereof against any party in any court having jurisdiction.
Article II
Board of Directors
2.01. Board of Directors. The bylaws of the Company shall provide that the Board shall consist of three directors: Robert F.X. Sillerman, who shall be appointed the Chairman of the Board of Directors, one other director designated by the Viggle Stockholder and one director designated by the Sportech Shareholder. The Company shall take all actions necessary to provide that the initial Viggle designees (including Mr. Sillerman) and the initial Sportech designee are nominated for reelection to the Board at the next annual meeting. The Viggle Stockholder shall have the right to designate any replacement for Mr. Sillerman (or his successor(s)) or the other Viggle designee upon the death, resignation, retirement, removal or disqualification from office of Mr. Sillerman (or his successor(s)) or any other Viggle designee, as the case may be, and any replacement for Mr. Sillerman or any of his successors who are duly designated in accordance with this sentence shall be appointed Chairman of the Board. The Sportech Stockholder shall have the right to designate any replacement for the Sportech designee upon the death, resignation, retirement, removal or disqualification from office of any Sportech designee.
2.02. Maintaining Composition of the Board. The Stockholders covenant and agree that they shall at all times and from time to time vote their Shares and any Shares over which they have voting control and, if applicable, vote as a director of the Company, to provide that the Board of Directors of the Company shall at all times consist of three (3) directors, two of whom will be appointed by the Viggle Stockholder and one of whom will be appointed by the Sportech Stockholder.
2.02. Failure to Designate a Board Member. If either the Viggle Stockholder or the Sportech Stockholder fail to exercise its right to designate a director or a replacement director, then the director designated by it and then serving shall be reelected if still eligible to serve as provided herein.
2.03. Removal of Board Members. Each Stockholder also agrees to vote, or cause to be voted, all Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that:
(a) no director elected pursuant to Section 2.01 of this Agreement may be removed from office unless such removal is directed or approved by the Stockholders entitled under Section 2.01 to designate that director. The Stockholder entitled to designate a director may also remove at will and replace that director; and
(b) upon the request of any party or parties entitled to designate a director as provided in Section 2.01 to remove such director, such director shall be removed.
All Stockholders agree to execute any written consents required to perform the obligations of this Agreement, and the Company agrees at the request of any party entitled to designate directors to call a special meeting of stockholders for the purpose of electing or replacing directors.
2.04. No Liability for Election of Recommended Directors. No Stockholder, nor any Affiliate of any Stockholder, shall have any liability as a result of designating a person for election as a director for any act or omission by such designated person in his or her capacity as a director of the Company, nor shall any Stockholder have any liability as a result of voting for any such designee in accordance with the provisions of this Agreement.
2.05. Certificate of Incorporation and Bylaws. The Company and each Stockholder shall take or cause to be taken all lawful action necessary to ensure at all times that the certificate of incorporation and bylaws of the Company are not inconsistent with the provisions of this Agreement.
Article III
Rights of First Refusal
3.01. Definitions. The following terms shall have the following meanings whenever used in this Agreement:
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A.
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"Bona Fide Offer" shall mean a legally enforceable offer in writing, made and signed by an offeror who is not an Affiliate of the Offering Stockholder (as defined in Section 3.01.C. hereof) to purchase Shares of the Offering Stockholder, as hereinafter defined, and who is a person or persons or entity or entities financially capable of carrying out the terms of such Bona Fide Offer.
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B.
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"Offering Stockholder Notice" shall mean written notice sent by the Offering Stockholder to the Other Stockholders (as defined hereinafter) stating that it has received a Bona Fide offer, containing a true and complete copy of the Bona Fide Offer and specifying (i) the number of Offered Shares to be sold by the Offering Stockholder; (ii) the per share purchase price and all terms and conditions of the Bona Fide Offer, including a description of any non-cash consideration in sufficient detail to permit the valuation thereof; (iii) the name(s), address(es) of the offeror or offerors; and (iv) the proposed date, time and location of the closing of the transfer of the Offered Shares (as defined herein), which shall be not less than sixty (60) calendar days from the date of the Offering Stockholder Notice. Any notice that does not contain all such requisite information shall not be considered an "Offering Stockholder Notice" for the purposes of Section 3.02 hereof.
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C.
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"Affiliate," as it relates to any person or entity, shall mean any parent, spouse, brother, or sister, or natural or adopted lineal descendant or spouse of such descendant of such person (any such person hereinafter in this Agreement being referred to as a "Relative"), and any proprietorship, corporation, partnership, trust, limited liability company, or other entity in which such person, entity, or Relative may have an equity interest or in which such person, entity, or Relative is a proprietor, partner, officer, director, employee, consultant, independent, manager, contractor, coventurer, employer, agent, representative, settlor, or beneficiary.
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3.02. Right of First Refusal and Receipt of Bona Fide Offer. Subject to the terms and conditions specified in this Section 3.02, each Stockholder shall have a right of first refusal if any other Stockholder receives a Bona Fide Offer (such other Stockholder, the "Offering Stockholder") to purchase all but not less than all of such Stockholder's Shares (the "Offered Shares") that the Offering Stockholder desires to accept. Each time the Offering Stockholder receives a Bona Fide Offer, the Offering Stockholder shall first make an offering of the Offered Shares to the other Stockholders in accordance with the following provisions of this Section 3.02 prior to transferring such Offered Shares to the party making the Bona Fide Offer (other than transfers that are permitted by Section 1.02 or Articles VII or VIII.) The Offering Stockholder shall, within five (5) Business Days of receipt of the Bona Fide Offer, send an Offering Stockholder Notice to the Company and to the other Stockholders (hereinafter in this Article III referred to as the "Other Stockholders"), which Offering Stockholder Notice shall constitute the Offering Stockholder's offer to sell the Offering Stockholder's Shares to the Other Stockholders at the same price and upon the same terms and conditions as are contained in the Bona Fide Offer and which offer shall be irrevocable until the end of the ROFR Notice Period (as defined hereinafter).
3.03. Procedure. For a period of ten (10) calendar days from its receipt of the Offering Stockholder Notice, the Other Stockholders shall have the right to purchase all (but not less than all) of the Offered Shares by delivering a written notice (a "ROFR Offer Notice") to the Offering Stockholder stating an offer to purchase such Offered Shares on the terms specified in the Offering Stockholder Notice. Each Stockholder that does not deliver a ROFR Offer Notice during the ROFR Notice Period shall be deemed to have waived all of such Stockholder's rights to purchase the Offered Shares under this Article III. If the Other Stockholders shall not, individually or together, purchase (for reasons other than the Offering Stockholder's default hereunder), within the prescribed time periods, all of the Offered Shares, the Offering Stockholder shall have the right to accept the Bona Fide Offer in whole, but not in part, and to sell such Offered Shares, subject to all of the provisions and restrictions of this Agreement, including, without limitation, the co-sale rights set forth in Article VII with respect to those Stockholders who have not delivered ROFR Offer Notices, but only in strict accordance with all of the provisions of the Bona Fide Offer and only if the sale is fully consummated within one hundred twenty (120) calendar days after the mailing of the Offering Stockholder Notice pursuant to Section 3.02 hereof; provided, that any Stockholder who delivers a ROFR Offer Notice shall be deemed to have waived any rights that such Stockholder may have pursuant to Article VII. In the event that the sale is not fully consummated within one hundred twenty (120) calendar days after the mailing of the Offering Stockholder Notice pursuant to Section 3.02 hereof, the provisions of this Article III must again be complied with by the Offering Stockholder before the Offering Stockholder may sell the Offered Shares pursuant to this Article III. Each Stockholder shall take all actions as may be reasonably necessary to consummate the sale contemplated by Section 3.03, including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate. At the closing of any sale and purchase pursuant to this Section 3.01, the Offering Stockholder shall deliver to the purchasing Stockholder(s) certificate or certificates representing the Offered Shares to be sold (if any) accompanied by stock powers with signatures guaranteed and all necessary stock transfer taxes paid and stamps affixed, if necessary, against receipt of the purchase price therefor from such purchasing Stockholder(s) by certified or official bank check or by wire transfer of immediately available funds.
3.04. Exempted Transfers. Notwithstanding the foregoing, the right of first refusal shall not apply to any transaction or related series of transactions that would terminate or upon completion would terminate this Agreement pursuant to Section 12.09.
Article IV
Rights to Future Stock Issuances
4.01. Right of First Offer. Subject to the terms and conditions of this Section 4.01 and applicable securities laws, if the Company proposes to offer or sell any new shares other than Excluded Securities, the Company shall first offer such new shares to each Stockholder. "Excluded Securities" means shares of the Company issued in connection with (a) a grant to any existing or prospective consultants, employees, officers or directors pursuant to any stock option, employee stock purchase or similar equity-based plans or other compensation agreement; (b) the conversion or exchange of any securities of the Company into shares of Common Stock or the exercise of any options, warrants or other rights to acquire such shares, (c) any acquisition by the Company of the stock, assets, properties or business of any person; (d) any merger, consolidation or other business combination involving the Company, (e) the commencement of any transaction or related transactions involving a Change of Control, (f) a stock split, stock dividend or any similar recapitalization or (g) any issuance of warrants or other similar rights to purchase any equity securities of the Company to lenders or other investors (excluding the Stockholders) in any arms’ length transaction providing debt financing to the Company or any of its Subsidiaries.
(a) Within five (5) Business Days following any meeting of the Board at which any issuance or sale of new Company's shares (other than Excluded Securities) is approved, the Company shall give written notice (the "Offer Notice") to each Stockholder, stating (i) its bona fide intention to offer such new shares; (ii) the number of such new shares to be offered; (iii) the proposed per share purchase price and terms, if any, upon which it proposes to offer such new shares; and (iv) the proposed issuance date of such shares.
(b) By written notification to the Company within ten (10) calendar days after the Offer Notice is given, each Stockholder may elect irrevocably to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such new shares which equals the proportion that the Stock then held by such Stockholder bears to the total Stock of the Company issued and held. At the expiration of such ten (10) calendar day period, the Company shall promptly notify each Stockholder that elects to purchase or acquire all the shares available to it (each, a "Fully Exercising Stockholder") or of any other Stockholder's failure to do likewise. During the ten (10) calendar day period commencing after the Company has given such notice, each Fully Exercising Stockholder may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the new shares for which Stockholders were entitled to subscribe but that were not subscribed for by the Stockholders which is equal to the proportion that the Stock issued and held, by such Fully Exercising Stockholder bears to the Stock issued and held, by all Fully Exercising Stockholders who wish to purchase such unsubscribed shares.The closing of any sale pursuant to this Section 4.01(b) shall occur within the later of ninety (90) calendar days of the date that the Offer Notice is given and the date of initial sale of new shares pursuant to Section 4.01(c).
(c) If all new shares referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 4.01(b), no later than five (5) Business Days following the expiration of the ten (10) day period provided in Section 4.01(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 4.01(b), offer and sell the remaining unsubscribed portion of such new shares to any person or persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the new shares within such period, or if such agreement is not consummated within forty-five (45) calendar days of the execution thereof, the right provided hereunder shall be deemed to be revived and such new shares shall not be offered unless first reoffered to the Stockholders in accordance with this Section 4.01.
(d) The right of first offer in this Section 4.01 shall not be applicable to (i) new shares issued to employees, directors, officers, consultants or vendors of the Company; (ii) shares of Stock issued in a public offering; or (iii) the issuance of shares in connection with a Change of Control as defined in Section 8.01.
(e) The right of first offer set forth in this Section 4.01 shall terminate with respect to any Stockholder who fails to purchase, in any transaction subject to this Section 4.01 that closes, all of such Stockholder's pro rata amount of the new shares allocated (or, if less than such Stockholder's pro rata amount is offered by the Company, such lesser amount so offered) to such Stockholder pursuant to this Section 4.01. Following any such termination, such Stockholder shall no longer be deemed a "Stockholder" for any purpose of this Section 4.01.
Article V
Reserved
Article VI
Purchase of Stock Upon Triggering Events
6.01. Repurchase Right of Key Employee Stock. The Company shall have the right to repurchase any and all Shares held by any employee who is terminated for Cause or who, within four (4) years from the date this Agreement was first executed, leaves the Company; provided, that only seventy-five percent (75%) of any Shares held by an employee are subject to this repurchase option and on the later of (i) the first day of the first full month following the date this Agreement was finally executed; or (ii) the first day of the first full month of the employee's date of hire (such date, the "Base Date") two and one-half percent (2.5%) of any and all Shares held by such employee will be released from this repurchase option and on the first day of each month after the Base Date two and one-half percent (2.5%) of such employee's shares will be released from this repurchase option. "Cause" shall mean any of the following:
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The material breach of any material term of his employment agreement;
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The repeated, deliberate or intentional failure, refusal, or the habitual neglect of the employee to substantially perform his duties;
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Acts constituting gross negligence in the performance of his duties or any cause based on criminal misconduct; or
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An act of dishonesty by the employee intended to result in gain or personal enrichment of the employee at the Company's expense.
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Article VII
Co-Sale Rights
7.01. Sales by Stockholder.
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If any Stockholder is permitted under the terms of this Agreement to sell or transfer Shares and proposes to sell or transfer all or a portion of its Shares and neither the Company nor the other Stockholders have exercised their right of first refusal under Article III, then such Stockholder shall promptly give written notice (the "Notice") to the other Stockholders (the "Non-Selling Stockholders") at least thirty (30) calendar days prior to the closing of such sale or transfer. The Notice shall contain the same information as the Offering Stockholder Notice.
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B.
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The Non-Selling Stockholders shall have the right, exercisable upon written notice to such selling Stockholder within ten (10) calendar days after receipt of the Notice, to participate in such sale of Stock on the same terms and conditions as the selling Stockholder. To the extent one or more of the Other Stockholders (a "Participant") exercise such right of participation in accordance with the terms and conditions set forth below, the number of Shares that the selling Stockholder may sell in the transaction shall be correspondingly reduced.
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Each Participant may sell all or any part of that number of Shares equal to the product obtained by multiplying (i) the aggregate number of Shares covered by the Notice by (ii) a fraction the numerator of which is the number of Shares owned by the Participant at the time of the sale or transfer and the denominator of which is the total number of Shares owned by all Participants and the selling Stockholder at the time of the sale or transfer.
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D.
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Each Participant shall effect its participation in the sale by promptly delivering to the selling Stockholder for transfer to the prospective purchaser one or more certificates, properly endorsed for transfer, which represent the type and number of Shares such Participant elects to sell.
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E.
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The stock certificate or certificates that the Participant delivers to the selling Stockholder pursuant to Section 7.01.D. shall be transferred to the prospective purchaser in consummation of the sale of the Shares pursuant to the terms and conditions specified in the Notice, and the selling Stockholder shall concurrently therewith remit to such Participant that portion of the sale proceeds to which such Participant is entitled by reason of its participation in such sale. To the extent that any prospective purchaser or purchasers prohibits such assignment or otherwise refuses to purchase shares or other securities from a Participant exercising its rights of co-sale hereunder, the selling Stockholder shall not sell to such prospective purchaser or purchasers any Shares unless and until, simultaneously with such sale, the selling Stockholder shall purchase such shares or other securities from such Participant at the same purchase price and subject to the same other terms and conditions; provided, however, that the form of consideration to be received by the Participant in connection with the proposed sale may be different from that received by the Participant.
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F.
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The terms and conditions of any transfer in accordance with Article VII will be memorialized in, and governed by, a written purchase and sale agreement with the prospective purchaser (the "Purchase and Sale Agreement") with customary terms and provisions for such a transaction, and the Participants and the selling Stockholder further covenant and agree to enter into such Purchase and Sale Agreement as a condition precedent to any sale or other transfer in accordance with Article VII and to bear or contribute pro rata to the fees, costs and disbursements of such transaction, including, without limitation, fees of counsel to the Participant and selling Stockholder and any escrow required under the Purchase and Sale Agreement, subject to Section 7.01.G.
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Subject to Section 7.01.D., the aggregate Shares to be sold and consideration payable to the Participants and the selling Stockholder shall be determined and allocated based on the number of shares of Stock sold to the Prospective Transferee by each Participant and the selling Stockholder as provided in Section 7.01.C.
Article VIII
Drag-Along Right
8.01. Definitions. A "Change of Control" shall mean, in one or a series of related transactions, (i) a sale or all or substantially all of the assets or Shares of the Company; (ii) a sale resulting in more than fifty percent (50%) of the Shares of the Company; or (iii) a merger of the Company with or into another company.
8.02. Actions to be Taken. In the event that the Viggle Stockholder (in this case, the "Electing Holder") requests, in writing, approval of a Change of Control transaction, and such Change of Control transaction is approved by Stockholders holding at least seventy percent of all Common Stock (which approving Stockholders may include the Viggle Stockholder), the Company and each Stockholder hereby agree:
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A.
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if such transaction requires Stockholder approval, with respect to all Shares that such Stockholder owns or over which such Stockholder otherwise exercises voting power, to vote (in person, by proxy or by action by written consent, as applicable) all Shares in favor of such Change of Control transaction (together with any related amendment to the Company's certificate of incorporation required to implement such Change of Control) and to vote in opposition to any and all other proposals that could delay or impair the ability of the Company to consummate such Change of Control;
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B.
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to sell the same proportion of shares of capital stock of the Company beneficially held by such Stockholder as is being sold by the Electing Holder to the Person to whom the Electing Holder proposes to sell its Shares, and on the same terms and conditions (including price) as the Electing Holder;
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C.
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to execute and deliver all related documentation and take such other action in support of the Change of Control as shall reasonably be requested by the Company or the Electing Holder in order to carry out the terms and provision of this Section 8.02, including without limitation executing and delivering instruments of conveyance and transfer, and any purchase agreement, merger agreement, indemnity agreement, escrow agreement, consent, waiver, governmental filing, share certificates duly endorsed for transfer (free and clear of impermissible liens, claims and encumbrances) and any similar or related documents;
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D.
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not to deposit, except as provided in this Agreement, any Shares of the Company owned by such party in a voting trust or subject any Shares to any arrangement or agreement with respect to the voting of such Shares, unless specifically requested to do so by the acquiror in connection with the Change of Control;
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E.
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to refrain from exercising any dissenters' rights or rights of appraisal under applicable law at any time with respect to such Change of Control;
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F.
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if the consideration to be paid in exchange for the Shares pursuant to this Section 8 includes any securities and due receipt thereof by any Stockholder would require under applicable law (x) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities; or (y) the provision to any Stockholder of any information other than such information as a prudent issuer would generally furnish in an offering made solely to "accredited investors" as defined in Regulation D promulgated under the Securities Act of 1933, as amended, the Company may cause to be paid to any such Stockholder in lieu thereof, against surrender of the Shares which would have otherwise been sold by such Stockholder, an amount in cash equal to the fair value (as determined in good faith by the Company) of the securities which such Stockholder would otherwise receive as of the date of the issuance of such securities in exchange for the Shares; and
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G.
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in the event that the Electing Holder, in connection with such Change of Control, appoints a stockholder representative (the "Stockholder Representative") with respect to matters affecting the Stockholders under the applicable definitive transaction agreements following consummation of such Change of Control, (x) to consent to (i) the appointment of such Stockholder Representative, (ii) the establishment of any applicable escrow, expense or similar fund in connection with any indemnification or similar obligations, and (iii) the payment of such Stockholder's pro rata portion (from the applicable escrow or expense fund or otherwise) of any and all reasonable fees and expenses to such Stockholder Representative in connection with such Stockholder Representative's services and duties in connection with such Change of Control and its related service as the representative of the Stockholders; and (y) not to assert any claim or commence any suit against the Stockholder Representative or any other Stockholder with respect to any action or inaction taken or failed to be taken by the Stockholder Representative in connection with its service as the Stockholder Representative, absent fraud or willful misconduct;.
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8.03. Exceptions. Notwithstanding the foregoing, a Stockholder will not be required to comply with Section 8.02 above in connection with any proposed Change of Control (the "Proposed Sale") unless:
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A.
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any representations and warranties to be made by such Stockholder in connection with the Proposed Sale are limited to representations and warranties related to authority, ownership and the ability to convey title to such Shares, including but not limited to representations and warranties that (i) the Stockholder holds all right, title and interest in and to the Shares such Stockholder purports to hold, free and clear of all liens and encumbrances; (ii) the obligations of the Stockholder in connection with the transaction have been duly authorized, if applicable; (iii) the documents to be entered into by the Stockholder have been duly executed by the Stockholder and delivered to the acquirer and are enforceable against the Stockholder in accordance with their respective terms; and (iv) neither the execution and delivery of documents to be entered into in connection with the transaction, nor the performance of the Stockholder's obligations thereunder, will cause a breach or violation of the terms of any agreement, law or judgment, order or decree of any court or governmental agency;
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B.
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the Stockholder shall not be liable for the inaccuracy of any representation or warranty made by any other Person in connection with the Proposed Sale, other than the Company (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any stockholder of any of identical representations, warranties and covenants provided by all stockholders);
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C.
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the liability for indemnification, if any, of such Stockholder in the Proposed Sale and for the inaccuracy of any representations and warranties made by the Company or its Stockholders in connection with such Proposed Sale, is several and not joint with any other Person (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any stockholder of any of identical representations, warranties and covenants provided by all stockholders), and is pro rata in proportion to, and does not exceed, the amount of consideration paid to such Stockholder in connection with such Proposed Sale; and
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D.
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liability shall be limited to such Stockholder's applicable share (determined based on the respective proceeds payable to each Stockholder in connection with such Proposed Sale) of a negotiated aggregate indemnification amount that applies equally to all Stockholders but that in no event exceeds the amount of consideration otherwise payable to such Stockholder in connection with such Proposed Sale, except with respect to claims related to fraud by such Stockholder, the liability for which need not be limited as to such Stockholder.
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Article IX
General Provisions re: Purchases
9.01. Delivery of Stock and Documents. Upon the closing of any purchase of any shares of Stock pursuant to this Agreement, the seller shall deliver to the purchaser the following: The certificate or certificates representing the shares of Stock being sold, duly endorsed for transfer and bearing such documentary stamps, if any, as are necessary, and such assignments, certificates of authority, tax releases, consents to transfer, instruments, and evidences of title of the seller and of his compliance with this Agreement as may be reasonably required by the purchaser or by counsel for the purchaser.
9.02. Remedy for Failure to Transfer Shares. In the event that a Stockholder shall be required to sell his shares of Stock pursuant to any provision hereof, and in the further event that the Stockholder is unable to, or for any reason does not, deliver the certificate or certificates evidencing the shares to the person who, or entity which, is or desires to purchase the shares, in accordance with the applicable provisions of this Agreement, the purchaser of the shares may deposit the purchase price for the shares, by good check, promissory note or both, as the case may be under the applicable provisions of this Agreement, with any bank doing business within fifty (50) miles of the Company's principal office, or with the Company's certified public accountants, as agent or trustee, or in escrow, for the Stockholder, to be held by the bank or accountant until withdrawn by the Stockholder. Upon the deposit by the purchaser of the purchase price for the shares and upon notice to the Stockholder who was required to sell, the shares of Stock of such Stockholder to be sold pursuant to the applicable provisions of this Agreement shall at such time be deemed to have been sold, assigned, transferred, and conveyed to the purchaser, the Stockholder shall have no further rights thereto, and the Company shall record the transfer in its stock transfer book.
9.03. Restrictions on Sales of the Company. No Stockholder shall be a party to any Change of Control unless (i) all holders of Stock are allowed to participate in such transaction; and (ii) the consideration received pursuant to such transaction is allocated among the parties thereto in the manner specified in the Certificate as if such transaction were a Change of Control.
Article X
Appraisal
10.01. Procedure for Appraisal. For purposes of this Agreement, whenever it is necessary to compute the appraised value of Shares, the appraised value of the Shares shall be determined as follows: If the selling Stockholder (or, if applicable, his executors or administrators or personal or legal representatives) and the Company (and/or, if applicable, the purchasing Stockholders) are able to reach mutual agreement as to appraised value, the agreed appraised value shall govern. If mutual agreement cannot be reached, the selling Stockholder (or, if applicable, his executors or administrators or personal or legal representatives) shall promptly but no later than thirty (30) calendar days after any event triggering a purchase of shares of Stock pursuant to this Agreement and the Company (and/or, if applicable, the purchasing Stockholder) shall promptly but no later than thirty (30) calendar days after any event triggering a purchase of shares of Stock pursuant to this Agreement each will appoint an appraiser to find an appraised value for the selling Stockholder's shares of Stock as of the date specified in the appropriate provision of this Agreement. Any party hereto appointing an appraiser shall furnish the other parties hereto with written notice of the name, address, and telephone number of the appraiser. The failure of any party entitled to appoint an appraiser to make an appointment within the thirty (30) calendar day period shall constitute a waiver of the party's right to appoint in appraiser, and the determination of the other party's appraiser shall be deemed to be the "appraised value" for the shares of Stock, notwithstanding any other provision of this Article X. If the two (2) appraisers agree upon the value of the shares of Stock, they shall jointly render a single written report of their opinion thereon. If the two (2) appraisers cannot agree upon the value of the shares of Stock, they shall each render a separate written report within sixty (60) calendar days after their respective appointment and appoint a third appraiser, who shall appraise the shares of Stock and shall render a written report of its opinion thereon. If the two appraisers cannot, within the thirty (30) calendar day period, agree on the appointment of a third appraiser, the accountant for the Company and accountant for the selling Stockholder shall confer upon and appoint the third appraiser.
The agreed value or the value contained in the joint written report or written report of the third appraiser, as the case may be, shall constitute the "appraised value" of the shares of Stock.
10.02. Assumptions. Any appraiser making any appraisal pursuant to this Article X shall assume an all-cash sale with respect to the shares of Stock to be sold and shall assume that the restrictions on transfer specified in this Agreement and any applicable federal or state securities law restrictions on transfer are not applicable to the shares of Stock. In determining appraised value for any sale of shares pursuant to this Agreement, none of the appraisers shall consider the effect, to the business or business prospects of the Company, of the death of a Stockholder or the termination of employment of a Stockholder for any other reason. Furthermore, none of the appraisers shall consider the life insurance proceeds, if any, received by the Company in valuing any share of Stock, and there shall be no "control premiums" or "minority ownership discounts" in valuing any shares of Stock. All appraisers appointed shall be provided: with all available financial statements of the Company; information as to its current financial condition; information as to its future plans and prospects; information as to its technology, know-how and competitive position; any other information reasonably necessary to make the appraisal; and shall have full access to all books and records of the Company.
10.03. Qualifications. All appraisers appointed shall be qualified by experience in the industry or industries in which the Company does business and by their ability to appraise such shares of Stock.
Article XI
Compliance with Laws
11.01 . Compliance with Laws. Each Stockholder specifically acknowledges that the the Company may be subject to certain licensing and regulatory requirements of various jurisdictions. Each Stockholder shall cooperate fully with the Company in satisfying any such licensing and regulatory requirements.
11.02 . Responsibility of Stockholders. Each Shareholder shall be responsible for procuring and maintaining any and all licenses, permits, and/or approvals as may be required of such Shareholder under applicable law at their own cost and expense.
Article XII
General
12.01. Notices. Any and all notices, requests, or other communications hereunder provided for herein shall be given in writing and sent by hand delivery, by registered or certified mail, return receipt requested, with first-class postage prepaid or by a nationally recognized express mail courier which provides verification of delivery; and such notices shall be addressed: (i) if to the Company, to the principal office of the Company; and (ii) if to a Stockholder, to the address of the Stockholder as reflected in the stock records of the Company, unless notice of a change of address is furnished to all parties in the manner provided in this Section 12.01. Any notice that is required to be made within a stated period of time shall be considered timely if delivered or mailed before midnight of the last day of such period.
12.02. Invalid or Unenforceable Provisions. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted provided such remaining provisions continue to confer all of the material benefits to all parties to this Agreement that are intended to be conferred to them hereunder.
12.03. Benefit and Burden. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their legatees, distributees, estates, executors, administrators, personal representatives, successors and assigns, and other legal representatives.
12.04. Gender. The use of any gender herein shall be deemed to be or include the other genders and the use of the singular herein shall be deemed to be or include the plural, and visa versa, wherever appropriate.
12.05. Changes; Waiver. This Agreement may only be amended or compliance with any term may be waived only upon the approval of a majority vote of Shares. Notwithstanding the foregoing, this Agreement may not be amended nor shall compliance with any term by waived with respect to the rights, preferences and priorities of any Stockholder without the written consent of such Stockholder, unless such amendment or waiver applies to all Stockholders in the same class as such Stockholder in such fashion. No waiver of any provision of this Agreement shall be valid unless in writing. The Company shall provide prompt notice of any amendment hereto or waiver hereunder to any Stockholder who has not consented in writing to such amendment or waiver. The failure of any party at any time to insist upon strict performance of any condition, promise, agreement, or understanding set forth herein shall not be construed as a waiver or relinquishment of the right to insist upon strict performance of the same or any other condition, promise, agreement, or understanding at a future time.
12.06. Entire Agreement. This Agreement sets forth all of the promises, agreements, conditions, understandings, warranties, and representations among the parties hereto with respect to the shares of Stock owned by the Stockholders and any other matters set forth herein, and there are no promises, agreements, conditions, understandings, warranties, or representations, oral or written, express or implied, among them with respect to such Shares or such other matters except as set forth herein. Any and all prior agreements among the parties hereto with respect to the Shares are hereby revoked. This Agreement is, and is intended by the parties to be, an integration of any and all prior agreements or understandings, oral or written, with respect to the Shares.
12.07. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to the principles of conflicts of law thereof that might cause the law of another jurisdiction to apply. The parties shall be subject to the exclusive jurisdiction of the state and federal courts of the State of New York.
12.08. Headings. The headings, subheadings, and other captions in this Agreement are for convenience and reference only and shall not be used in interpreting, construing, or enforcing any of the provisions of this Agreement.
12.09. Termination of Agreement. This Agreement shall be effective as of the date first hereinabove set forth and shall not apply to and terminate at such time as (a) the Stockholders shall sell all of their shares of Stock to the Company pursuant to any provision of this Agreement or otherwise; (b) there is a public offering and sale of securities of the Company to the public; or (c) the Company becomes subject to the periodic reporting requirements of Section 12(q) or 15(d) of the Securities Exchange Act of 1934. Notwithstanding the foregoing, certain sections of this Agreement may terminate prior to the aforesaid termination if those sections so provide.
12.10. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures and counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
12.11. Role of Drafters. Each party to this Agreement has had sufficient opportunity to review this Agreement with their counsel and comment upon and contribute to the content hereof. Accordingly, each party agrees that this Agreement shall not be construed for or against a party on account of any party's or counsel's role or contribution in or to the drafting of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officers, and each Stockholder has executed this Agreement under seal, all as of the day and year first above written.
Company:
DraftDay Gaming Group, Inc.
By: /s/ John Small
Name: John Small
Its: Chief Financial Officer
Stockholders:
Each Stockholder executes this Agreement by virtue of and upon execution and delivery to the Company of the Joinder Page in the form attached hereto as Exhibit B.