Exhibit 10.1

 

Execution Version

 

 

Membership Interest Purchase Agreement

 

Dated June 5, 2020

 

by and between

 

Bright Mountain Media, Inc.,
as Buyer

 

and

 

Centre Lane Credit Partners
Master Credit Fund II, L.P.,
as Member

 

 

   

 

 

Membership Interest Purchase Agreement

 

This Membership Interest Purchase Agreement (this “Agreement”) dated June 5,
2020, is made by and between Bright Mountain Media, Inc. (the “Buyer”), a
corporation organized under the laws of the State of Florida, having an office
for the transaction of business at 6400 Congress Avenue, Suite 2050, Boca Raton,
FL 33487 and Centre Lane Partners Master Credit Fund II, L.P. (the “Member”), a
limited partnership organized under the laws of the state of Delaware, having an
office for the transaction of business at 60 East 42nd Street, Suite 1250, New
York, NY 10165.

 

Whereas, the Member owns all of the issued and outstanding Membership Interests
(as hereinafter defined) of CL Media Holdings LLC (the “Company”); and

 

Whereas, the Buyer desires to acquire from the Member, and the Member desires to
sell to the Buyer, all of the Membership Interests in exchange for the
Consideration Shares (as hereinafter defined), making the Company, upon the
closing of the transaction herein contemplated, a wholly-owned subsidiary of
Buyer, on the terms and conditions set forth below.

 

Now, Therefore, in consideration of the foregoing, and the mutual terms,
covenants and conditions herein below set forth, the Parties agree, as follows:

 

1. DEFINITIONS AND INTERPRETATION.

 

1.1 In this Agreement:

 

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration,
inquiry, audit, notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal, administrative,
regulatory or otherwise, whether at law or in equity.

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such Person, and the term “control”
(including the terms “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities, by Contract or otherwise.

 

“Bad Actor Disqualifying Event” means disqualification described in Rule
506(d)(1)(i) to (viii) under the Securities Act, except for a Bad Actor
Disqualifying Event contemplated by Rule 506(d)(2) or (d)(3) of the Securities
Act.

 

“Balance Sheet Date” means April 30, 2020.

 

“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in New York, New York or Boca Raton, Florida are
authorized or required by Law to be closed for business.

 

   

 

 

“Business Debt” means (a) any indebtedness for borrowed money;(b) obligations
for the deferred purchase price of property or services (c) other indebtedness
that is evidenced by a note, bond, debenture or similar instrument; (d)
obligations with respect to any letters of credit, bankers’ acceptances, surety
bonds, interest rate swap agreements, foreign currency exchange contracts or
other hedging agreements; (e) any guaranty of the type of obligations described
in (a)-(d) above; and (f) all accrued or accrued and unpaid interest, fees,
premiums, penalties and/or other amounts that would arise or become due in
respect of any of the foregoing. For purposes of this Agreement, “Business Debt”
shall not include trade payables incurred in the ordinary course of the
Company’s business.

 

“Buyer Common Stock” means the common stock, $.001 par value per share, of
Buyer.

 

“Closing” means the closing of the sale of the Membership Interests in
accordance with the terms, and subject to the conditions, of this Agreement.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Consideration Shares” means two million five hundred thousand (2,500,000)
shares of Buyer Common Stock.

 

“Contracts” means all contracts, leases, deeds, mortgages, licenses,
instruments, notes, commitments, undertakings, indentures, joint ventures and
all other legally binding agreements, commitments and legally binding
arrangements in writing.

 

“Company Financial Statements” means the financial statements for the Company
for the year ended December 31, 2019 prepared in accordance with GAAP and
provided prior to the date hereof by the Member to the Buyer.

 

“Company Intellectual Property” means Intellectual Property owned by the Company
or any of its Subsidiaries.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended.

 

“GAAP” means U.S. generally accepted accounting principles consistently applied.

 

“Governmental Entity” means any federal, state, local or foreign government or
political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.

 

“Governmental Order” means any order writ, judgment, injunction, decree,
stipulation, determination or award entered into with any Governmental Entity.

 

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“Intellectual Property” means any and all rights in, arising out of, or
associated with any of the following in any jurisdiction throughout the world:
(a) issued patents and patent applications (whether provisional or
non-provisional), including divisionals, continuations, continuations-in-part,
substitutions, reissues, reexaminations, extensions, or restorations of any of
the foregoing, and other Governmental Entity-issued indicia of invention
ownership (including certificates of invention, petty patents, and patent
utility models) (“Patents”); (b) trademarks, service marks, brands,
certification marks, logos, trade dress, trade names, and other similar indicia
of source or origin, together with the goodwill connected with the use of and
symbolized by, and all registrations, applications for registration, and
renewals of, any of the foregoing (“Trademarks”); (c) copyrights and original
works of authorship, whether or not copyrightable, and all registrations,
applications for registration, and renewals of any of the foregoing
(“Copyrights”); (d) internet domain names and social media account or user names
(including “handles”), whether or not Trademarks, all associated web addresses,
URLs, websites and web pages, social media sites and pages, and all content and
data thereon or relating thereto, whether or not Copyrights; (e) mask works, and
all registrations, applications for registration, and renewals thereof; (f)
industrial designs, and all Patents, registrations, applications for
registration, and renewals thereof (g) trade secrets, know-how, inventions
(whether or not patentable), discoveries, improvements, technology, business and
technical information, databases, data compilations and collections, tools,
methods, processes, techniques, and other confidential and proprietary
information and all rights therein (“Trade Secrets”); (h) computer programs,
operating systems, applications, firmware, and other code, including all source
code, object code, application programming interfaces, data files, databases,
protocols, specifications, and other documentation thereof; and (i) all other
intellectual or industrial property and proprietary rights.

 

“Law” means any local, state, federal or foreign statute, law, ordinance,
regulation, rule, code, executive order, or any injunction, judgment, decree or
order in which the party in question is a named party, in each case of any
Governmental Entity.

 

“Liability” or “Liabilities” means any and all debts, liabilities, commitments
and obligations, whether fixed, contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, known or unknown, whenever
or however arising (including whether arising out of any contract or tort based
on negligence or strict liability) and whether or not the same would be required
by GAAP to be reflected in financial statements or disclosed in the notes
thereto.

 

“Lien” means any mortgage, lien, security interest, license, option, pledge or
other similar encumbrance.

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to (a) the business, results of operations,
condition (financial or otherwise) or assets of the Company, Member or Buyer, as
the case may be, or (b) the ability of any Party to consummate the transactions
contemplated hereby on a timely basis.

 

“Membership Interests” means all of the issued and outstanding membership
interests or any class or series of the Company.

 

“Parties” means collectively, the Buyer and the Member.

 

“Party” means the Buyer or the Member, individually.

 

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“Permits” means any approvals, authorizations, registrations, consents,
licenses, permits or certificates of a Governmental Entity.

 

“Person” means a natural person, company, limited liability company,
corporation, partnership, association, trust or any unincorporated organization
or other entity.

 

“Representative” means, with respect to any Person, any and all directors,
officers, members, managers, employees, consultants, financial advisors,
counsel, accountants and other agents of such Person.

 

“Rule 144” means Rule 144 promulgated by the Commission under the Securities
Act.

 

“SBA PPP Loan” means an unsecured loan incurred by the Company under 15 U.S.C.
636(a)(36) (as added to the Small Business Act by Section 1102 of the CARES
Act).

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association, or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers, or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited
liability company, partnership, association, or other business entity (other
than a corporation), a majority of membership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof
and for this purpose, a Person or Persons own a majority ownership interest in
such a business entity (other than a corporation) if such Person or Persons
shall be allocated a majority of such business entity’s gains or losses or shall
be or control any managing director or general partner of such business entity
(other than a corporation). The term “Subsidiary” shall include all Subsidiaries
of such Subsidiary.

 

“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, production, ad valorem, transfer, franchise, registration,
profits, license, lease, service, service use, withholding, payroll, employment,
unemployment, estimated, excise, severance, environmental, stamp, occupation,
premium, property (real or personal), real property gains, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.

 

“Transaction Documents” means this Agreement and any other agreements,
instruments and documents required to be delivered hereunder at the Closing.

 

1.2 Interpretation.

 

1.2.1 As used in this Agreement, unless the context clearly indicates otherwise:

 

(a) words used in the singular include the plural and words in the plural
include the singular;

 

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(b) reference to any Person includes such person’s successors and assigns, but
only if such successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any other
capacity;

 

(c) reference to any gender includes the other gender;

 

(d) whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without limitation”
or “but not limited to” or words of similar import;

 

(e) reference to any Section means such Section of this Agreement, and
references in any Section or definition to any clause means such clause of such
Section or definition;

 

(f) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar
import shall be deemed references to this Agreement as a whole and not to any
particular Section or other provision hereof;

 

(g) reference to any agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and by this
Agreement;

 

(h) reference to any law (including statutes and ordinances) means such law
(including all rules and regulations promulgated thereunder) as amended,
modified, codified or reenacted, in whole or in part, and in effect at the time
of determining compliance or applicability, and reference to any particular
provision of any law shall be interpreted to include any revision of or
successor to that provision regardless of how numbered or classified;

 

(i) relative to the determination of any period of time, “from” means “from and
including,” “to” means “to but excluding” and “through” means “through and
including”; and

 

(j) the titles and headings of Sections contained in this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of or to affect the meaning or interpretation of this Agreement.

 

1.2.2 This Agreement was negotiated by the Parties with the benefit of legal
representation, and no rule of construction or interpretation otherwise
requiring this Agreement to be construed or interpreted against any Party shall
apply to any construction or interpretation hereof. This Agreement shall be
interpreted and construed to the maximum extent possible so as to uphold the
enforceability of each of the terms and provisions hereof, it being understood
and acknowledged that this Agreement was entered into by the Parties after
substantial negotiations and with full awareness by the parties of the terms and
provisions hereof and the consequences thereof.

 

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1.2.3 Where a statement in this Agreement is qualified by the expression “to the
best of Buyer’s knowledge,” “to the best of the Member’s knowledge,” “so far as
Buyer is aware” or “so far as the Member is aware” or any similar expression
shall be deemed to include Buyer’s or the Member’s actual knowledge of Quinn
Morgan, with respect to the Member or W. Kip Speyer, with respect to the Buyer,
as applicable, in each case after due inquiry. A Person shall be deemed to have
actual knowledge of all information of which such Person has received written
notice.

 

2. Acquisition of the Company by Buyer; Closing.

 

2.1 Sale of the Membership Interests. Effective upon delivery of those closing
deliverables identified in Section 7 hereof, the Member shall sell, transfer and
assign all of the Membership Interests to Buyer, and Buyer shall issue to the
Member a certificate representing the Consideration Shares, which Consideration
Shares shall be exempt from registration under the Securities Act in reliance on
an exemption provided by Section 4(a)(2) of that act and shall be “restricted
securities” as that term is defined in Rule 144 promulgated under the Securities
Act.

 

2.2 Closing. The Closing shall take place by electronic means on the date
hereof, or at such other place and at such other time as the Parties may agree
in writing.

 

2.3 Deemed Effective Date. The Member and the Buyer agree that, as between the
parties, the sale of the Membership Interests shall be deemed to have occurred
as of June 1, 2020, but no (i) adjustment to the consideration paid by the Buyer
or (ii) economic effect on or with respect to the transactions contemplated
hereby shall be made or incurred as a result of such deemed effective date.

 

3. Representations and Warranties of the Member as to Itself.

 

The Member hereby warrants and represents to Buyer, as of the date of this
Agreement, as follows:

 

3.1 Power and Authority. The execution and delivery of this Agreement and each
instrument required hereby to be executed and delivered by the Member prior to
or at the Closing, the performance of the Member’s obligations hereunder and
thereunder and the consummation by the Member of the transactions contemplated
hereby have been duly and validly authorized by all necessary action on the part
of the Member, and no other proceedings on the part of the Member are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed by the Member, and,
assuming this Agreement has been duly executed by the Buyer, this Agreement
constitutes a valid and binding agreement of the Member, enforceable against the
Member in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity principles.

 

3.2 Ownership of Membership Interests. The Member is the sole record and
beneficial owner of the Membership Interests, all of which Membership Interests
are owned free and clear of all Liens, and have not been sold, pledged, assigned
or otherwise transferred except pursuant to this Agreement. There are no
outstanding subscriptions, rights, options, warrants or other agreements
obligating the Member to sell or transfer to any third person any of the
Membership Interests owned by the Member, or any interest therein. The Member
has full power and authority to exchange, transfer and deliver to Buyer the
Membership Interests.

 

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3.3 Consents and Approvals. The execution and performance of this Agreement do
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions of this Agreement will not (a) conflict with or violate any
statute, ordinance, rule, regulation, judgment, order, writ, injunction, decree
or law applicable to the Member, or (b) by which either the Member or its
properties or assets may be bound or affected, or result in a violation or
breach of or constitute a default (or an event which with or without notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
any loss of any benefit under, any contract, agreement or arrangement to which
the Member is a party, or the creation of Liens on any of the properties or
assets of the Member. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by the Member in connection with the execution of this Agreement by the Member
or the consummation by it of the transactions contemplated hereby.

 

3.4 Investment Representations. The Member is acquiring the shares of Buyer
Common Stock for its own account with the present intention of holding such
securities for purposes of investment, and it has no intention of distributing
such shares of Buyer Common Stock, or selling, transferring or otherwise
disposing of such shares of Buyer Common Stock in a public distribution, in any
of such instances, in violation of the federal securities laws of the United
States of America. The Member understands that (a) the shares of Buyer Common
Stock will be “restricted securities,” as defined in Rule 144 promulgated under
the Securities Act; (b) such shares of Buyer Common Stock will not be registered
under the Securities Act, will be subject to restrictions on transfer and will
be issued in reliance on exemptions for private offerings contained in Section
4(a)(2) of the Securities Act; (c) the Buyer has no obligation to so register
the shares of Buyer Common Stock for resale; and (d) the shares of Buyer Common
Stock may not be distributed, re-offered or resold except through a valid and
effective registration statement or pursuant to a valid exemption from the
registration requirements under the Securities Act at such time as the shares of
Buyer Common Stock become eligible for resale by the Member. The Member
acknowledges that upon any future distribution by it of the shares of Buyer
Common Stock to any other third party, as a condition precedent to such
distribution, the receiving party(ies) will be required to execute agreement(s)
for the benefit of Buyer in a form and substance satisfactory to it
acknowledging and consenting to the foregoing investment representations and the
restrictions on transfer. The certificate evidencing the shares of Buyer Common
Stock shall contain the following legend:

 

“The shares of common stock evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the “Act”). Such shares
may not be sold, transferred, pledged, hypothecated or otherwise disposed of
unless they have been so registered or Bright Mountain Media, Inc. shall have
received an opinion of counsel satisfactory to it to the effect that
registration thereof for purposes of transfer is not required under the Act or
the securities laws of any state.”

 

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3.5 Information on Buyer. The Member has been provided access via the
Commission’s public website at www.sec.gov/EDGAR with access to copies of
Buyer’s Annual Report on Form 10-K for the period ended December 31, 2019 and
its other filings with the Commission, and represents and warrants that it has
read and reviewed these reports, together with Buyer’s other filings with the
Commission. The Member is a sophisticated investor who has such knowledge and
experience in financial, tax and other business matters as to enable it to
evaluate the merits and risks of, and to make an informed investment decision
with respect to, the shares of Buyer Common Stock and this Agreement. The
Member, either alone or together with its advisors, has such knowledge and
experience in financial, tax, and business matters, and, in particular,
investments in securities, so as to enable it to utilize the information made
available to it in connection with the transactions contemplated hereby, to
evaluate the merits and risks of an investment in the shares of Buyer Common
Stock and to make an informed investment decision with respect thereto. The
Member understands that its acquisition of the shares of Buyer Common Stock is a
speculative investment, and the Member represents that it is able to bear the
risk of such investment for an indefinite period, and can afford a complete loss
thereof.

 

3.6 Bad Actor Disqualifying Event. The Member is not subject to any Bad Actor
Disqualifying Event.

 

4. Representations and Warranties of the Member with Respect to the Company.

 

The Member hereby warrants and represents to Buyer with respect to the Company,
as of the date of this Agreement, as follows:

 

4.1 Organization and Good Standing. The Company is a limited liability company
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its organization, with full limited liability company power and
authority to own, lease and operate its business and properties and to carry on
business in the places and in the manner as presently conducted or proposed to
be conducted and is in good standing as a foreign organization in each
jurisdiction in which the properties owned, leased or operated, or where its
business is conducted that requires such qualification except where the failure
to so qualify would not have a Material Adverse Effect.

 

4.2 Company Financial Statements. The Company Financial Statements present
fairly in all material respects the financial position and results of operations
of the Company as at the dates and for the periods indicated therein. The
Company Financial Statements are based on the books and records of the Company.
The Company has no Liabilities (i) of the nature (whether known or unknown and
whether absolute, accrued, contingent or otherwise) that GAAP would require to
be set forth in the balance sheet as of the Balance Sheet Date included in the
Company Financial Statements which are not set forth therein or (ii) other than
Liabilities in the ordinary course of the Company’s business consistent with
past practice since the Balance Sheet Date.

 

4.3 Assets. The Company has good and marketable title, free and clear of all
Liens to all of the properties and assets, real and personal, tangible or
intangible, which are reflected at the Balance Sheet Date included in the
Company Financial Statements (the “Assets”), except for such imperfections of
title, easements and encumbrances, if any, as do not materially interfere with
the use of such property as such property is used and which would not have a
Material Adverse Effect on the Company and except for Liens arising in
connection with that certain Senior Secured Credit Agreement dated as of January
31, 2019 among the Company, the Lenders party thereto and the Member, as
Administrative and Collateral Agent (the “Senior Facility”) and “Permitted
Liens” (as such term is defined in the Senior Facility). Certain of the Assets
were acquired by the Company pursuant to a valid strict foreclosure action under
Article 9 of the Uniform Commercial Code.

 

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4.4 Subsidiaries. The Company does not own, nor have any interest in any shares
or have an ownership interest in any other Person, except Wild Sky Media Co.,
Ltd. (f/k/a RockYou (Thailand) Co., Ltd.).

 

4.5 No Conflicts; Consents. The execution, delivery and performance by Member of
this Agreement and the ancillary documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not: (a) conflict with or result in a violation or breach of, or default
under, any provision of the Organizational Documents of Company; (b) conflict
with or result in a violation or breach of any provision of any Law or
Governmental Order applicable to the Company or; (c) require the consent, notice
or other action by any Person under, conflict with, result in a violation or
breach of, constitute a default or an event that, with or without notice or
lapse of time or both, would constitute a default under, result in the
acceleration of or create in any party the right to accelerate, terminate,
modify or cancel any Contract to which the Company is a party or by which the
Company is bound or to which any of their respective properties and assets are
subject, or any Permit affecting the properties, assets or business of the
Company, except where any of the foregoing would not have a Material Adverse
Effect on the Company’s business. No consent, approval, Permit, Governmental
Order, declaration or filing with, or notice to, any Governmental Entity is
required by or with respect to the Company in connection with the execution and
delivery of this Agreement and the ancillary documents and the consummation of
the transactions contemplated hereby and thereby, except where failure to comply
with any of the foregoing requirements would not have a Material Adverse Effect
on the Company’s business.

 

4.6 Material Contracts.

 

4.6.1 Schedule 4.6 lists each of the following Contracts of the Company
(“Material Contracts”):

 

(a) each Contract of the Company involving aggregate consideration in excess of
$100,000 and which, in each case, cannot be cancelled by the Company without
penalty or without more than 60 days’ notice;

 

(b) all Contracts that provide for the indemnification by the Company of any
Person or the assumption of any Tax, or other Liability of any Person;

 

(c) all broker, distributor, dealer, manufacturer’s representative, franchise,
agency, sales promotion, market research, marketing consulting and advertising
Contracts to which the Company is a party and which provides for payments in
excess of $100,000; and

 

(d) all employment agreements and Contracts with independent contractors or
consultants (or similar arrangements) to which the Company is a party and which
are not cancellable without material penalty or without more than 60 days’
notice.

 

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4.6.2 Each Material Contract is valid and binding on the Company in accordance
with its terms and is in full force and effect. None of the Company or, to
Member’s Knowledge, any other party thereto is in breach of or default under (or
is alleged to be in breach of or default under) in any material respect, or has
provided or received any notice of any intention to terminate, any Material
Contract. No event or circumstance has occurred that, with notice or lapse of
time or both, would constitute an event of default under any Material Contract
or result in a termination thereof or would cause or permit the acceleration or
other changes of any right or obligation or the loss of any benefit thereunder.
Complete and correct copies of each Material Contract (including all
modifications, amendments, and supplements thereto and waivers thereunder) have
been made available to Buyer.

 

4.7 Intellectual Property.

 

4.7.1 Schedule 4.7.1 contains a correct, current, and complete list of: (i) all
Intellectual Property applications and registrations owned by the Company (the
“Company IP Registrations”), specifying as to each, as applicable: the title,
mark, or design; the record owner and inventor(s), if any; the jurisdiction by
or in which it has been issued, registered, or filed; the, registration, or
application serial number; the issue, registration, or filing date; and the
current status and (ii) all material unregistered Trademarks included in the
Company Intellectual Property; and (iii) all proprietary Software of the
Company.

 

4.7.2 Schedule 4.7.2 contains a correct, current and complete list of all
material Contracts for the license, transfer, or sale of technology or other
Intellectual Property rights to or from the Company (other than licenses of
non-customized, off-the-shelf, commercially-available software) (the “Company IP
Agreements”), specifying for each the date, title, and parties thereto, and
separately identifying the Company IP Agreements: (i) under which the Company is
a licensor or otherwise grants to any Person any right or interest relating to
any Company Intellectual Property; (ii) under which the Company is a licensee or
otherwise granted any right or interest relating to the Intellectual Property of
any Person; and (iii) which otherwise relate to the Company’s ownership or use
of Intellectual Property in each case identifying the Intellectual Property
covered by such Company IP Agreement. Member has provided Buyer with true and
complete copies (or in the case of any oral agreements, a complete and correct
written description) of all material Company IP Agreements, including all
material modifications, amendments and supplements thereto and waivers
thereunder. Each Company IP Agreement is valid and binding on the Company in
accordance with its terms and is in full force and effect, except as would not
have a Material Adverse Effect on the Company’s business. Neither the Company
nor any other party thereto is, or is alleged to be, in breach of or default
under, or has provided or received any notice of breach of, default under, or
intention to terminate (including by non-renewal), any Company IP Agreement,
except as would not have a Material Adverse Effect on the Company’s business.

 

4.7.3 The Company is the sole and exclusive legal and beneficial, and with
respect to the Company IP Registrations, record, owner of all right, title and
interest in and to the Company Intellectual Property, and has the valid and
enforceable right to use all other Intellectual Property used or held for use in
or necessary for the conduct of the Company’s business as currently conducted
and as proposed to be conducted, in each case, free and clear of all Liens,
except as would not have a Material Adverse Effect on the Company’s business.

 

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4.7.4 All of the Company Intellectual Property is valid and enforceable, and all
Company IP Registrations are subsisting and in full force and effect. The
Company has taken all reasonable and necessary steps to maintain and enforce the
material Company Intellectual Property and to preserve the confidentiality of
all Trade Secrets included in the Company Intellectual Property.

 

4.8 Accounts Receivable. The accounts receivable reflected on the Balance Sheet
and the accounts receivable arising after the date thereof (a) have arisen from
bona fide transactions entered into by the Company involving the sale of goods
or the rendering of services in the ordinary course of business consistent with
past practice; and (b) constitute only valid, undisputed claims of the Company
not subject to claims of set-off or other defenses or counterclaims other than
normal cash discounts accrued in the ordinary course of business consistent with
past practice.

 

4.9 Insurance. Schedule 4.9 sets forth a true and complete list of all current
policies or binders of fire, liability, product liability, umbrella liability,
real and personal property, workers’ compensation, vehicular, directors’ and
officers’ liability, fiduciary liability and other casualty and property
insurance maintained by the Company and relating to the assets, business,
operations, employees, officers and managers of the Company (collectively, the
“Insurance Policies”) and true and complete copies of such Insurance Policies
have been made available to Buyer. The Company has not received any written
notice of cancellation of, premium increase with respect to, or alteration of
coverage under, any of such Insurance Policies.

 

4.10 Legal Proceedings; Governmental Orders. Except as set forth on Schedule
4.10, there are no Actions pending or, to Member’s Knowledge, threatened (a)
against or by the Company affecting any of its properties or assets (or by or
against Member or any Affiliate thereof and relating to the Company); (b)
against or by the Company, Member or any Affiliate of Member that challenges or
seeks to prevent, enjoin or otherwise delay the transactions contemplated by
this Agreement; or (c) there are no outstanding Governmental Orders and no
unsatisfied judgments, penalties or awards against or affecting the Company or
any of its properties or assets.

 

4.11 Compliance With Laws; Permits. The Company has complied, and is now
complying, with all Laws applicable to it or its business, properties or assets.
All Permits required for the Company to conduct its business have been obtained
by it and are valid and in full force and effect, except as would not have a
Material Adverse Effect on the Company’s business. Schedule 4.11 lists all
current Permits issued to the Company, including the names of the Permits and
their respective dates of issuance and expiration. No event has occurred that,
with or without notice or lapse of time or both, would reasonably be expected to
result in the revocation, suspension, lapse or limitation of any Permit set
forth on Schedule 4.11.

 

4.12 Business Debt. The Company has no Business Debt other than the Senior
Facility and the SBA PPP Loan. As a result of the transactions contemplated
among the Parties at Closing, the aggregate amount outstanding under the Senior
Facility will be not greater than $16,416,905.

 

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4.13 Taxes. At all times since its formation, the Company has been classified
for U.S. federal income tax purposes as a disregarded entity and is so
classified for U.S. federal income tax purposes at the time of the Closing. The
Company has withheld and paid each Tax required to have been withheld and paid
by it in connection with amounts paid or owing to any employee, independent
contractor, creditor, customer, member or other party, or otherwise, and has
complied with all information reporting and backup withholding provisions of
applicable Law.

 

4.14 Accounts Receivable/ Lien. Following satisfaction of the Company’s
obligations to Fast Pay Partners LLC and FPP Sandbox LLC (collectively, “Fast
Pay”) at Closing, all of the accounts receivable shown on the Company Financial
Statements will be free and clear of all Liens and encumbrances.

 

4.15 Employment Matters. Schedule 4.15 contains a list of all persons who are
employees, independent contractors or consultants of the Company as of the date
hereof, including any employee who is on a leave of absence of any nature, paid
or unpaid, authorized or unauthorized, and sets forth for each such employee the
following: (i) title or position (including whether full-time or part-time);
(ii) current annual base compensation rate or contract fee and (iii) commission,
bonus or other incentive-based compensation (if applicable) as of the date
hereof. Except as set forth in Section 4.15 of the Disclosure Schedules, as of
the date hereof, all compensation, including wages, commissions, bonuses, fees
and other compensation, payable to all employees, independent contractors or
consultants of the Company for services performed on or prior to the date hereof
have been paid in full and there are no outstanding agreements, understandings
or commitments of the Company with respect to any compensation, commissions,
bonuses or fees. All individuals characterized and treated by the Company as
independent contractors or consultants are properly treated as independent
contractors under all applicable Laws. All employees of the Company classified
as exempt under the Fair Labor Standards Act and state and local wage and hour
laws are properly classified.

 

4.16 Employee Benefit Matters. Schedule 4.16 contains a true and complete list
of each pension, benefit, retirement, compensation, employment, consulting,
profit-sharing, deferred compensation, incentive, bonus, performance award,
phantom equity or other equity, change in control, retention, severance,
vacation, paid time off (PTO), medical, vision, dental, disability, welfare,
Code Section 125 cafeteria, fringe benefit and other similar agreement, plan,
policy, program or arrangement (and any amendments thereto), in each case
whether or not reduced to writing and whether funded or unfunded, including each
“employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or
not tax-qualified and whether or not subject to ERISA, which is or has been
maintained, sponsored, contributed to, or required to be contributed to by the
Company for the benefit of any current or former employee, officer, manager,
retiree, independent contractor or consultant of the Company or any spouse or
dependent of such individual, or under which the Company or any of its ERISA
Affiliates has or may have any Liability, or with respect to which Buyer or any
of its Affiliates would reasonably be expected to have any Liability, contingent
or otherwise (as listed on Schedule 4.16, each, a “Benefit Plan”). The Company
has separately identified in Schedule 4.16 each Benefit Plan that contains a
change in control provision.

 

4.17 Closing Cash. At Closing, the Company will retain cash in an amount not
less than $1,467,921.17, which includes $1,377,110.00 received under an SBA PPP
Loan.

 

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4.18 Bad Actor Disqualifying Event. To the best of the Member’s knowledge, the
Company is not subject to any Bad Actor Disqualifying Event.

 

5. Representations and Warranties of Buyer.

 

The Buyer hereby makes the following representations and warranties to the
Member as of the date hereof:

 

5.1 Organization and Good Standing. The Buyer is an entity duly incorporated,
validly existing and in good standing under the laws of the State of Florida,
with full corporate power and authority to own, lease and operate its business
and properties and to carry on its business in the places and in the manner as
presently conducted or proposed to be conducted. The Buyer is in good standing
as a foreign entity in each jurisdiction in which the properties owned, leased
or operated, or where the business is conducted by it requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect on its business, taken as a whole, or consummation of the
transactions contemplated hereby.

 

5.2 Authority and Enforcement. The Buyer has all requisite corporate power and
authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby. The Buyer has taken all corporate action
necessary for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, and this Agreement constitutes the
valid and binding obligation of the Buyer, enforceable against it in accordance
with its terms, except as may be affected by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors’ rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.

 

5.3 No Conflicts or Defaults. The execution and delivery of this Agreement by
the Buyer and the consummation of the transactions contemplated hereby do not
and shall not (a) contravene its articles of incorporation or bylaws, or (b)
with or without the giving of notice or the passage of time (i) violate,
conflict with, or result in a material breach of, or a material default or loss
of rights under, any covenant, agreement, mortgage, indenture, lease,
instrument, Permit or license to which it is a party or by which it is bound, or
any judgment, order or decree, or any law, rule or regulation to which it is
subject, (ii) result in the creation of, or give any party the right to create,
any Lien upon any assets or properties of the Buyer, (iii) terminate or give any
party the right to terminate, amend, abandon or refuse to perform, any material
agreement, arrangement or commitment relating to which the Buyer is a party, or
(iv) result in a Material Adverse Effect.

 

5.4 Shares of Buyer Common Stock. The shares of Buyer Common Stock have been
duly authorized, and upon issuance pursuant to the provisions hereof, will be
validly issued, fully paid and non-assessable.

 

5.5 Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Buyer, threatened against it
which questions the validity of this Agreement or the transactions contemplated
hereby or any action taken or to be taken pursuant hereto or thereto. There is
no action, suit, claim, investigation or proceeding pending or, to the knowledge
of the Buyer, threatened against or involving the Buyer or any of its properties
or assets, which if adversely determined would result in a Material Adverse
Effect. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or Governmental Entity against the Buyer or
affecting its assets, which if adversely determined would result in a Material
Adverse Effect.

 

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5.6 SEC Reports. The Buyer files annual, quarterly and current reports with the
Commission, pursuant to Section 12(g) of the Exchange Act. The Buyer has filed
all reports required to be filed by it under the Exchange Act since March 31,
2013 (the “SEC Reports”). The SEC Reports do not misrepresent a material fact,
do not omit to state a material fact and do not omit any fact necessary to make
the statements made therein, in light of the circumstances under which they are
made, not misleading.

 

5.7 Disclosure. The representations, warranties and acknowledgments of the Buyer
set forth herein are true, complete and accurate in all material respects and do
not omit any fact necessary to make such representations, warranties and
acknowledgments not misleading.

 

6. Covenants; Additional Agreements.

 

6.1 Confidentiality. From and after the Closing, each Party shall, and shall
cause its Affiliates to, hold, and shall use its or their reasonable best
efforts to cause its or their respective Representatives to hold, in confidence
any and all information, whether written or oral, concerning the other Party and
the transactions contemplated hereby, except to the extent that such Party can
show that such information (a) is generally available to and known by the public
through no fault of such Party, any of its or their Affiliates or their
respective Representatives; or (b) is lawfully acquired by such Party, any of
its or their Affiliates or their respective Representatives from and after the
Closing from sources which are not prohibited from disclosing such information
by a legal, contractual or fiduciary obligation. If any Party or any of its or
their Affiliates or their respective Representatives are compelled to disclose
any information by judicial or administrative process or by other requirements
of Law, such Party, as applicable, shall promptly notify the other Party in
writing and shall disclose only that portion of such information which such
Party is advised by its counsel in writing is legally required to be disclosed,
provided that such Party shall use reasonable best efforts to obtain an
appropriate protective order or other reasonable assurance that confidential
treatment will be accorded such information.

 

6.2 Taxes. The Parties agree that the transactions contemplated by this
Agreement will be treated for U.S. federal income tax purposes and applicable
state income tax purposes as a taxable sale by the Member and a purchase by the
Buyer of the assets of the Company. The Buyer and Seller shall each (a) be one
-half responsible for any and all liabilities for any sales, use, stamp, value
added, documentary, filing, recording, transfer, stock transfer, gross receipts,
registration, duty, securities transactions or similar fees or taxes or
governmental charges (together with any interest or penalty, addition to tax or
additional amount imposed) as levied by any Governmental Entity in connection
with the transactions contemplated by this Agreement (collectively, “Transfer
Taxes”), regardless of the Person liable for such Transfer Taxes under
applicable Law and (b) timely file or caused to be filed all necessary documents
(including any return, declaration, report, or information return or statement)
with respect to Transfer Taxes.

 

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6.3 Further Assurances. If, at any time after the Closing, the Parties or any
Party shall consider or be advised that any further deeds, assignments or
assurances in law or that any other things are necessary, desirable or proper to
complete the transactions contemplated hereby, including for the avoidance of
doubt, but not limited to, in respect of RockYou (Thailand) Co., Ltd, in
accordance with the terms of this Agreement or to vest, perfect or confirm, of
record or otherwise, the title to any property or rights of the Parties hereto,
the Parties agree that their proper Representatives shall execute and deliver
all such proper deeds, assignments and assurances in law and do all things
necessary, desirable or proper to vest, perfect or confirm title to such
property or rights and otherwise to carry out the purpose of this Agreement, and
that the proper Representatives of the Parties are fully authorized to take any
and all such action.

 

6.4 Press Releases and Communications. Unless otherwise required by Law, no
press release or public announcement related to this Agreement or the
transactions contemplated herein, shall be issued or made by any Party hereto
without the prior written approval of the other Party which consent shall not be
unreasonably withheld. Neither Party shall have any communications with any
third party related to this Agreement or the transactions contemplated herein,
other than its Representatives, without the prior written consent of the other
Party.

 

7. Documents to Be Delivered at Closing.

 

7.1 Documents to Be Delivered by the Member. Contemporaneously herewith, the
Member shall deliver to Buyer the following:

 

7.1.1 a certificate, dated within five (5) Business Days of the Closing, from
the Secretary of State of the State of Delaware, certifying that the Company is
in good standing in Delaware;

 

7.1.2 an assignment of the Membership Interests to Buyer in the form of Exhibit
A hereto (the “Assignment Agreement”), duly executed by the Member;

 

7.1.3 evidence satisfactory to the Buyer in its sole discretion that (i) all
obligations of the Company to Fast Pay shall have been satisfied in full, and
(ii) all security interests in the Company’s assets other than those arising in
connection with the Senior Facility and “Permitted Liens” (as such term is
defined in the Senior Facility) shall have been released; and

 

7.1.4 such other customary instruments of transfer, assumption, filings or other
documents, in form and substance satisfactory to Buyer, as may be required to
give effect to this Agreement.

 

7.2 Documents to Be Delivered by Buyer. Contemporaneously herewith, the Buyer
shall deliver to the Member the following:

 

7.3 a certificate representing the Consideration Shares;

 

7.4 the Assignment Agreement, duly executed by the Buyer; and

 

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7.5 such other customary instruments of transfer, assumption, filings or other
documents, in form and substance satisfactory to Buyer, as may be required to
give effect to this Agreement,

 

8. Indemnification

 

8.1 Survival. Subject to the limitations and other provisions of this Agreement,
the representations and warranties contained herein shall survive the Closing
and shall remain in full force and effect until March 31, 2021. All covenants
and agreements of the parties contained herein shall survive the Closing
indefinitely or for the period explicitly specified therein. Notwithstanding the
foregoing, any claims asserted in good faith with reasonable specificity (to the
extent known at such time) and in writing by notice from the non-breaching party
to the breaching party prior to the expiration date of the applicable survival
period shall not thereafter be barred by the expiration of the relevant
representation or warranty and such claims shall survive until finally resolved.

 

8.2 Indemnification By Member. Subject to the other terms and conditions of this
Section 8, Member shall indemnify and defend each of Buyer and its Affiliates
(including the Company) and their respective Representatives (collectively, the
“Buyer Indemnitees”) against, and shall hold each of them harmless from, and
shall pay and reimburse each of them for, any and all Losses incurred or
sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of,
with respect to or by reason of:

 

8.2.1 any inaccuracy in or breach of any of the representations or warranties of
Member contained in this Agreement or in any certificate or instrument delivered
by or on behalf of Member pursuant to this Agreement, as of the date such
representation or warranty was made or as if such representation or warranty was
made on and as of the Closing (except for representations and warranties that
expressly relate to a specified date, the inaccuracy in or breach of which will
be determined with reference to such specified date) and Losses associated with
the Chapter 7 proceeding of RockYou, Inc. (Case No. 19−10453−scc) brought in the
Bankruptcy Court for the Southern District of New York;

 

8.2.2 any breach or non-fulfillment of any covenant, agreement or obligation to
be performed by Member pursuant to this Agreement.

 

8.3 Indemnification By Buyer. Subject to the other terms and conditions of this
Section 8, Buyer shall indemnify and defend each of Member and its Affiliates
and their respective Representatives (collectively, the “Member Indemnitees”)
against, and shall hold each of them harmless from, and shall pay and reimburse
each of them for, any and all Losses incurred or sustained by, or imposed upon,
the Member Indemnitees based upon, arising out of, with respect to or by reason
of:

 

8.3.1 any inaccuracy in or breach of any of the representations or warranties of
Buyer contained in this Agreement or in any certificate or instrument delivered
by or on behalf of Buyer pursuant to this Agreement, as of the date such
representation or warranty was made or as if such representation or warranty was
made on and as of the Closing (except for representations and warranties that
expressly relate to a specified date, the inaccuracy in or breach of which will
be determined with reference to such specified date); or

 

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8.3.2 any breach or non-fulfillment of any covenant, agreement or obligation to
be performed by Buyer pursuant to this Agreement.

 

8.4 Certain Limitations. The indemnification provided for in Section 8.2 and 8.3
shall be subject to the following limitations:

 

8.4.1 Member shall not be liable to the Buyer Indemnitees for indemnification
under Section 8.2.1 until the aggregate amount of all Losses in respect of
indemnification under such Section 8.2.1 exceeds $80,000 (the “Basket”), in
which event Member shall be required to pay or be liable for all such Losses in
excess of the Basket. The aggregate amount of all Losses for which Member shall
be liable pursuant to Section 8.2. shall be computed in accordance with Section
8.6.2. The limitation on indemnification set forth in this Section 8.4.1 shall
not apply to a breach of the Member’s representations contained in Section 4.17
and any Losses in respect of a breach of such Section 4.17 shall not be counted
against the Basket.

 

8.4.2 Buyer shall not be liable to the Member Indemnitees for indemnification
under Section 8.3.1 until the aggregate amount of all Losses in respect of
indemnification under such Section 8.3.1 exceeds the Basket, in which event
Buyer shall be required to pay or be liable for all such Losses in excess of the
Basket. The aggregate amount of all Losses for which Buyer shall be liable
pursuant to Section 8.3. shall be computed in accordance with Section 8.6.2.

 

8.4.3 Buyer acknowledges that it has had the opportunity to conduct due
diligence and investigate the Company, and Buyer has no knowledge that any of
the Member’s representations and warranties contained in Section 4 are not true
and correct.

 

8.5 Indemnification Procedures. The party making a claim under this Section 8 is
referred to as the “Indemnified Party,” and the party against whom such claims
are asserted under this Section 8 is referred to as the “Indemnifying Party.”

 

8.5.1 Third Party Claims. If any Indemnified Party receives notice of the
assertion or commencement of any Action made or brought by any Person who is not
a party to this Agreement or an Affiliate of a party to this Agreement or a
Representative of the foregoing (a “Third Party Claim”) against such Indemnified
Party with respect to which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall give the
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than 15 calendar days after receipt of such notice of such Third Party
Claim. The failure to give such prompt written notice shall not, however,
relieve the Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party forfeits rights or defenses by
reason of such failure. Such notice by the Indemnified Party shall describe the
Third Party Claim in reasonable detail, shall include copies of all material
written evidence thereof and shall indicate the estimated amount, if reasonably
practicable, of the Loss that has been or may be sustained by the Indemnified
Party. The Indemnifying Party shall have the right to participate in, or by
giving written notice to the Indemnified Party, to assume the defense of any
Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying
Party’s own counsel, and the Indemnified Party shall cooperate in good faith in
such defense; provided, that if the Indemnifying Party is Member, such
Indemnifying Party shall not have the right to defend or direct the defense of
any such Third Party Claim that (x) is asserted directly by or on behalf of a
Person that is a supplier or customer of the Company, or (y) seeks an injunction
or other equitable relief against the Indemnified Party. In the event that the
Indemnifying Party assumes the defense of any Third Party Claim, subject to
Section 8.5.2, it shall have the right to take such action as it deems necessary
to avoid, dispute, defend, appeal or make counterclaims pertaining to any such
Third Party Claim in the name and on behalf of the Indemnified Party. The
Indemnified Party shall have the right to participate in the defense of any
Third Party Claim with counsel selected by it subject to the Indemnifying
Party’s right to control the defense thereof. The fees and disbursements of such
counsel shall be at the expense of the Indemnified Party, provided, that if in
the reasonable opinion of counsel to the Indemnified Party, (A) there are legal
defenses available to an Indemnified Party that are different from or additional
to those available to the Indemnifying Party; or (B) there exists a conflict of
interest between the Indemnifying Party and the Indemnified Party that cannot be
waived, the Indemnifying Party shall be liable for the reasonable fees and
expenses of counsel to the Indemnified Party in each jurisdiction for which the
Indemnified Party determines counsel is required. If the Indemnifying Party
elects not to compromise or defend such Third Party Claim, fails to promptly
notify the Indemnified Party in writing of its election to defend as provided in
this Agreement, or fails to diligently prosecute the defense of such Third Party
Claim, the Indemnified Party may, subject to Section 8.5.2, pay, compromise,
defend such Third Party Claim and seek indemnification for any and all Losses
based upon, arising from or relating to such Third Party Claim. Member and Buyer
shall cooperate with each other in all reasonable respects in connection with
the defense of any Third Party Claim, including making available (subject to the
provisions of Section 6.1) records relating to such Third Party Claim and
furnishing, without expense (other than reimbursement of actual out-of-pocket
expenses) to the defending party, management employees of the non-defending
party as may be reasonably necessary for the preparation of the defense of such
Third Party Claim.

 

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8.5.2 Settlement of Third Party Claims. Notwithstanding any other provision of
this Agreement, the Indemnifying Party shall not enter into settlement of any
Third Party Claim without the prior written consent of the Indemnified Party,
except as provided in this Section 8.5.2. If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial or
other obligation on the part of the Indemnified Party and provides, in customary
form, for the unconditional release of each Indemnified Party from all
liabilities and obligations in connection with such Third Party Claim and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party shall give written notice to that effect to the Indemnified Party. If the
Indemnified Party fails to consent to such firm offer within ten days after its
receipt of such notice, the Indemnified Party may continue to contest or defend
such Third Party Claim and in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim shall not exceed the amount of
such settlement offer. If the Indemnified Party fails to consent to such firm
offer and also fails to assume defense of such Third Party Claim, the
Indemnifying Party may settle the Third Party Claim upon the terms set forth in
such firm offer to settle such Third Party Claim. If the Indemnified Party has
assumed the defense pursuant to Section 8.5.1, it shall not agree to any
settlement without the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld or delayed).

 

8.5.3 Direct Claims. Any Action by an Indemnified Party on account of a Loss
which does not result from a Third Party Claim (a “Direct Claim”) shall be
asserted by the Indemnified Party giving the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than 15 days after the
Indemnified Party becomes aware of such Direct Claim. The failure to give such
prompt written notice shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the Indemnifying
Party forfeits rights or defenses by reason of such failure. Such notice by the
Indemnified Party shall describe the Direct Claim in reasonable detail, shall
include copies of all material written evidence thereof and shall indicate the
estimated amount, if reasonably practicable, of the Loss that has been or may be
sustained by the Indemnified Party. The Indemnifying Party shall have 30 days
after its receipt of such notice to respond in writing to such Direct Claim. The
Indemnified Party shall allow the Indemnifying Party and its professional
advisors to investigate the matter or circumstance alleged to give rise to the
Direct Claim, and whether and to what extent any amount is payable in respect of
the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s
investigation by giving such information and assistance (including access to the
Company’s premises and personnel and the right to examine and copy any accounts,
documents or records) as the Indemnifying Party or any of its professional
advisors may reasonably request. If the Indemnifying Party does not so respond
within such 30 day period, the Indemnifying Party shall be deemed to have
rejected such claim, in which case the Indemnified Party shall be free to pursue
such remedies as may be available to the Indemnified Party on the terms and
subject to the provisions of this Agreement.

 

8.6 Payments.

 

8.6.1 Once a Loss is agreed to by the Indemnifying Party or finally adjudicated
to be payable pursuant to this Section 8 the Indemnifying Party shall satisfy
its obligations within 15 Business Days of such final, non-appealable
adjudication.

 

8.6.2 Any Losses payable to a Buyer Indemnitee pursuant to this Section 8 shall
be satisfied by a turnover of that number of shares of the Consideration Shares
equal to the amount of the Loss divided by $1.49, being the value of the
Consideration Shares as of the Closing (the “Closing Date Share Value”). For the
avoidance of doubt, Member’s obligation to indemnify any and all Buyer
Indemnitees shall be solely limited to the delivery of stock certificates
representing a number of shares of Buyer’s Common Stock, such number of shares
of Buyer’s Common Stock computed in accordance with this Section 8.6.2. and
never greater than 2,500,000 shares. Any Losses payable to a Member Indemnitee
pursuant to this Section 8 shall be satisfied by turnover of additional shares
of Buyer’s Common Stock valued at the Closing Date Share Value. Buyer’s
obligation to indemnify any and all Member Indemnitees shall be solely limited
to the delivery of stock certificates representing a number of shares of Buyer’s
Common Stock, such number of shares of Buyer’s Common Stock computed in
accordance with this Section 8.6.2. and never greater than 2,500,000 shares.

 

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8.7 Tax Treatment of Indemnification Payments. All indemnification payments made
under this Agreement shall be treated by the parties as an adjustment to the
purchase price hereunder for Tax purposes, unless otherwise required by Law.

 

8.8 Effect of Investigation. The representations, warranties and covenants of
the Indemnifying Party, and the Indemnified Party’s right to indemnification
with respect thereto, shall not be affected or deemed waived by reason of any
investigation made by or on behalf of the Indemnified Party (including by any of
its Representatives) or by reason of the fact that the Indemnified Party or any
of its Representatives knew or should have known that any such representation or
warranty is, was or might be inaccurate or by reason of the Indemnified Party’s
waiver of any condition set forth in Section 7.1.1 or Section 7.1.2, as the case
may be.

 

8.9 Exclusive Remedies. Subject to Section 9.10, the parties acknowledge and
agree that their sole and exclusive remedy with respect to any and all claims
(other than claims arising from fraud, criminal activity or willful misconduct
on the part of a party hereto in connection with the transactions contemplated
by this Agreement) for any breach of any representation, warranty, covenant,
agreement or obligation set forth herein or otherwise relating to the subject
matter of this Agreement, shall be pursuant to the indemnification provisions
set forth in this Section 8, including, but not limited to the limitations on
liability contained in Section 8.4. In furtherance of the foregoing, each party
hereby waives, to the fullest extent permitted under Law, any and all rights,
claims and causes of action for any breach of any representation, warranty,
covenant, agreement or obligation set forth herein or otherwise relating to the
subject matter of this Agreement it may have against the other parties hereto
and their Affiliates and each of their respective Representatives arising under
or based upon any Law, except pursuant to the indemnification provisions set
forth in this Section 8. Nothing in this Section 8.9 shall limit any Person’s
right to seek and obtain any equitable relief to which any Person shall be
entitled or to seek any remedy on account of any party’s fraudulent, criminal or
intentional misconduct. No Party shall be entitled to indemnification for lost
income, revenues or profits, multiples of earnings damages, diminution in value,
punitive damages, incidental damages, consequential damages, exemplary damages,
special damages, indirect damages or similar damages.

 

9. Miscellaneous.

 

9.1 Expenses. Except as otherwise expressly provided herein, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
such costs and expenses, provided that costs and expenses borne by the Member up
to a maximum amount of $500,000 shall be added to the principal balance of the
Senior Facility.

 

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9.2 Notices. All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
given: (a) when delivered by hand (with written confirmation of receipt); (b)
when received by the addressee if sent by a nationally recognized overnight
courier (receipt requested); (c) on the date sent by facsimile or e-mail of a
.PDF document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next Business Day if sent after normal
business hours of the recipient; or (d) on the third (3rd) day after the date
mailed, by certified or registered mail, return receipt requested, postage
prepaid. Such communications must be sent to the respective parties at the
following addresses (or at such other address for a Party as shall be specified
in a notice given in accordance with this Section 8.2):

 

  If to the Member: Centre Lane Partners     One Grand Central Place     60 East
42nd Street     Suite 1250     New York, NY 10165     E-mail:
qmorgan@centrelanepartners.com     Attention: Quinn Morgan         with a copy
to: Chapman and Cutler LLP     1270 Avenue of the Americas     New York, NY
10020     Attention: Larry G. Halperin     E-mail: halperin@chapman.com        
If to Buyer: 6400 Congress Avenue, Suite 2050     Boca Raton, FL  33431    
Attention: W. Kip Speyer, Chief Executive Officer     E-mail:
kip@brightmountainmedia.com         with a copy to: Dickinson Wright PLLC    
350 E. Las Olas Blvd Ste. 1750, Ft Lauderdale, FL 33301     Attention: Joel D
Mayersohn     E-mail: jmayersohn@dickinsonwright.com

 

9.3 Interpretation. For purposes of this Agreement: (a) the words “include,”
“includes” and “including” shall be deemed to be followed by the words “without
limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,”
“hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole.
Unless the context otherwise requires, references herein: (x) to Articles,
Sections, Schedules and Exhibits mean the Articles and Sections of, and
Schedules and Exhibits attached to, this Agreement; (y) to an agreement,
instrument or other document means such agreement, instrument or other document
as amended, supplemented and modified from time to time to the extent permitted
by the provisions thereof; and (z) to a statute means such statute as amended
from time to time and includes any successor legislation thereto and any
regulations promulgated thereunder. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation
against the Party drafting an instrument or causing any instrument to be
drafted.

 

9.4 Headings. The headings in this Agreement are for reference only and shall
not affect the interpretation of this Agreement.

 

 20 

 

 

9.5 Severability. If any term or provision of this Agreement is invalid, illegal
or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction. Upon such determination that any term or other provision is
invalid, illegal or unenforceable, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

9.6 Entire Agreement. This Agreement and the other Transaction Documents
constitute the sole and entire agreement of the parties to this Agreement with
respect to the subject matter contained herein and therein, and supersede all
prior and contemporaneous understandings and agreements, both written and oral,
with respect to such subject matter. In the event of any inconsistency between
the statements in the body of this Agreement and those in the other Transaction
Documents, the Exhibits and Schedules, the statements in the body of this
Agreement will control.

 

9.7 Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither Party may assign its rights or obligations hereunder
without the prior written consent of the other Parties, which consent shall not
be unreasonably withheld or delayed. No assignment shall relieve the assigning
party of any of its obligations hereunder.

 

9.8 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the
Parties hereto and their respective successors and permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other Person
or entity any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 

9.9 Amendment and Modification; Waiver. This Agreement may only be amended,
modified or supplemented by an agreement in writing signed by each Party hereto.
No waiver by any Party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and signed by the Party so waiving. No waiver by
any Party shall operate or be construed as a waiver in respect of any failure,
breach or default not expressly identified by such written waiver, whether of a
similar or different character, and whether occurring before or after that
waiver. No failure to exercise, or delay in exercising, any right, remedy, power
or privilege arising from this Agreement shall operate or be construed as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

 

9.10 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 specific performance of
the terms hereof, in addition to any other remedy to which they are entitled at
law or in equity.

 

9.11 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall be deemed to be one
and the same agreement. A signed copy of this Agreement delivered by facsimile,
e-mail or other means of electronic transmission shall be deemed to have the
same legal effect as delivery of an original signed copy of this Agreement.

 

 21 

 

 

9.12 Jurisdiction and Governing Law. This Agreement shall be governed and
construed under and in accordance with the laws of the State of New York. Each
of the Parties hereto expressly and irrevocably: (1) agree that any legal suit,
action or proceeding arising out of or relating to this Agreement will be
instituted exclusively in the United States District Court for the Southern
District of New York; (2) waive any objection they may have now or hereafter to
the venue of any such suit, action or proceeding; and (3) consent to the in
personam jurisdiction of the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Each of the Parties
hereto further agrees to accept and acknowledge service of any and all process
which may be served in any such suit, action or proceeding in the United States
District Court for the Southern District of New York and agree that service of
process upon it mailed by certified mail to its address will be deemed in every
respect effective service of process upon it, in any such suit, action or
proceeding. Any legal suit, action or proceeding arising out of or based upon
this Agreement, the other Transaction Documents or the transactions contemplated
hereby or thereby may be instituted in the federal courts of the United States
of America located in New York, New York, and each Party irrevocably submits to
the exclusive jurisdiction of such courts in any such suit, action or
proceeding. Service of process, summons, notice or other document by mail to
such Party’s address set forth herein shall be effective service of process for
any suit, action or other proceeding brought in any such court. The Parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or any proceeding in such courts and irrevocably waive and
agree not to plead or claim in any such court that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

 

Each Party acknowledges and agrees that any controversy which may arise under
this Agreement or the other Transaction Documents is likely to involve
complicated and difficult issues and, therefore, each such Party irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any legal action arising out of or relating to this Agreement, the other
Transaction Documents or the transactions contemplated hereby or thereby. Each
Party to this Agreement certifies and acknowledges that (a) no representative of
any other Party has represented, expressly or otherwise, that such other Party
would not seek to enforce the foregoing waiver in the event of a legal action,
(b) such Party has considered the implications of this waiver, (c) such Party
makes this waiver voluntarily, and (d) such Party has been induced to enter into
this Agreement by, among other things, the mutual waivers and certifications in
this Section 9.12.

 

  Bright Mountain Media, Inc.         By: /s/ W. Kip Speyer   Name: W. Kip
Speyer   Title: Chief Executive Officer         Centre Lane Credit Partners
Master Credit Fund II, L.P.         By: /s/ Quinn Morgan   Name: Quinn Morgan  
Title: Authorized Signatory

 

 22 

 

 

Exhibit A

Assignment Agreement

 

 Exhibit A-1 

 

 

ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTERESTS

 

THIS ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTERESTS (this “Agreement”) is
entered into as of June 5, 2020, by and between Centre Lane Partners Master
Credit Fund II, L.P., a Delaware limited partnership (“Assignor”), and Bright
Mountain Media, Inc., a Florida corporation (“Assignee”).

 

WHEREAS, Assignor is the sole member of, and is the record and beneficial owner
of all of the membership interests in, CL Media Holdings LLC, a Delaware limited
liability company (the “Company”);

 

WHEREAS, Assignor and Assignee are parties to that certain Membership Interest
Purchase Agreement dated as the date hereof (the “Purchase Agreement”); and

 

WHEREAS, pursuant to the terms of the Purchase Agreement, Assignor desires to
assign and transfer to Assignee its one hundred percent (100%) membership
interest in the Company (collectively, the “Assigned Interest”).

 

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions
set forth in this Agreement and in the Purchase Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1. Defined Terms. Capitalized terms used herein, but not otherwise defined shall
have the meanings ascribed to such terms in the Purchase Agreement.

 

2. Assignment. Assignor hereby assigns and transfers to Assignee all of
Assignor’s right, title and interest in and to the Assigned Interest, including
all voting, consent and financial rights now or hereafter existing and
associated with ownership of the Assigned Interest.

 

3. Acceptance by Assignee; Company Management. Assignee: (a) accepts the
assignment of all of Assignor’s right, title and interest in and to the Assigned
Interest; (b) agrees to be bound by all of the terms, covenants, and conditions
of this Agreement and of the Limited Liability Company Agreement of CL Media
Holdings LLC dated as of January 18, 2019; and (c) designates W. Kip Speyer as
Manager of the Company on behalf of Assignee.

 

4. Absolute Conveyance. The conveyance of the Assigned Interest hereunder is an
absolute transfer to Assignee, free and clear of all liens and restrictions.

 

5. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with the internal, substantive Laws of the State of New
York, without giving effect to its conflict of law rules (other than Section
5-1401 and 5-1402 of the New York General Obligations Law).

 

6. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original for all
purposes, and all such counterparts shall together constitute but one and the
same instrument. A signed copy of this Agreement delivered by e-mail shall be
deemed to have the same legal effect as delivery of an original signed copy of
this Agreement.

 

7. Binding Effect; Amendments and Modifications. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns. This Agreement may not be modified or amended in any
manner other than by a written agreement signed by the party to be charged.

 

[signature page follows]

 

 Exhibit A-2 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.

 

ASSIGNOR: Centre Lane Credit Partners Master Credit Fund II, L.P.       By:
               ASSIGNEE: Bright Mountain Media, Inc.         By:  

 

[signature page to assignment of membership interests]

 

 Exhibit A-3 

 

 

Schedules

 

The following Schedules are qualified in their entirety by reference to the
specific provisions of the Agreement to which they relate, and are not intended
to constitute, and shall not be construed as constituting, representations or
warranties of the Member or any other Person, except as and to the extent
expressly provided in the Agreement.

 

Inclusion of any information, matter or item in these Schedules shall not, in
and of itself, constitute, or be deemed to be, an admission by the Member or any
other Person, or to otherwise imply, that any such information, matter or item
(i) has had or would reasonably be expected to have a Material Adverse Effect or
(ii) did not arise in the ordinary course of business or in a manner consistent
with past practice. For the avoidance of doubt, the foregoing sentence shall not
be deemed to qualify, limit, supersede or otherwise modify the representations,
warranties, covenants and agreements in the Agreement. Inclusion of any item in
these Schedules shall not establish, or be deemed to establish, a standard for
materiality or a Material Adverse Effect. In such cases where a representation
or warranty is qualified by a reference to materiality or a Material Adverse
Effect, the disclosure of any information, matter or item in these Schedules
shall not imply that any other undisclosed information, matter or item that has
a greater value (x) is or is reasonably likely to be material or (y) has had or
would reasonably be expected to have a Material Adverse Effect.

 

These Schedules and the information, matters or items contained herein are
intended only to qualify and limit the representations and warranties of the
Member set forth in the Agreement and shall not be deemed to expand in any way
the scope or effect of any such representations or warranties.

 

No reference to or disclosure of any item or other matter in these Schedules
shall be construed as an admission of any obligation or liability to any
third-party. No reference in these Schedules to any agreement or document shall
be construed as an admission or indication that there are any obligations
remaining to be performed or any rights that may be exercised under such
agreement or document. No disclosure in these Schedules relating to any possible
breach or violation of any agreement, law or regulation shall be construed as an
admission or indication that any such breach or violation exists or has actually
occurred. In disclosing any information, matter or item in these Schedules, the
Member expressly does not waive any attorney-client privilege, attorney work
product protection or any other legal privilege or protection associated
therewith or afforded thereto.

 

 Schedules 

 

 

Schedule 4.6 – Material Contracts

 

Responsive to Section 4.6(a):

 

  1. Agreement of Sublease dated as of May 21, 2018 by and between Allied
Advertising Limited Partnership and the Company.         2. Service Order dated
as of February 1, 2019 by and between Lotame Solutions, Inc. and Wild Sky Media,
Inc.         3. JW Player Order and subscription by and between Wild Sky Media
and JW Player / LongTail Ad Solutions, Inc.         4. Order Form dated as of
February 21, 2020 by and between ISPRIME LLC and Wild Sky Media         5.
Service Order dated March 30, 2019 by and between Contentful Enterprises and
Wild Sky Media         6. Service Order #2 dated February 5, 2020 by and between
Contentful Enterprises and Wild Sky Media         7. GA 360 Service Agreement
dated May 1, 2019 by and between Bounteous, Inc. and Wild Sky Media         8.
License Agreement dated December 15, 2018 by and between RockYou, Inc. and Getty
Images (US), Inc.         9. License Agreement dated June 1, 2017 by and between
CafeMom and Getty Images (US), Inc.         10. Agreement for NetSuite Services
dated April 16, 2020 by and between Oracle America, Inc. and Wild Sky Media    
    11. Affiliate Agreement dated February 12, 2020 by and between Stack Social,
Inc. d/b/a StackCommerce and Wild Sky Media, Inc.         12. License Agreement
dated February 14, 2020 by and between Skimbit Limited and Wild Sky Media      
  13. Master Services Agreement dated March 13, 2019 by and between AUDIOis Inc.
d/b/a SpokenLayer and CL Media Holdings LLC d/b/a Wild Sky Media         14.
Agreement dated May 28, 2015 by and between EM & OS Agencia Mexico SA DE CV and
Máma Latinas         15. Real property lease relating to 233 Broadway, 13th
Floor, New York, NY 10279         16. Certain contracts disclosed as responsive
to Schedule 4.7.2 or this Schedule 4.6 may also be responsive to this request.

 

Responsive to Section 4.6(b):

 

  1. Kargo Publisher Master Services Agreement dated as of June 26, 2019 by and
between Kargo Global, Inc. and Company         2. Master Services Agreement
dated as of May 1, 2019 by and between the Company and Index Exchange Inc.      
  3. Insertion Order terms relating to each of the following campaigns:

 

  a. HBO Max Growth         b. IHOP Corporation         c. Jelly Belly

 

 Schedules 

 

 

  d. KiwiCo         e. MGA – Little Tikes         f. Nintendo of America
(Switch)         g. Church & Dwight Co (Orajel Kids)         h. Target Baby    
    i. Amazon Troop Zero         j. California Milk Processing Board         k.
Disney (Call of the Wild and Mulan)         l. Enfamil         m. Fox Theatrical
Call of the Wild

 

  4. Certain contracts disclosed as responsive to Schedule 4.7.2 or this
Schedule 4.6 may also be responsive to this request.

 

Responsive to Section 4.6(c):

 

  1. Certain contracts disclosed as responsive to Schedule 4.7.2 or this
Schedule 4.6 may also be responsive to this request.

 

Responsive to Section 4.6(d):

 

  1. Profit Participation Agreement dated as of March 23, 2020 by and between
the Company and Patrick Callahan         2. Profit Participation Agreement dated
as of March 23, 2020 by and between the Company and Dera Campbell         3.
Profit Participation Agreement dated as of March 23, 2020 by and between the
Company and John Ferrara         4. Profit Participation Agreement dated as of
March 23, 2020 by and between the Company and Nathan Lau         5. Profit
Participation Agreement dated as of March 23, 2020 by and between the Company
and Christen Mahlmeister         6. Profit Participation Agreement dated as of
March 23, 2020 by and between the Company and Matthew Mirman         7. Profit
Participation Agreement dated as of March 23, 2020 by and between the Company
and Justin Santino         8. Profit Participation Agreement dated as of March
23, 2020 by and between the Company and Emily Smith         9. Profit
Participation Agreement dated as of March 23, 2020 by and between the Company
and Johanna Torres         10. Profit Participation Agreement dated as of March
23, 2020 by and between the Company and Michael Zaic         11. Certain
contracts disclosed as responsive to Schedule 4.7.2 or this Schedule 4.6 may
also be responsive to this request.

 

 6 

 

 

Schedule 4.7 – Intellectual Property

 

Responsive to Section 4.7.1:

 

Patents:

 

Patent Number /Application Number   Title Prov No. 61522653   Systems and
Methods for Crediting Rewards in On-Line Games 13/762,304   Virtual Coupons for
use in On-Line Games Prov No. 61621708   Automated Sweepstakes Manager

7094154/11026783

  COMPUTER NETWORKED GAME SYSTEM UTILIZING SUBSCRIPTION BASED MEMBERSHIP AND
ALTERNATIVE METHODS OF ENTRY

 

Trademarks:

 

Title and Description   Date of Application   Date of Registration   Pending
Serial No.   Registered Trademark No. ROCKYOU       9/13/2011   85093664  
4024964 ROCKYOU       9/13/2011   85093702   4024965 ROCKYOU MEDIA      
9/6/2011   85109083   4021649 PUREPLAY       4/29/2008   77145241   3419492 MALL
WORLD       7/5/2011   85086427   3988594 DAILYTOAST       5/31/2016   86786858
  4968708 GALACTIC TRADER       9/20/2011   85254060   4028841 REWARD BASED
GAMES       1/14/2014   85661686   4467979 CLUBMOM   1/5/2000   7/9/2002  
75888488   2592351 CLUBMOM - DESIGN   11/13/2001   8/13/2002   76093807  
2608079 CAFEMOM (WORD MARK)   1/19/2007   10/23/2007   77087028   3316341
CAFEMOM (DESIGN)   10/2/2014   6/2/2015   86412925   4747392 SWEETPEAS  
7/9/2007   2/19/2008   77224943   3385159 CAFEMOM PRESENTS MOM.COM   5/13/2011  
7/15/2014   85320348   4566129 THE STIR (WORD MARK)   7/26/2012   5/13/2014  
85687337   4527732 THE STIR (DESIGN)   7/26/2012   5/13/2014   85687398  
4527733 THE PROWL   5/8/2013   4/15/2014   85926437   4516285 VIVALA   6/17/2015
  8/16/2016   86665291   5020283

 

Schedules

 

 

ATHENA   9/19/2014   9/27/2016   86400086   5047658 REVELIST   9/13/2015  
11/22/2016   86755217   5087970 CLUB MOMME           86849967   5189110 MOM.ME  
        85665259   4349124 MOM.ME (AND DESIGN BELOW)           85665353  
4349125 PURPLE CLOVER           85957218   4818373 LITTLETHINGS.COM   1/19/2016
  7/12/2016   86880049   4998319 TRUTH BOMB MOM   1/4/2017   8/22/2017  
87288919   5270266 LITTLETHINGS LIVE   4/28/2016   4/4/2017   87018328   5178153
THELITTLETHINGS   8/8/2014   N/A   86361677   N/A LITTLETHINGS SUN AND CLOUD
LOGO (DESIGN)   11/4/2015   7/12/2016   86808864   4996756

LISTBLISS

WILD SKY MEDIA

 

6/29/2012

3/4/2019

 

10/15/2013

3/17/2020

 

85665296

88324430

 

4419547

6014984

 

Copyrights:

 

Title   Registration Number   Registration Date ZOMBIES SOCIAL NETWORKING
SOFTWARE.   TXu001578412   2008/07/15 WEREWOLVES SOCIAL NETWORKING SOFTWARE.  
TXu001578413   2008/07/15 VAMPIRES SOCIAL NETWORKING SOFTWARE.   TXu001578398  
2008/07/15 SLAYERS SOCIAL NETWORKING SOFTWARE.   TXu001578404   2008/07/15 My
Hottest Friends / by Javier Guel, Bill Summer, Guy Argus, MMJK, Inc.  
TX0006424446   2010/08/16 MY HOTTEST FRIENDS.   TX0007176107   2010/07/16

 

Domain Names:

 

See attached.

 

8 

 

 

Responsive to Section 4.7.2:

 

  1. Content License Agreement dated as of January 29, 2020 by and between
Microsoft Online Inc. and the Company, as amended by that certain amendment
thereto dated as of May 20, 2020.         2. Content Partner Terms agreed to by
the Company and Snap Inc.         3. Services Agreement dated as of February 1,
2019 by and between the Company and RockYou (Thailand) Co., Ltd.         4.
Advertising-Supported Video on Demand Short Form License dated as of May 31,
2017 by and between CBS Local Digital Media and LittleThings, Inc., , as amended
        5. Advertising-Supported Video on Demand Short Form License dated as of
August 16, 2016 by and between CBS Interactive Inc. and LittleThings, Inc., as
amended         6. Getty Images North America Permium Access License Agreement
dated as of June 1, 2017 by and between CafeMom and Getty Images (US), Inc., as
amended         7. Terms and Conditions and Service Agreement dated as of
October 1, 2013 by and between DoubleClick and CMI Marketing, Inc.         8.
Master Services Agreement dated as of December 1, 2015 by and between Likqid
Media, Inc. and CafeMedia.         9. Subscription Agreement dated as of
November 1, 2019 by and between MediaRadar, Inc. and RockYou, Inc.         10.
Second Amended License Agreement dated as of October 10, 2018 by and between
RockYou Media and Mezcal Ent Photo Services, LLC         11. Order dated as of
April 16, 2020 by and between Wild Sky Media and Oracle America, Inc.        
12. Master Services Agreement dated as of May 1, 2014 by and between Polar
Mobile Group Inc. and CMI Marketing, Inc., as amended         13. Agreement
dated as of February 14, 2020 by and between SkimBit Limited and Wild Sky Media
        14. Service Agreement dated as of December 17, 2015 by and between
SocialFlow, Inc. and Rock You Media, as amended         15. Content License
Terms dated as of August 6, 2018 by and between Splash News and Picture Agency,
LLC and Rock You, Inc.         16. Master Services Agreement dated as of March
7, 2019 by and between AUDIOis Inc. and the Company         17. Service
Agreement dated as of April 25, 2018 by and between Spot.IM, Ltd and Rock You,
Inc.         18. License Agreement dated as of August 15, 2018 by and between
South West Service News Ltd. and RockYou Inc., as amended         19. Terms and
Conditions agreed to with Caters News Agency Ltd.         20. Music Licensing
Agreement dated as of September 1, 2018 by and between Coney Island Music, LLC
and RockYou Media, Inc.         21. Enterprise Customer Agreement between
Contentful Inc. and Wild Sky Media         22. Leaf Group Content Channels
Agreement dated as of August 8, 2019 by and between Wild Sky Media and Leaf
Group Ltd.

 

9 

 

 

Schedule 4.9 – Insurance

 

Responsive to Section 4.9:

 

Policy Description   Policy Number   Policy Term   Insurance Carrier Auto  
6076334913   3/8/2020-3/8/2021   Continental Insurance Company Excess and
Umbrella   6076334944   3/8/2020-3/8/2021   Continental Insurance Company
Package (General Liability, Business Property and Employee Benefits Liability)  
6076334894   3/8/2020-3/8/2021   National Fire Insurance Company of Hartford
Foreign Package (Thailand Liability and Property)   WP 67 307 3965  
3/8/2020-3/8/2021   Continental Insurance Company Errors & Omissions  
C-4LPE-040539-CYBER-2019   3/8/2019-6/30/2020   North American Capacity
Insurance Company; Peleus Insurance Company Workers Compensation; Employers
Liability  

6076334930

6076334927

  3/8/2020-3/8/2021   Continental Insurance Company Kidnap & Ransom   86-343-536
  3/8/2020-3/8/2021   AIG CrisiSolution Directors & Officers   8259-6749  
5/31/2020-5/31/2021   Federal Insurance Company

 

10 

 

 

Schedule 4.10 – Legal Proceedings

 

Responsive to Section 4.10:

 

1. Creative Photographers, Inc. v. Wild Sky Media Co., Ltd., 1:2019cv10396
(S.D.N.Y.)

Filed: Nov. 8, 2019

Description of claim: Plaintiff claims copyright infringement and violation of
the Digital Millennium Copyright Act (DMCA) by the Company on behalf of
photographer Zoey Grossman relating to four images of Christina Aguilera that
were allegedly posted on revelist.com.

Requested damages: Plaintiff has requested damages based on an accounting of
revenues during the period in which the pictures were posted and willful
copyright infringement damages of up to $600,000 ($150,000/per infringement),
other punitive damages, and attorneys’ fees.

Last settlement offer by Plaintiff: $40,000 (May 11, 2020)

Case Status: Case is scheduled for mediation session on June 24, 2020

 

2. Minden Pictures, Inc. v. Wild Sky Media, Co., Ltd., 1:2019cv10401 (S.D.N.Y.)

Filed: Dec. 13, 2019

Description of claim: Plaintiff claims copyright infringement and violation of
the Digital Millennium Copyright Act (DMCA) by the Company relating to four
nature images that were allegedly posted on littlethings.com.

Requested damages: Plaintiff has requested damages based on an accounting of
revenues during the period in which the pictures were posted and willful
copyright infringement damages of up to $600,000 ($150,000/per infringement),
other punitive damages, and attorneys’ fees.

Last settlement offer by Plaintiff: $30,000 (May 7, 2020)

Case Status: Answer to Complaint due June 4, 2020

 

3. Duffy Archives Limited v. Wild Sky Media, Inc., 1:2019cv11426 (S.D.N.Y.)

Filed: Dec. 13, 2019

Description of claim: Plaintiff claims copyright infringement and
contributory/vicarious copyright infringement by the Company on behalf of
photographer Brian Duffy relating to one image of David Bowie (the so-called
‘Aladdin Sane’ image) that was allegedly posted on revelist.com.

Requested damages: Plaintiff has requested damages based on an accounting of
revenues during the period in which the pictures were posted and willful
copyright infringement damages of up to $150,000 ($150,000/per infringement),
other punitive damages, and attorneys’ fees.

Last settlement offer by Plaintiff: $10,000 (May 7, 2020)

Case Status: Answer to Complaint due June 8, 2020

 

 Schedules 

 

 

4. Keatley v. Wild Sky Media Co., Ltd., 1:2020cv01792 (S.D.N.Y.)

Filed: Mar. 2, 2020

Description of claim: Plaintiff claims copyright infringement by the Company on
behalf of himself relating to one image of Macklemore that was allegedly posted
on playbuzz.com.

Requested damages: Plaintiff has requested damages based on an accounting of
revenues during the period in which the pictures were posted and willful
copyright infringement damages of up to $150,000 ($150,000/per infringement),
other punitive damages, and attorneys’ fees.

Last settlement offer by Plaintiff: No settlement offer has been made

Case Status: Answer to Complaint due June 1, 2020; Case is scheduled for
mediation session on June 30, 2020

 

5. Sands v. Wild Sky Media Co., Ltd., 1:2020cv02734 (S.D.N.Y.)

Filed: Apr. 2, 2020

Description of claim: Plaintiff claims copyright infringement by the Company on
behalf of himself relating to one image of Jennifer Lopez that was allegedly
posted on Quemas.MamasLatinas.com.

Requested damages: Plaintiff has requested the Company’s actual damages or gains
and willful copyright infringement damages of up to $150,000 ($150,000/per
infringement), other punitive damages, and attorneys’ fees.

Last settlement offer by Plaintiff: No settlement offer has been made at this
time.

Case Status: This Complaint has not yet been served.

 

6. From time to time, matters relating to the Chapter 7 cases of RockYou, Inc.
and MMJK, Inc. pending in the United States Bankruptcy Court for the Southern
District of New York.

 

7. Document requests from Salvatore LaMonica, solely in his capacity as the
Chapter 7 Trustee of RockYou Inc. and MMJK, Inc., served on CR3 Partners LLC
(“CR3 Partners”) and the examination of a representative, employee or agent
designated by CR3 Partners pursuant to Federal Rule of Civil Procedure 30(b)(6).
    8. Order Regarding Chapter 7 Trustee’s Motion for Entry of an Order
Compelling the Turnover of The Debtors’ Books and Records and Other Electronic
Data of the Debtors in the Possession, Custody or Control of Wild Sky Media, CL
Media Holdings LLC and/or Any Other Third Party to the Trustee.     9.
Settlement Agreement, dated March 12, 2020, between Vita Insurance Associates,
Inc. and the Company.     10. Order, Pursuant to Section 105(a) of the
Bankruptcy Code and Bankruptcy Rule 9019, Authorizing and Approving the
Trustee’s Entry Into a Settlement With CMI Marketing, Inc. and CL Media Holdings
LLC.

 

12 

 

 

Schedule 4.11 – Permits

 

Responsive to Section 4.11:

 

None.

 

 Schedules 

 

 

Schedule 4.15 – Employment Matters

 

Responsive to Section 4.15:

 

U.S. Employees

 

Title or Position  Full-Time or Part-Time 

Annual base

compensation

or contract

fees

   Commission, bonus or incentive-based compensation Chief Executive Officer 
Full  $400,000   Bonus of 75% Based on EBITDA of $2,000,000 Senior Director
Yield  Full  $255,000   Bonus of 15% Based on EBITDA of $2,000,000 Senior VP
Content and Marketing  Full  $245,000   Bonus of 35% Based on EBITDA of
$2,000,000 Senior VP Engineering  Full  $230,000   Bonus of 25% Based on EBITDA
of $2,000,000 VP of Sales Development  Full  $215,000   Commission of 0.7%
Director of IT and Operations  Full  $201,365   Bonus of 15% Based on EBITDA of
$2,000,000 VP Sales Strategy and Operations  Full  $200,000   $50,000 guaranteed
Systems Architect  Full  $185,400   Bonus of 12% Based on EBITDA of $2,000,000
Direct Sales Personnel  Full  $180,000   $40,000 guaranteed Director of
Engineering  Full  $175,100   Bonus of 12% Based on EBITDA of $2,000,000
Director of East Coast Sales  Full  $170,000   $96,950 at goal Director of
Audience Data & Analytics  Full  $159,650   Bonus of 12% Based on EBITDA of
$2,000,000 Director of West Coast Sales  Full  $150,000   $88,410 at goal
Engineer  Full  $150,000   Bonus of 12% Based on EBITDA of $2,000,000
Controller  Full  $140,000   Bonus of 15% Based on EBITDA of $2,000,000 Director
of Social Engagement  Full  $140,000   Bonus of 12% Based on EBITDA of
$2,000,000 Director of Trending Content  Full  $135,000   Bonus of 12% Based on
EBITDA of $2,000,000 Director of Ad Operations  Full  $130,000   Bonus of 12%
Based on EBITDA of $2,000,000 Senior Finance Manager  Full  $125,000   Bonus of
12% Based on EBITDA of $2,000,000 Staff Software Engineer  Full  $125,000  
Bonus of 12% Based on EBITDA of $2,000,000 Engineering Manager  Full  $120,000  
Bonus of 12% Based on EBITDA of $2,000,000

 

 Schedules 

 

 

Title or Position  Full-Time or Part-Time 

Annual base

compensation

or contract

fees

   Commission, bonus or incentive-based compensation Executive Producer  Full 
$115,000   Bonus of 12% Based on EBITDA of $2,000,000 Editorial Director for
Parenting  Full  $115,000   Bonus of 12% Based on EBITDA of $2,000,000 Managing
Editor Wild Sky Media  Full  $115,000   Bonus of 12% Based on EBITDA of
$2,000,000 Director of Account Management  Full  $108,000   Commission of 0.2%
Managing Editor and Mamas Latinas  Full  $106,500   Bonus of 8% Based on EBITDA
of $2,000,000 Editorial Director for Lifestyle  Full  $100,800   Bonus of 12%
Based on EBITDA of $2,000,000 Deputy Editor  Full  $95,000   Bonus of 8% Based
on EBITDA of $2,000,000 Managing Editor Parenting  Full  $91,520   Bonus of 8%
Based on EBITDA of $2,000,000 Deputy Editor Parenting  Full  $90,000   Bonus of
8% Based on EBITDA of $2,000,000 Senior Performance Marketing Manager  Full 
$85,000   Bonus of 8% Based on EBITDA of $2,000,000 Director of Influencer
Strategy Operations  Full  $80,000   N/A Senior Copy Editor  Full  $75,000  
Bonus of 8% Based on EBITDA of $2,000,000 Deputy Editor for Entertainment  Full 
$75,000   Bonus of 8% Based on EBITDA of $2,000,000 Video Editor  Full 
$70,000   Bonus of 8% Based on EBITDA of $2,000,000 Senior Producer  Full 
$70,000   Bonus of 8% Based on EBITDA of $2,000,000 Social Strategy Manager 
Full  $70,000    Bonus of 8% Based on EBITDA of $2,000,000 Senior Branded
Content Editor  Full  $65,000   Bonus of 8% Based on EBITDA of $2,000,000
Producer  Full  $63,000   Bonus of 8% Based on EBITDA of $2,000,000 Media
Manager  Full  $60,000   Bonus of 8% Based on EBITDA of $2,000,000 Reporter 
Full  $58,500   Bonus of 8% Based on EBITDA of $2,000,000 Senior VP of Sales 
Full  $300,000   N/A Data Scientist  Full  $125,000   Bonus of 8% Based on
EBITDA of $2,000,000 Account Manager  Full  $95,000   N/A Account Manager  Full 
$95,000   N/A Account Manager  Full  $95,000   N/A

 

15 

 

 

Title or Position  Full-Time or Part-Time 

Annual base

compensation

or contract

fees

   Commission, bonus or incentive-based compensation Intern     $32,640   N/A
Intern     $32,640   N/A Senior VP of Global Operations and Manager of Thailand 
Full  $300,000   Bonus of 25% Based on EBITDA of $2,000,000 Chief Financial
Officer  Full  $275,000   Bonus of 30% Based on EBITDA of $2,000,000 VP of
Revenue Operations  Full  $250,000   Bonus of 25% Based on EBITDA of $2,000,000
Director of Global Engineering  Full  $200,850   Bonus of 15% Based on EBITDA of
$2,000,000 Director of Finance  Full  $150,000   Bonus of 15% Based on EBITDA of
$2,000,000 Senior Performance Marketing Manager  Full  $130,000   Bonus of 12%
Based on EBITDA of $2,000,000 Director of HR  Full  $115,000   Bonus of 12%
Based on EBITDA of $2,000,000 IT Systems Administrator  Full  $115,000   Bonus
of 12% Based on EBITDA of $2,000,000 Account Manager  Full  $110,000   N/A
Principal Designer  Full  $104,030   Bonus of 8% Based on EBITDA of $2,000,000
Ad Operations Manger  Full  $95,000   Bonus of 8% Based on EBITDA of $2,000,000
Senior Global Accountant  Full  $90,000   Bonus of 8% Based on EBITDA of
$2,000,000 Senior Performance Marketing Manager  Full  $50,000   Bonus of 8%
Based on EBITDA of $2,000,000

 

Thailand Employees

 

Title or Position  Annual base compensation or contract fees in US Dollars  
Commission, bonus or incentive-based compensation  Social Media Analytics
Manager  $52,000    10% Senior Manager of Art and Video  $46,400    10% QA
Manager  $40,000    10% Engineering Manager  $40,000    10% Engineering Team
Lead  $36,800    10% Senior Manager for Business Operations  $34,400    10%
Senior Project Manager  $33,580    10% SEO Associate  $33,580    10% SEO
Associate  $33,580    10% SEO Associate  $33,580    10%

 

16 

 

 

Title or Position  Annual base compensation or contract fees in US Dollars  
Commission, bonus or incentive-based compensation  Senior Software Engineer 
$32,200    10% Senior Graphic and Web Designer  $28,000    10% Senior QA
Analyst  $28,000    10% Producer  $26,000    10% Financial Operations  $25,200  
 10% Social Media Scheduler  $24,400    10% Associate Producer  $24,000    10%
Senior Software Engineer  $22,540    10%    $22,335    10% Art Manager 
$22,200    10% Full Stack Software Engineer  $22,000    10% Executive Editorial
Assistant  $21,200    10% QA Analyst  $21,200    10% Engineering team Lead 
$20,800    10% Senior QA Analyst  $20,400    10% Illustrator  $19,200    10%
Social Media Scheduler  $19,200    10% SEO Associate  $18,000    10% Lead
Designer  $16,100    10% Social Media Designer  $16,000    10% Graphic Designer 
$16,000    10% QA Analyst  $14,800    10% Illustrator  $14,400    10% Motion
Graphics Designer  $12,400    10% Graphic Designer  $12,400    10% Video Editor 
$12,000    10% Video Editor  $11,200    10% Video Editor  $10,400    10%
Illustrator  $10,000    10%    $10,000    10% HR and Administrative Officer 
$10,000    10% Video Editor  $9,200    10% Illustrator  $9,200    10%
Receptionist and Janitorial Services  $6,800    10%

 

Contractors/Freelancers

 

See attached.

 

17 

 

 

Schedule 4.16 – Employee Benefit Matters

 

Responsive to Section 4.16:

 

  1. Wild Sky Media Co., Ltd. Employee Work Rules and Regulations effective June
1, 2019   2. Wild Sky Media Co., Ltd. US Employee Handbook effective May 2019  
3. TriNet 401(k) Plan   4. Vita 2020 FSA, Dependent Care, and Transit Plans   5.
UnitedHealthCare Select Plus PPO Platinum and Gold Plans   6. Company bonus,
commission and severance plans, details of which have been provided to the Buyer
  7. Cleo Bump to Baby Services

 

 Schedules