Exhibit 10.1


 


ASSET PURCHASE AGREEMENT


 


BY AND AMONG


 


MEDIASENTRY, INC.


 


SAFENET, INC.,


 


ARTISTDIRECT INC.,


 


AND


 


MEDIADEFENDER, INC.


 


 


Dated as of March 30, 2009


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE I

  	
   

  	
  PURCHASE AND SALE OF ASSETS

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Purchase and Sale of Assets

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Excluded Assets

  	
   

  	
  2

  
	
  1.3

  	
   

  	
  Assumption of Liabilities

  	
   

  	
  3

  
	
  1.4

  	
   

  	
  Excluded Liabilities

  	
   

  	
  3

  
	
  1.5

  	
   

  	
  Closing

  	
   

  	
  5

  
	
  1.6

  	
   

  	
  Closing Deliveries

  	
   

  	
  5

  
	
  1.7

  	
   

  	
  Consent of Third Parties

  	
   

  	
  6

  
	
  1.8

  	
   

  	
  Further Assurances

  	
   

  	
  7

  
	
  1.9

  	
   

  	
  Transfer Taxes

  	
   

  	
  7

  
	
  ARTICLE II

  	
   

  	
  PURCHASE PRICE

  	
   

  	
  8

  
	
  2.1

  	
   

  	
  Purchase Price

  	
   

  	
  8

  
	
  2.2

  	
   

  	
  Offset

  	
   

  	
  8

  
	
  ARTICLE III

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

  	
   

  	
  8

  
	
  3.1

  	
   

  	
  Organization; Good Standing and Qualification

  	
   

  	
  8

  
	
  3.2

  	
   

  	
  Ownership of MediaSentry

  	
   

  	
  8

  
	
  3.3

  	
   

  	
  Authorization; Binding Obligation

  	
   

  	
  8

  
	
  3.4

  	
   

  	
  Consents and Approvals

  	
   

  	
  9

  
	
  3.5

  	
   

  	
  No Violation

  	
   

  	
  9

  
	
  3.6

  	
   

  	
  Approvals and Orders

  	
   

  	
  9

  
	
  3.7

  	
   

  	
  Title to and Condition of Properties; Sufficiency of
  Assets

  	
   

  	
  10

  
	
  3.8

  	
   

  	
  Financial Statements

  	
   

  	
  10

  
	
  3.9

  	
   

  	
  Absence of Undisclosed Liabilities

  	
   

  	
  10

  
	
  3.10

  	
   

  	
  Absence of Certain Events

  	
   

  	
  11

  
	
  3.11

  	
   

  	
  Tax Matters

  	
   

  	
  11

  
	
  3.12

  	
   

  	
  Intellectual Property; Privacy

  	
   

  	
  11

  
	
  3.13

  	
   

  	
  Contracts

  	
   

  	
  14

  
	
  3.14

  	
   

  	
  Absence of Restrictions on Business Activities

  	
   

  	
  14

  
	
  3.15

  	
   

  	
  Legal Proceedings

  	
   

  	
  14

  
	
  3.16

  	
   

  	
  Accounts Receivable

  	
   

  	
  15

  
	
  3.17

  	
   

  	
  Intentionally omitted

  	
   

  	
  15

  
	
  3.18

  	
   

  	
  Compliance with Laws

  	
   

  	
  15

  
	
  3.19

  	
   

  	
  Employee Matters

  	
   

  	
  15

  
	
  3.20

  	
   

  	
  Brokers

  	
   

  	
  16

  
	
  3.21

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  16

  
	
  3.22

  	
   

  	
  Certain Business Practices

  	
   

  	
  16

  
	
  3.23

  	
   

  	
  Customers and Vendors

  	
   

  	
  16

  
	
  3.24

  	
   

  	
  Disclosure

  	
   

  	
  17

  
	
  ARTICLE IV

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF THE BUYER

  	
   

  	
  17

  
	
  4.1

  	
   

  	
  Organization and Good Standing

  	
   

  	
  17

  
	
  4.2

  	
   

  	
  Authorization; Enforceability; No Conflict

  	
   

  	
  17

  
	
  4.3

  	
   

  	
  Consents

  	
   

  	
  17

  
	
  4.4

  	
   

  	
  Litigation

  	
   

  	
  18

  
	
  4.5

  	
   

  	
  No Brokers

  	
   

  	
  18

  
	
  4.6

  	
   

  	
  Solvency

  	
   

  	
  18

  
	
  ARTICLE V

  	
   

  	
  ADDITIONAL AGREEMENTS

  	
   

  	
  18

  



 


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  5.1

  	
   

  	
  Public Announcements

  	
   

  	
  18

  
	
  5.2

  	
   

  	
  Litigation Cooperation

  	
   

  	
  18

  
	
  5.3

  	
   

  	
  Use of Names

  	
   

  	
  18

  
	
  5.4

  	
   

  	
  Accounts Receivable/Collections

  	
   

  	
  18

  
	
  5.5

  	
   

  	
  Employment Matters

  	
   

  	
  19

  
	
  5.6

  	
   

  	
  Non-Solicitation

  	
   

  	
  19

  
	
  ARTICLE VI

  	
   

  	
  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION

  	
   

  	
  20

  
	
  6.1

  	
   

  	
  Survival of Representations, Warranties and
  Covenants

  	
   

  	
  20

  
	
  6.2

  	
   

  	
  Indemnification of the Sellers

  	
   

  	
  20

  
	
  6.3

  	
   

  	
  Indemnification of the Buyer and ADI

  	
   

  	
  20

  
	
  6.4

  	
   

  	
  Limitations on Indemnification

  	
   

  	
  21

  
	
  6.5

  	
   

  	
  Indemnification Process

  	
   

  	
  21

  
	
  6.6

  	
   

  	
  Fraud and Related Claims; Characterization of
  Payments

  	
   

  	
  22

  
	
  6.7

  	
   

  	
  Additional Indemnification Provisions

  	
   

  	
  23

  
	
  6.8

  	
   

  	
  Exclusive Remedy

  	
   

  	
  23

  
	
  ARTICLE VII

  	
   

  	
  CERTAIN DEFINITIONS; INTERPRETATION

  	
   

  	
  24

  
	
  7.1

  	
   

  	
  Certain Definitions

  	
   

  	
  24

  
	
  7.2

  	
   

  	
  Interpretation

  	
   

  	
  28

  
	
  ARTICLE VIII

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  29

  
	
  8.1

  	
   

  	
  Modification or Amendment

  	
   

  	
  29

  
	
  8.2

  	
   

  	
  Governing Law; Waiver of Jury Trial

  	
   

  	
  29

  
	
  8.3

  	
   

  	
  Consent to Jurisdiction

  	
   

  	
  29

  
	
  8.4

  	
   

  	
  Notices

  	
   

  	
  29

  
	
  8.5

  	
   

  	
  Entire Agreement

  	
   

  	
  30

  
	
  8.6

  	
   

  	
  No Third Party Beneficiaries

  	
   

  	
  31

  
	
  8.7

  	
   

  	
  Severability

  	
   

  	
  31

  
	
  8.8

  	
   

  	
  Assignment

  	
   

  	
  31

  
	
  8.9

  	
   

  	
  Legal Counsel

  	
   

  	
  31

  
	
  8.10

  	
   

  	
  Expenses

  	
   

  	
  31

  
	
  8.11

  	
   

  	
  Specific Performance

  	
   

  	
  32

  
	
  8.12

  	
   

  	
  Counterparts

  	
   

  	
  32

  
	
  8.13

  	
   

  	
  Joint and Several

  	
   

  	
  32

  



 


ii

















 


EXHIBITS AND SCHEDULES


 


EXHIBITS


 


Exhibit A                                               Form of
Note


Exhibit B                                                 Form of
Bill of Sale, Assignment and Assumption Agreement


Exhibit C                                                 Form of
Patent and Trademark Assignment


Exhibit D                                                Form of
Sellers Non-Competition, Non-Solicitation and Confidentiality Agreement


Exhibit E                                                  Form of Transition Services Agreement


Exhibit F                                                  Form of
Employee Non-Competition, Non-Solicitation and Confidentiality Agreement


Exhibit G                                                 Form of
Escrow Agreement


 


SCHEDULES


 


Schedule 1.1(a)                                                               Assigned
Contracts


Schedule 1.1(b)                                                              Approvals
and Orders


Schedule 1.1(c)                                                               Credits,
Refunds, Prepaid Expenses Etc.


Schedule 1.1(h)                                                              Telephone
and Facsimile Numbers


Schedule 1.1(j)                                                                  Tangible
Personal Property


Schedule 1.2(g)                                                              Certain
Excluded Assets


 


Disclosure Schedule


 


iii

















 


ASSET PURCHASE
AGREEMENT


 


THIS
ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of March 30,
2009, is made by and among MEDIASENTRY, INC., a Georgia corporation (“MediaSentry”),
and SAFENET, INC., a Delaware corporation (“SafeNet” and together with
MediaSentry, the “Sellers”), on the one hand; and ARTISTDIRECT INC., a
Delaware corporation (“ADI”), and MEDIADEFENDER, INC., a Delaware
corporation and a wholly-owned subsidiary of ADI (the “Buyer” and
together with ADI, the “Buyer Parties”), on the other hand.


 


WHEREAS,
SafeNet, operating using the name MediaSentry, is engaged in providing hosted
application services for digital media measurement (the “Business”);


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Sellers
wish to sell to the Buyer, and the Buyer wishes to purchase from the Sellers,
all of the assets described in this Agreement owned, used or held for use
primarily in connection with the operation of the Businesses.


 


NOW,
THEREFORE, in consideration of the mutual benefits to be derived from this
Agreement and the representations, warranties, covenants, agreements,
conditions and promises contained herein, the parties hereby agree as follows:


 


ARTICLE I


 


PURCHASE AND SALE
OF ASSETS


 


1.1                                 Purchase
and Sale of Assets.  Upon the terms
and subject to the conditions set forth in this Agreement, at the Closing,
Sellers shall sell, transfer, assign and deliver to the Buyer, and relinquish
to the Buyer (together with its successors and assigns) in perpetuity, free and
clear of all Liens, all right, title and interest in and to all of the Acquired
Assets.  As used in this Agreement, the
term “Acquired Assets” means all of the assets, properties, rights,
interests and goodwill of Sellers of every kind and nature whatsoever, whether
real, personal or mixed, tangible or intangible, wherever located, owned, used
or held for use by Sellers primarily in connection with the operation of the
Business, including the following, but excluding the Excluded Assets:


 


(a)           all right, title and
interest in, to and under the Contracts listed on Schedule 1.1(a) attached
hereto (the “Assigned Contracts”);


 


(b)           all rights, to the
extent transferable, under all Approvals and Orders of Governmental Authorities
required for the operation of the Business, including those listed on Schedule
1.1(b) attached hereto;


 


(c)           all rights with
respect to all credits, refunds, prepaid expenses, advance payments, security
deposits and other prepaid items arising from the operation of the Business,
including those listed on Schedule 1.1(c) attached hereto;


 


(d)           all accounts receivable
or notes receivable of, and other rights to payment payable or otherwise owed
to, the Sellers arising from the operation of the Business;


 


1





















 


(e)           all Intellectual
Property of the Business (“Business Intellectual Property”), and all
goodwill associated therewith, licenses and sublicenses granted in respect
thereto and rights thereunder, together with all claims against third parties
for profits and all costs, losses, claims, liabilities, fines, penalties,
damages and expenses (including interest which may be imposed in connection
therewith), court costs and reasonable fees and disbursements of counsel,
consultants and expert witnesses incurred by reason of the past infringement,
alleged infringement, unauthorized use or disclosure or alleged unauthorized
use or disclosure of the Business Intellectual Property, together with the
right to sue for, and collect the same, or to sue for injunctive relief, for
the Buyer’s own use and benefit, and for the use and benefit of its successors,
assigns or other legal representatives;


 


(f)            all books, records,
information, files, manuals, databases and other materials maintained by or on
behalf of the Sellers in any medium (including, where available, digital media)
that exclusively relate to the Business, including all customer, user,
subscriber, mailing and vendor lists and databases, advertising materials,
research files and correspondence, market research studies and surveys,
operating data and plans, production data, technical documentation (design
specifications, functional requirements, operating instructions, logic manuals,
flow charts, etc.), user documentation (installation guides, user manuals,
training materials, release notes, working papers, etc.), equipment repair,
maintenance and service records, sales and promotional materials and records,
purchasing and billing records, research and development files, data,
intellectual property disclosures, media materials, accounting files and
records, sales order files, personnel files for Transferred Employees (but only
to the extent permitted under applicable law) and all lists of and all rights
in and to the information contained therein (collectively, the “Books and
Records”);


 


(g)           the domain name
MediaSentry.com;


 


(h)           all telephone
numbers and facsimile numbers exclusively used by the Business, including those
listed on Schedule 1.1(h) attached hereto;


 


(i)            all claims,
demands, causes of action, rights of recovery, rights of set-off, rights of
recoupment, guaranties, warranties, indemnities and similar rights to the
extent arising  from the operation of the
Business and all rights to proceeds under insurance policies and indemnity
agreements to the extent arising from the operation of the Business;


 


(j)            all tangible
personal property set forth on Schedule 1.1(j) attached hereto; and


 


(k)           all goodwill and
going concern value of the Business.


 


1.2                                 Excluded
Assets.  Notwithstanding anything to
the contrary in Section 1.1 above, the following assets and property of
the Sellers are to be retained by the Sellers and shall not constitute Acquired
Assets (collectively, the “Excluded Assets”):


 


(a)           all rights in and to
the trademark “SafeNet” and the name “SafeNet;”


 


(b)           all cash, cash
equivalents, short term investments and bank accounts;


 


2





















 


(c)           all claims, demands,
causes of action, rights of recovery, rights of set-off, rights of recoupment,
guaranties, warranties, indemnities and similar rights and all rights to
proceeds under insurance policies and indemnity agreements, to the extent the
foregoing relate to the Excluded Assets and the Excluded Liabilities;


 


(d)           all Contracts to
which either Seller is a party or by which either Seller or any of its assets
or properties are bound, other than the Assigned Contracts;


 


(e)           all rights of the
Sellers under this Agreement and the Transaction Documents;


 


(f)            all minute books
and stock records of the Sellers;


 


(g)           all capital stock or
other equity interest in any Subsidiary or Affiliate of either Seller or in any
other Person, and all options, warrants or other rights to acquire such capital
stock or other equity interest;


 


(h)           subject to the
provisions of Section 1.1(i), all insurance policies of the Sellers;


 


(i)            all Employee Benefit
Plans of the Sellers and all assets related thereto;


 


(j)            those assets
specifically set forth in Schedule 1.2(j) attached hereto; and


 


(k)           all other assets,
properties, rights and interests of Sellers of every kind and nature
whatsoever, whether real, personal or mixed, tangible or intangible, that are
not owned, used or held for use by the Sellers primarily in connection with the
operation of the Business.


 


1.3                                 Assumption
of Liabilities.  Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, the
Buyer Parties shall assume from the Sellers only the following Liabilities (the
“Assumed Liabilities”):


 


(a)           all Liabilities,
obligations and commitments related to the ownership or use of the Acquired
Assets and the operation of the Business from and after the Closing Date,
including, without limitation, up to $1000 for interdiction services; and


 


(b)           all Liabilities of
the Sellers for performance after the Closing under the Assigned Contracts,
provided, that, the Buyer shall not assume, and does not hereby agree to pay,
discharge or perform, any Losses  to the extent
arising from any breach or default of either Seller of any Assigned Contract
prior to the Closing Date regardless of whether the Sellers disclose such
breach or default pursuant to this Agreement.


 


1.4                                 Excluded
Liabilities.  Except as expressly
assumed pursuant to Section 1.3, the Buyer is not assuming and shall not
have any liability or obligation for any Liabilities of either Seller or any of
its predecessors or Affiliates (the “Excluded Liabilities”).  Without limiting the generality of the
foregoing, the Buyer shall not be deemed to assume any of the following
Liabilities, all of which shall constitute Excluded Liabilities:


 


3





















 


(a)           Liabilities arising
under any written or oral Contract to which either Seller is a party or by
which either Seller or its assets or properties are otherwise subject or bound,
other than Liabilities arising under the Assigned Contracts or otherwise
constituting Assumed Liabilities;


 


(b)           Liabilities of a
Seller or any of its predecessors or Affiliates in respect of any indebtedness
for money borrowed, or Transaction Expenses of either Seller;


 


(c)           Liabilities of a
Seller or any of its predecessors or Affiliates to any Affiliate or current or
former stockholder or option holder of the Seller or any of its predecessors or
Affiliates;


 


(d)           Liabilities of a
Seller or any of its predecessors or Affiliates for or in respect of Taxes,
except for Taxes arising from and after the Closing Date from the operation of
the Business and except as provided in Section 1.9 and Section 8.10;


 


(e)           Liabilities of a
Seller or any of its predecessors or Affiliates to any present or former
director, officer, employee, consultant or independent contractor of such
Seller or any of its predecessors or Affiliates, including Liabilities arising
under any federal, state, local or foreign Laws, Approvals or Orders;


 


(f)            Liabilities of a
Seller or any of its predecessors or Affiliates for any Actions against a
Seller or any of its predecessors or Affiliates, except any Action in respect
to any Assumed Liability;


 


(g)           Liabilities of a
Seller or any of its predecessors or Affiliates arising out of or resulting
from any violation of or non-compliance by a Seller or any of its predecessors
or Affiliates with any federal, state, local or foreign Laws, Approvals or
Orders, including any environmental laws;


 


(h)           Liabilities of a
Seller or any of its predecessors or Affiliates arising from any obligation of
a Seller or any of its predecessors or Affiliates to indemnify any Person
(other than pursuant to an Assigned Contract to the extent assumed pursuant to Section 1.3(a) or
pursuant to any other Assumed Liability);


 


(i)            Liabilities of a
Seller arising under this Agreement or any of the Transaction Documents;


 


(j)            Liabilities arising
under any Employee Benefit Plan of a Seller or any of its predecessors or
Affiliates;


 


(k)           Liabilities
resulting from any breach or default by Seller in respect to products sold or
services performed by a Seller or any of its predecessors or Affiliates prior
to Closing; and


 


(l)            Liabilities
attributable in any manner to the Excluded Assets.


 


4





















 


1.5                                 Closing.  The closing of the transactions contemplated
by this Agreement (the “Closing”) will take place simultaneously with
the execution of this Agreement on the date of this Agreement (the “Closing
Date”) by email or fax, or at such place as the parties may designate.  The consummation of the transactions
contemplated by this Agreement shall be deemed to occur at 11:59 p.m.
Eastern Time on the Closing Date.


 


1.6                                 Closing
Deliveries.  At the Closing, the
parties shall execute and deliver, or cause to be executed and delivered, the
following documents and take, or cause to be taken, the following actions:


 


(a)           the Sellers and the
Buyer Parties shall execute and deliver to one another a bill of sale,
assignment and assumption agreement in the form of Exhibit B attached hereto
(the “Bill of Sale”) pursuant to which the Sellers will transfer and
assign to the Buyer the Acquired Assets and the Buyer Parties will assume from
the Sellers the Assumed Liabilities;


 


(b)           the Sellers shall
execute and deliver to the Buyer one or more trademark and domain name
assignments in substantially the form of Exhibit C attached hereto (the “Trademark
Assignments”) pursuant to which the Sellers will transfer and assign to the
Buyer the trademarks and domain names being acquired by the Buyer pursuant to
this Agreement;


 


(c)           the Sellers shall
execute and deliver to the Buyer a non-competition, non-solicitation and
confidentiality agreement in the form of Exhibit D attached hereto (the “Sellers
Non-Competition Agreement”);


 


(d)           the
Sellers and the Buyer Parties shall execute and deliver to one another a
transition services agreement in the form of Exhibit E attached hereto
(the “Transition Services Agreement”);


 


(e)           each Transferred
Employee shall execute and deliver to the Buyer a non-competition, non-solicitation
and confidentiality agreement in substantially the form of Exhibit F
attached hereto (each, an “Employee Non-Competition Agreement”);


 


(f)            each Transferred
Employee shall execute and deliver to the Buyer an employment offer letter in a
form acceptable to the Buyer and such Transferred Employee;


 


(g)           each Seller will
deliver to the Buyer a certificate of an officer of such Seller, dated as of
the Closing Date, certifying as to and attaching (if applicable): (i) true
and correct copies of the corporate charter of such Seller as in effect on the
Closing Date; (ii) the incumbency of the officers executing this Agreement
and the Transaction Documents to which such Seller is a party on behalf of such
Seller; (iii) and true and correct copies of resolutions of the Board of
Directors of such Seller authorizing and approving the execution, delivery and
performance of this Agreement and the Transactions Documents to which such
Seller is a party, as applicable, and the transactions contemplated hereby and
thereby, and the acts of the officers of such Seller in carrying out the terms
and provisions hereof; and each Seller shall deliver to the Buyer certificates
of corporate good standing with respect to such Seller from the Secretary of
the State of the state of incorporation or organization of such Seller and any
jurisdiction where such Seller is qualified to do business in connection with
the operation of the Business, and each Seller shall deliver to the Buyer which
certificates shall be dated within a reasonable period prior to the Closing
Date as determined by the Buyer;


 


5

















 


(h)           each Buyer Party
will deliver to the Seller a certificate of an officer of such Buyer Party,
dated as of the Closing Date, certifying as to and attaching (if applicable): (i) true
and correct copies of the corporate charter of such Buyer Party as in effect on
the Closing Date; (ii) the incumbency of the officers executing this
Agreement and the Transaction Documents to which such Buyer Party is a party on
behalf of such Buyer Party; (iii) and true and correct copies of
resolutions of the Board of Directors of such Buyer Party authorizing and
approving the execution, delivery and performance of this Agreement and the
Transactions Documents to which such Buyer Party is a party, as applicable, and
the transactions contemplated hereby and thereby, and the acts of the officers
of such Buyer Party in carrying out the terms and provisions hereof; and each
Buyer Party shall deliver to the Sellers certificates of corporate good
standing with respect to such Buyer Party from the Secretary of the State of
the state of incorporation or organization of such Buyer Party and any
jurisdiction where such Buyer Party is qualified to do business, and each Buyer
Party shall deliver to the Seller, which certificates shall be dated within a
reasonable period prior to the Closing Date as determined by the Seller;


 


(i)            each party will
deliver other consents and approvals contemplated by this Agreement, or that,
in the reasonable discretion of such party, are reasonably necessary for the
consummation of the transactions contemplated hereby, in form and substance
satisfactory to the parties;


 


(j)            all Liens on any of
the Acquired Assets shall have been fully released and discharged pursuant to
such documents in form and substance reasonably satisfactory to the Buyer, and
the Sellers shall have made all necessary filings and taken all other action
necessary to effect such releases and discharges including, without limitation,
filing all necessary UCC termination statements in all applicable
jurisdictions;


 


(k)           each party will
execute and deliver all such other bills of sale, assignments, endorsements,
intellectual property right assignments, trade name assignments, domain name
assignments, certificates of title, consents and other necessary instruments
and documents of conveyance and transfer in a form reasonably satisfactory to
the parties; and


 


(l)            the Buyer shall
make or cause to be made the payment required by Section 2.1 and ADI shall
deliver the Note (as defined in such Section).


 


1.7                                 Consent
of Third Parties.


 


(a)           Notwithstanding
anything in this Agreement or in any Transaction Document to the contrary,
neither this Agreement nor any such Transaction Document shall constitute an
agreement to assign or otherwise transfer, or require the Buyer to assume any
obligations under, any Assigned Contract if an attempted assignment or transfer
thereof would, without the consent of a third party to such assignment or transfer,
constitute a breach thereof, would be ineffective, would affect adversely the
rights of the Buyer thereunder or would violate any applicable Law.


 


6




















 


If any such consent has not been obtained as of the Closing Date and
the Buyer nevertheless determines to proceed with the Closing, the Sellers
shall use their reasonable best efforts to obtain such consent following the
Closing, and the Buyer will provide reasonable cooperation to the Sellers in
seeking to obtain any such consent.


 


(b)           If any
Assigned Contract is not transferred to the Buyer for lack of consent as
described above at the Closing pursuant to this Agreement (a “Post-Closing
Assigned Contract”), the Sellers shall cooperate with the Buyer in any
reasonable arrangement designed to provide for the Buyer all of the benefits
of, and to have the Buyer assume the burdens, liabilities, obligations and
expenses with respect to, such Post-Closing Assigned Contract.  In such event, until such consent has been
obtained, (i) the Buyer shall use commercially reasonable efforts to
perform in the applicable Seller’s name, all of the applicable Seller’s
obligations with respect to each Post-Closing Assigned Contract, and (ii) the
Sellers shall take all actions reasonably requested by the Buyer to enforce for
the benefit of the Buyer any and all rights of the Sellers with respect to any
such Post-Closing Assigned Contract.


 


(c)           The
Sellers hereby authorize the Buyer to perform all of their respective
obligations after the Closing with respect to all Post-Closing Assigned
Contracts and the Sellers hereby grant to the Buyer a power of attorney to act
in the name of the Sellers with respect thereto.  Such power of attorney shall be coupled with
an interest and shall be irrevocable. 
The power of attorney granted to the Buyer pursuant to this Section will
expire upon the actual assignment of the Post-Closing Assigned Contracts to the
Buyer, at which time such Post-Closing Assigned Contracts will constitute an
Assigned Contract and an Acquired Asset of the Buyer as described in Section 1.1(a).
The Sellers agree to remit promptly to the Buyer all collections or payments
received by either Seller in respect of all such Post-Closing Assigned
Contracts pursuant to this Section, and shall hold all such collections or
payments in trust for the benefit of, and promptly pay the same over to, the
Buyer; provided, however, that nothing herein shall create or provide any
rights or benefits in or to third parties.


 


(d)           Nothing
in this Section 1.7 shall be deemed to modify in any respect any of the
Sellers’ representations or warranties set forth herein or be deemed to
constitute an agreement to exclude from the Acquired Assets any assets
described under Section 1.1.


 


1.8           Further Assurances.  At any time and from time to time after the
Closing, at the request of a party and without further consideration, the
parties will execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation, and will take such further action, as may be
reasonably requested in order to more effectively transfer, convey and assign
to the Buyer, and to confirm the Buyer’s title in and to, the Acquired Assets
and the Buyer Parties’ assumption of the Assumed Liabilities, and each of the
parties shall execute such other documents and take such further action as may
be reasonably required or desirable to carry out the provisions of this
Agreement and the transactions contemplated hereby.


 


1.9           Transfer Taxes.  All sales (including, without limitation,
bulk sales), transfer and similar Taxes, if any, payable in connection with the
transactions contemplated hereby shall be split by Buyer and the Sellers.


 


7

















 


ARTICLE II



PURCHASE PRICE


 


2.1           Purchase Price.  The purchase price for the Acquired Assets
(the “Purchase Price”) shall be $1,400,000, subject to adjustment as set
forth below in this Section.  At the
Closing, the Buyer shall pay or cause to be paid to the Sellers $600,000 by
wire transfer of immediately available funds to a United States bank account
designated by the Sellers to the Buyer in writing and deliver to the Sellers a
one-year promissory note of the Buyer Parties with interest at the rate of 6%
per annum (the “Note”) in the principal amount of $800,000.  The Note shall be in the form set forth on Exhibit A
attached hereto.  The portion of the
Purchase Price payable at Closing shall be reduced by the amount by which the
Buyer and the Sellers agree that that the accounts receivable as of the Closing
that are included in the Acquired Assets are less than $800,000.  The accounts receivable as of the Closing
shall be computed net of accounts receivables from the Recording Industry
Association of America and the Motion Picture Association of America that are
more than 90 days old.


 


2.2           Offset.  Any payment to which the Sellers become
entitled to pursuant to this Agreement shall be subject to offset only as
provided in Section 6.5(c).


 


ARTICLE III


 


REPRESENTATIONS
AND WARRANTIES OF THE SELLERS


 


The
Sellers, jointly and severally, hereby represent and warrant to the Buyer
Parties that, except as disclosed in the disclosure schedule (the “Disclosure
Schedule”) attached hereto and dated the date hereof:


 


3.1           Organization; Good
Standing and Qualification.  Each
Seller is duly incorporated or organized and validly existing and in good
standing under the Laws of its jurisdiction of incorporation or organization,
and is duly qualified or licensed as a foreign corporation to do business and
is in corporate and tax good standing in each jurisdiction where the character
of the Acquired Assets or the nature of the Business makes such qualification
or licensing necessary, all of which are listed in Section 3.1 of the
Disclosure Schedule.  Each Seller has all
requisite corporate power and authority, and is in possession of all Approvals
necessary, to own, lease and operate the Acquired Assets and to carry on the
Business as it is now being conducted.


 


3.2           Ownership of
MediaSentry.  All outstanding shares
of capital stock of MediaSentry are owned solely by SafeNet.


 


3.3           Authorization;
Binding Obligation.  Each Seller has
all necessary corporate power and authority to execute and deliver this
Agreement, each Transaction Document to which it is a party and each other
instrument or document required to be executed and delivered by it pursuant to
this Agreement or any such Transaction Document, and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.  The execution and delivery
by each Seller of this Agreement and each Transaction Document to which it is a
party, the performance of its respective obligations hereunder and thereunder,
and the consummation of the transactions contemplated hereby and thereby, have
been duly and validly authorized by all necessary action on the part of such
Seller and no other proceedings on the part of such Seller are necessary to
authorize this Agreement or any Transaction Document to which it is a party or
to consummate the transactions so contemplated herein and therein.


 


8

















 


This Agreement has been,
and each of the Transaction Documents to which either Seller is a party, when
executed and delivered by such Seller, will be, duly and validly executed and
delivered by such Seller, and this Agreement constitutes, and each Transaction
Document to which either Seller is a party, when executed and delivered by such
Seller, will constitute, a legal, valid and binding obligation of such Seller
enforceable against such Seller in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the rights
of creditors generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).


 


3.4           Consents and
Approvals.  The execution and
delivery by each Seller of this Agreement, the Transaction Documents to which
either Seller is a party or any other instrument or document required by this
Agreement or any Transaction Document to be executed and delivered by either
Seller do not, and the performance of this Agreement, the Transaction Documents
to which either Seller is a party and any other instrument or document required
by this Agreement or any Transaction Document to be executed and delivered by
either Seller shall not, require either Seller to obtain any Approval of any
Person or Approval of, observe any waiting period imposed by, or make any
filing with or notification to, any Governmental Authority.


 


3.5           No Violation.  The execution and delivery by each Seller of
this Agreement, the Transaction Documents to which either Seller is a party or
any other instrument or document required by this Agreement or any Transaction
Document to be executed and delivered by either Seller do not, and the
performance of this Agreement, the Transaction Documents to which either Seller
is a party or any other instrument or document required by this Agreement or
any Transaction Document to be executed and delivered by either Seller, will
not, (a) conflict with or violate the Organizational Documents of either
Seller, (b) conflict with or violate any Law or Order applicable to either
Seller or by which either Seller or any of their respective properties are
bound or affected, or (c) result in any breach or violation of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair either Seller’s rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the creation
of a Lien on any of the Acquired Assets pursuant to, any Contract to which
either Seller is a party or is otherwise bound, or any Approval to which either
Seller is a party or by which either Seller or it or any of its properties are
bound or affected.


 


3.6           Approvals and Orders.  Section 3.6 of the Disclosure Schedule
contains a true, correct and complete list of all Approvals and Orders that
have been issued, granted or otherwise made available by any Governmental
Authority to either Seller in connection with the operation of the Business
(the “Acquired Business Licenses”). 
Each Acquired Business License is valid and in full force and effect, no
Acquired Business License is subject to any Lien, or except as provided therein
or constituting a part thereof, any limitation, restriction, probation or other
qualification and there is no material default under any Acquired Business
License or, to the knowledge of the Sellers, any basis for the assertion of any
material default thereunder.


 


9

















 


There is no Action
pending or, to the knowledge of the Sellers, threatened that could reasonably
be expected to result in the termination, revocation, limitation, suspension,
restriction or impairment of any Acquired Business License or the imposition of
any fine, penalty or other sanctions for violation of any legal or regulatory
requirements relating to any Acquired Business License or, to the knowledge of
the Sellers, any basis therefor. The Sellers have all Approvals of Governmental
Authorities that are or were necessary in order to enable the Sellers to own
and operate the Acquired Assets and to conduct the Acquired Businesses.  All
Acquired Business Licenses are validly held by the Sellers, and each Seller has
complied in all material respects with the terms and conditions of each
Acquired Business License held by it.


 


3.7           Title to and
Condition of Properties; Sufficiency of Assets.  Each Seller is the sole and exclusive legal
and equitable owner of all right, title and interest in, and has good, clear,
indefeasible and marketable title to, all of the Acquired Assets purported to
be owned by such Seller and has the valid, enforceable and sufficient right to
use all of the other Acquired Assets used or held by such Seller, free and
clear of all Liens.  All tangible assets
and properties included in the Acquired Assets have been maintained in
accordance with normal industry practice and are in operating condition,
subject to ordinary wear and tear and there has not been any material
interruption of the operations of the Acquired Businesses due to the condition
of any such assets or properties. The Acquired Assets comprise all material
assets, properties and rights necessary for the operation of the Business in
the manner in which the Business is currently operated, it being understood by
the Buyer Parties, however, that certain assets and services used in the
operation of the Business such as, but not limited to, accounting functions and
services and internet access capability, have been provided by Sellers and are
not part of the Acquired Assets (“Sellers’ Assets”).


 


3.8           Financial Statements.  Attached hereto as Section 3.8(a) of
the Disclosure Schedule are the unaudited schedule of Acquired Assets and
Assumed Liabilities as of December 31, 2008 and the related statements of
income for the twelve-month periods ended December 31, 2008 (collectively,
the “Financial Statements”). The Financial Statements are complete and
correct in all material respects, and have been prepared in accordance with
sound business and accounting practices, and fairly present in all material
respects the results of operations and the financial position of the Business
as at and for the twelve-month period ended December 31, 2008.  Also, included as part of Section 3.8 of
the Disclosure Schedule, for Buyer’s information (but without representation by
the Sellers) are statements of income for each quarterly period in 2008.


 


3.9           Absence of
Undisclosed Liabilities.  Except as
and to the amounts specifically accrued or disclosed in the Financial
Statements or in the Disclosure Schedule, neither Seller has any Liabilities
arising from the operation of the Business, except for Liabilities of the
nature that are required by GAAP to be disclosed that were incurred in the
ordinary course of business and consistent with past practice since December 31,
2008 and except for Liabilities as would not reasonably be expected to have an
adverse effect on the condition (financial or otherwise), properties, assets,
liabilities, operations, results of operations or prospects of the Business or
either of the Sellers’ ability to perform its obligations as contemplated in
this Agreement.


 


10

















 


3.10         Absence of Certain
Events.  Since January 1, 2009,
the Sellers have conducted the Business only in the ordinary and usual course
and in a manner consistent with past practices and there has not been any
change, event, development, damage or circumstance affecting the Acquired
Assets or the Business which, individually or in the aggregate, has had or
could reasonably be expected to have, a Material Adverse Effect.


 


3.11         Tax Matters.  All Taxes arising from the operation of the
Business have been timely paid or are fully accrued in the Financial Statements
or in the financial records of the Sellers.  
All Taxes that either Seller is or was required by Law to have withheld
or collected in connection with the operation of the Business have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Authority.  Neither Seller
has been informed by any jurisdiction that such jurisdiction believes that such
Seller was required to file any Tax Return in connection with the ownership or
operation of the Acquired Assets or the Business that was not filed.  Neither Seller has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code, and no withholding pursuant to Section 1445 of the Code will be
required in connection with this Agreement or the transactions contemplated
hereby. There are no Liens with respect to Taxes upon any of the Acquired
Assets.


 


3.12         Intellectual
Property; Privacy.


 


(a)           Section 3.12(a) of
the Disclosure Schedule sets forth, with respect to all Business Intellectual
Property, a complete and accurate list of all United States and foreign
Patents, Trademarks (including Internet domain name registrations and
registered and applied for Trademarks) and registered Copyrights, indicating
for each, the applicable jurisdiction, registration number (or application
number) and date issued (or date filed). 
All registered and applied for Trademarks, Patents and Copyrights of
each Seller are currently in compliance with all legal requirements (including
the timely post-registration filing of affidavits of use and incontestability
and renewal applications with respect to Trademarks, and the payment of filing,
examination and maintenance fees and proof of working or use with respect to
Patents), are valid and enforceable, and are not subject to any maintenance
fees or actions falling due within one hundred eighty (180) days after the
Closing Date.  No Trademark included in
the Business Intellectual Property (“Acquired Trademarks”) has been or
is now involved in any cancellation proceeding and, to the knowledge of the
Sellers, no such Action is threatened with respect to any of such Acquired
Trademarks.  All Acquired Trademarks have
been in continuous use by the Sellers since they were first used by the
Sellers.  To the knowledge of the
Sellers, there has been no prior use of such Acquired Trademarks by any Person
which would confer upon such Person superior rights in such Trademarks; and the
registered Acquired Trademarks have been continuously used in the form
appearing in, and in connection with the goods and services listed in, their
respective registration certificates or identified in their respective pending
applications.  No Patent included in the
Business Intellectual Property has been or is now involved in any litigation,
interference, reissue, re-examination or opposing proceeding.  No Copyright registration or Copyrightable
work included in the Business Intellectual Property has been or is now involved
in any Action.  To the knowledge of the
Sellers, there are no potentially conflicting Trademarks or potentially
interfering Patents of any third party.


 


11

















 


(b)           Section 3.12(b) of
the Disclosure Schedule sets forth a complete and accurate list of all license
agreements granting any right to use or practice any rights under any Business
Intellectual Property (“Licensed Intellectual Property”), whether a
Seller is the licensee or licensor thereunder, and any assignments, consents,
forbearances to sue, judgments, orders, settlements, indemnification or similar
obligations relating to any Licensed Intellectual Property to which a Seller is
a party or otherwise bound (collectively, the “License Agreements”),
indicating for each the title, the parties, date executed, whether or not it is
exclusive and the Licensed Intellectual Property covered thereby.  The License Agreements are valid and binding
obligations of the applicable Seller party thereto and, to the knowledge of the
Sellers, of each other party thereto enforceable in accordance with their
respective terms, and neither such Seller nor, to the knowledge of the Sellers,
the other party or parties thereto is or are in default thereunder and there
exists no event, condition or occurrence which (with or without due notice or
lapse of time, or both) would constitute such a default by the Sellers or, to
the knowledge of the Sellers, the other party or parties thereto of any of the
foregoing.  No consent of, or notice to,
any Person is required under any License Agreement as a result of or in
connection with, and the terms or enforceability of any License Agreement will
not be affected in any manner by, the execution, delivery and performance of
this Agreement or any Transaction Document, or the transactions contemplated
hereby or thereby.


 


(c)           The
Business Intellectual Property constitutes all of the Intellectual Property
(other than the Intellectual Property that constitute Sellers’ Assets) used in
the conduct of the Business as currently conducted.


 


(d)           No
royalties, honoraria or other fees are payable to any third parties for the use
of or right to use any Business Intellectual Property except pursuant to the
License Agreements set forth in Section 3.12(d) of the Disclosure
Schedule.  All inventions, discoveries,
trade secrets, ideas and works, whether or not patented or patentable or
otherwise protectable under Law, created, prepared, developed or conceived by
employees or independent contractors of a Seller in connection with the
operation of the Business and material to the operation of the Business are the
sole property of such Seller and were either created, prepared, developed or
conceived by (i) employees of such Seller within the scope of their
employment or (ii) by independent contractors who have duly assigned their
rights to such Seller pursuant to enforceable written agreements.


 


(e)           Each
Seller owns all Business Intellectual Property purported to be owned by such
Seller, and has a valid, enforceable, transferable and sufficient right to use
for the purposes such Seller has previously used, the Business Intellectual
Property licensed or otherwise used by such Seller, free and clear of all
Liens.


 


(f)            The use
of the Business Intellectual Property by Sellers as currently used in the
Business does not infringe upon, violate, misappropriate or make unlawful use
of any Intellectual Property or other rights of any other Person.  Neither Seller has received notice of any
allegation that the use of any Business Intellectual Property or the conduct of
the Business infringes upon, violates, misappropriates or makes unlawful use of
any Intellectual Property or other rights of any other Person.  To the knowledge of the Sellers, no Person is
misappropriating, infringing, violating or making unlawful use of any Business
Intellectual Property.  There is no
Action pending or, to the knowledge of the Sellers, threatened alleging that
either Sellers’ activities or the conduct of the Business infringes upon,
violates or constitutes the unauthorized use of the Intellectual Property or
other rights of any other Person.


 


12

















 


Neither Seller has
threatened to bring and neither Seller has brought any Action regarding the
ownership, use, validity or enforceability of any Business Intellectual
Property.


 


(g)           Section 3.12(g) of
the Disclosure Schedule lists all Software which is owned, licensed or
otherwise used in connection with the operation of the Business (“Acquired
Business Software”) and indicates whether the software is subject to an
escrow agreement and, if so, indicates where the Software is held in
escrow.  Neither Seller has sold or
licensed any Acquired Business Software to a third party.  To the knowledge of the Seller, none of the
Acquired Business Software (i) is designed to intentionally disrupt,
disable, harm or otherwise impede in any manner, including aesthetical
disruptions or distortions, the operation of any computer system (e.g., viruses
or worms), (ii) would disable any computer system or impair in any way its
operation based on the elapsing of a period of time, the exceeding of an
authorized number of copies or the advancement to a particular date or other
numeral (e.g., time bombs, time locks, or drop dead devices) or (iii) would
permit any Person to access any computer system (e.g., traps, access codes, or
trap door devices).  The Sellers have
delivered to the Buyer all documentation relating to use, maintenance and
operation of the Acquired Business Software held by the Sellers.


 


(h)           The
Sellers have taken all reasonable steps in accordance with normal industry
practice to protect the Business Intellectual Property, including the Sellers’
rights in confidential information and Trade Secrets included in the Business
Intellectual Property. True and complete copies of proprietary information,
confidential and assignment agreements that Sellers have from persons employed
in or contracted with, in connection with the conduct of the Business, have been
delivered or made available to the Buyer (collectively, the “Proprietary
Information Agreements”) and, to the knowledge of the Sellers, no such
person is in breach or violation of any such agreement.  To the knowledge of the Sellers, except
pursuant to enforceable confidentiality obligations in favor of the Sellers,
there has been no disclosure of any the confidential information or Trade
Secrets included in the Business Intellectual Property.  To the knowledge of the Sellers, no current
or former employee, consultant, contractor or potential partner or investor of
either Seller is in unauthorized possession of any of the Trade Secrets or
Software included in the Business Intellectual Property.


 


(i)            Section 3.12(j) of
the Disclosure Schedule describes all databases used by either Seller in
connection with the operation of either Acquired Business (the “Databases”).  At the Closing, the Databases will have at
least the same information and functionality as exists prior to the
Closing.  No Person has any right, title
or interest in or to any of the information contained in any of the Databases
and neither Seller has sold, assigned, leased, transferred, permitted the use
of or otherwise disclosed to any Person any information contained in any of the
Databases, including any Personally Identifiable Information, except in
compliance in all material respects with applicable law.  The Sellers have complied and are in
compliance in material respects in with all applicable privacy Laws in
connection with the operation of the Business and all information contained in
the Databases has been collected, used and maintained in all material respects
in accordance with all applicable privacy Laws. 
The Sellers have the right to sell and assign all of its rights in and
to the Databases and all information contained therein to the Buyer (and its
successors and assigns), and any such sale and assignment will not violate any
privacy policy applicable to any Personally Identifiable Information contained
therein at the time it was collected.


 


13

















 


(j)            The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of the Buyer’s ownership or rights in and to any of the
Acquired Business Intellectual Property, require the Buyer to grant to any
third party any right to any Acquired Business Intellectual Property or
obligate the Buyer to pay any royalties or other amounts to any third party in
excess of any amounts payable to such third parties prior to the Closing, nor
will the consummation of the transactions contemplated hereby require the
approval or consent of any Governmental Authority or other Person in respect of
any Acquired Business Intellectual Property.


 


3.13         Contracts.  The
Seller has delivered to the Buyer true and complete copies of all written
Assigned Contracts (including all amendments thereto) and a written description
of all oral Assigned Contracts.  The
Assigned Contracts listed on Schedule 1.1(a) constitute all of the
Contracts material to the operation of the Business as operated as of the
Closing, except for the Contracts that are Excluded Assets.  Each Assigned Contract is in full force and
effect and is the legal, valid and binding obligation of the applicable Seller
party thereto and, to the knowledge of the Sellers, of each other party thereto
enforceable in accordance with its terms, and neither the applicable Seller
party thereto nor, to the knowledge of the Sellers, the other party or parties
thereto is or are in default thereunder and there exists no event, condition or
occurrence which (with or without due notice or lapse of time, or both) would
constitute such a default by the applicable Seller party thereto or, to the
knowledge of the Sellers, the other party or parties thereto of any of the
foregoing.  No consent of, or notice to,
any Person is required under any Assigned Contract as a result of or in
connection with the execution, delivery and performance of this Agreement or
any Transaction Document, or the transactions contemplated hereby or thereby.


 


3.14         Absence of
Restrictions on Business Activities. 
There is no Contract or Order binding upon either Seller or any of its
assets or properties which has had or could reasonably be expected to have the
effect of prohibiting or materially restricting the conduct of the Business as
currently conducted.  Neither of the
Sellers is subject to any non-competition or similar contractual restriction
relating to the Business and are not contractually restricted from carrying on
the Business anywhere in the world.


 


3.15         Legal
Proceedings.


 


(a)           There is
no Action arising from the operation of the Business pending or, to the
knowledge of the Sellers, threatened by or against either Seller, and neither
Seller has received any written or, to the knowledge of Sellers, oral claim,
threat or notice of any such Action.


 


(b)           Section 3.15
of the Disclosure Schedule sets forth all Actions arising from the operation of
the Business by or against either Seller or any of its Affiliates that have
been concluded or settled during the past three (3) years.


 


14

















 


3.16         Accounts Receivable.  All accounts receivable included in the
Acquired Assets: (a) have arisen only from bona fide transactions in the
ordinary course of business consistent with past practice; (b) represent
valid and enforceable obligations;  and (c) are
owned by the Sellers free of all Liens. 
No discount or allowance from the face amount of any receivable as of
the Closing Date has been made or agreed to and none represents billings prior
to actual sale of goods or provision of services.  There is no obligor of any such account
receivable that has refused in writing or threatened in writing to refuse to
pay its obligations for any reason and, to the knowledge of the Sellers, no
such obligor has been declared bankrupt by a court of competent jurisdiction or
that is subject to any bankruptcy proceeding. 
Attached hereto as Section 3.16 of the Disclosure Schedule is a
complete and accurate accounts receivable aging report for the Business as of
the Closing Date.


 


3.17         Intentionally omitted.


 


3.18         Compliance with Laws.  The Sellers are in compliance in all material
respects with all Laws applicable to the operation of the Business.  Neither Seller has received any written or,
to the knowledge of Sellers, oral notice to the effect that, or otherwise been
advised in writing that, it is not in compliance with any such Laws.


 


3.19         Employee
Matters.


 


(a)           Section 3.19(a) of
the Disclosure Schedule identifies (a) all employees that have provided
services on a substantially full time basis to the Business as of the Closing
and sets forth each such employee’s: (i) rate of pay or annual
compensation, (ii) bonus payments, (iii) job title, (iv) state
of employment, (v) date of hire, (vi) annual vacation and sick time
allowance and (vii) accrued vacation and sick time as of the Closing Date
and (b) all consultants and independent contractors that have provided
material services to the Business as of the Closing or at any time during the
six-month period prior to the Closing and sets forth each consultant’s and
independent contractor’s: (i) rate of pay, (ii) scope of services
provided, (iii) state of engagement and (iv) date of engagement and,
if applicable, termination of engagement. 
Neither Seller is delinquent in payments to any such employees or
consultants for any wages, salaries, commissions, bonuses or other compensation
for any services performed by them through the date hereof or amounts required
to be reimbursed to them.


 


(b)           Neither
Seller nor, to the knowledge of the Sellers, any current or former employee or
consultant that provided services to the Business is in violation of any term
of any employment, consulting, independent contractor, non-disclosure, non-competition,
inventions assignment or any other Contract (or any other legal obligation such
as a trade secrets statute or common law duty of loyalty) relating to the
relationship of such employee or consultant with either Seller or has been
notified in writing or, to the knowledge of Sellers, orally that any such
employee or consultant may be in violation of any such Contract or other legal
obligation, in each case to the extent such violation would have a Material
Adverse Effect.


 


(c)           Section 3.19(c) of
the Disclosure Schedule sets forth all Employee Benefit Plans under which
current employees or consultants of either Seller that primarily work in the
Business (or their beneficiaries) are eligible to participate or derive a
benefit.  Each Employee Benefit Plan
intended to be qualified under section 401(a) of the Code, and the trust
(if any) forming a part thereof, is so qualified and has received a favorable
determination letter, opinion or advisory from the IRS.


 


15

















 


Each Employee Benefit
Plan has been operated in all material respects in accordance with applicable
Law.  None of the Acquired Assets are
subject to any lien in favor of, or enforceable by, the Pension Benefit Guaranty
Corporation.


 


3.20         Brokers.  Except as set forth on Section 3.20 of
the Disclosure Schedule, neither of the Sellers nor any of their respective
officers, directors or employees has employed any broker, finder, investment
banker or other agent or incurred or will incur Liability for any brokerage
fees, commissions, finders’ fees or similar fees in connection with the
transactions contemplated hereby.


 


3.21         Transactions with
Affiliates.  To the knowledge of the
Sellers, no current director, officer or employee of either Seller or any member
of any such Person’s family is now a party to any transaction with either
Seller primarily in respect to the Business (including any Contract providing
for the employment of, furnishing of goods or services by, rental of real or
personal property from, borrowing money from or lending money to, or otherwise
requiring payments to, any such Person, but excluding payments for normal
salary and bonuses and reimbursement of expenses), or the direct or indirect
owner of an interest in any Person which is a present or potential competitor,
supplier or client of the Business and, to the knowledge of the Sellers, no
such Person receives income from any source other than a Seller which relates
to the Business.


 


3.22         Certain Business
Practices.  Neither of the Sellers
nor any director, officer, employee or agent of either Seller on behalf of such
Seller has: (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity, (b) made
any unlawful payment to any foreign or domestic government official or employee
or to any foreign or domestic political party or campaign or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or (c) made
any other unlawful payment.


 


3.23         Customers
and Vendors.


 


(a)           Section 3.23(a) of
the Disclosure Schedule sets forth a list of each customer of the Business that
has generated greater than $10,000 in revenue during the 2007 or 2008 calendar
year (each, a “Material Customer”). 
There are not, and have not been, any material disputes with any
Material Customer.  No Material Customer
has cancelled, terminated, or otherwise materially adversely altered its
relationship with either Seller nor has any Material Customer of either Seller
notified such Seller in writing of any intention to do so or otherwise
threatened in writing to cancel, terminate or materially adversely alter its
relationship with such Seller.  There has
been no material reduction in the rate or amount of services provided to and
paid by any Material Customer of either Seller.


 


(b)           Section 3.23(b) of
the Disclosure Schedule sets forth a list of each vendor of the Business that
has supplied to either Seller any product or service primarily relating to the
Business for which it has been paid greater than $10,000 during the Sellers’
2007 or 2008 fiscal year (each, a “Material Vendor”).  There are not any material disputes with any
Material Vendor.  No Material Vendor has
cancelled, terminated, or otherwise altered its relationship with either Seller
nor has any current Material Vendor of either Seller notified such Seller in
writing of any intention to do so or otherwise threatened in writing to cancel,
terminate or materially adversely alter its relationship with such Seller.


 


16
















 


3.24         Disclosure.  Neither this Agreement nor any other
agreement, certificate or statement provided to the Buyer at Closing by or on
behalf of either Seller as required by this Agreement knowingly contains any
untrue statement of a material fact or knowingly omits to state a material fact
necessary in order to make the statements contained therein not misleading in
any material respect in light of the circumstances under which they were made.


 


ARTICLE IV




REPRESENTATIONS
AND WARRANTIES OF THE BUYER


 


The Buyer
Parties, jointly and severally, represents and warrant to the Sellers as
follows:


 


4.1           Organization and Good Standing.  Each of ADI and the Buyer is duly organized,
validly existing and in good standing under the Laws of the State of Delaware.


 


4.2           Authorization; Enforceability; No
Conflict.  The execution, delivery
and performance by each of ADI and the Buyer of this Agreement and each of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of each of ADI and the
Buyer.  This Agreement has been, and each
of the Transaction Documents to which each of ADI and the Buyer is a party,
when executed and delivered by each of ADI and the Buyer, will be, duly and
validly executed and delivered by such Party, and this Agreement constitutes,
and each Transaction Document to which such Party is a party, when executed and
delivered by such Party, will constitute a legal, valid and binding obligation
of such Party, enforceable against it in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the rights
of creditors generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).  Neither the execution, delivery
and performance of this Agreement or the Transaction Documents to which each of
ADI and the Buyer is a party, nor the consummation by each of ADI and the Buyer
of the transactions contemplated hereby or thereby, nor compliance by each of
ADI and the Buyer with any provision hereof or thereof will conflict with any
term, condition or provision of (x) the Organizational Documents of such
Party, as amended through the date hereof, (y) any Contract to which such
Party is a party, or by which such Party or any of its properties, assets or
rights may be bound or (z) any Law or Order applicable to such Party or
any of its properties, assets or rights, in each case, which conflict would
impair in any material respect or prevent the consummation of the transactions
contemplated by this Agreement or any of the Transaction Documents.


 


4.3           Consents.  No Approval of any Governmental Authority or
any other Person on the part of each of ADI and the Buyer is required in
connection with the consummation of the transactions contemplated by this
Agreement, except for such Approvals which, if not obtained, would not
reasonably be likely to have a material adverse effect on such Party’s ability
to consummate the transactions contemplated hereby.


 


17

















 


4.4           Litigation.  There is no Action pending, or to the actual
knowledge of each of ADI and the Buyer, currently threatened against ADI or the
Buyer, that questions the validity of this Agreement or any of the Transaction
Documents to which either Party is a party or the right of ADI or the Buyer to enter
into this Agreement or any of the Transaction Documents to which either Party
is a party or to consummate the transactions contemplated hereby or thereby.


 


4.5           No Brokers.  Neither ADI nor the Buyer has employed any
broker, finder, investment banker or other agent or incurred or will incur any
Liability for any brokerage fees, commissions, finders’ fees or similar fees in
connection with the transactions contemplated hereby, except that the Buyer
Parties will be responsible for any fee payable to Jon Diamond.


 


4.6           Solvency.  ADI and Buyer are solvent and have and will
have the ability to pay the Note when due.


 


ARTICLE V



ADDITIONAL AGREEMENTS


 


5.1           Public Announcements.  Neither the Buyer Parties nor the Sellers
shall issue any press releases or any announcements regarding the Transaction
unless approved in writing by the other party, such approval not to be
unreasonably withheld; provided, that either party may make such announcements
as are required by law so long as, to the extent practicable, such party
provides the other party with a reasonable opportunity to review and comment on
any such announcement.


 


5.2           Litigation Cooperation.   If the Buyer or the Sellers or any of their
respective Affiliates shall become engaged or participate in any Action relating
in any way to the Acquired Assets, the Excluded Assets, the Assumed Liabilities
or the Excluded Liabilities, the other parties shall cooperate in all
reasonable respects with such party in connection therewith, including, without
limitation, making available to such parties, without cost, all relevant
records and using its commercially reasonable efforts to make available the
employees of such party or its Affiliates who are reasonably expected to be
helpful with respect to such Action, provided that, to the extent practicable,
such employees shall be made available in a manner so as not to interfere with
their employment duties in any material respect.


 


5.3           Use of Names.  From and after the Closing, neither Seller
shall use any names or other Trademarks included in the Acquired Assets or any
derivations thereof.  Without limiting
the foregoing, promptly following the Closing, MediaSentry shall change its
corporate name to eliminate therefrom any name acquired by the Buyer hereunder
or commence dissolution or merger proceedings into SafeNet.


 


5.4           Accounts Receivable/Collections.  After the Closing, the Sellers shall permit
the Buyer to collect, in the name of each Seller, all accounts and notes
receivable (and other rights to payments from customers of the Sellers from the
operation of the Business) included in the Acquired Assets and to endorse with
the name of each Seller for deposit in the Buyer’s account any checks or drafts
received in payment thereof.   The
Sellers shall promptly deliver to the Buyer any cash, checks or other property
that either Seller may receive after the Closing in respect of any such
accounts or notes receivable or other assets constituting part of the Acquired
Assets.


 


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5.5                                 Employment
Matters.


 


(a)           The Buyer has
offered, or shall contemporaneously with Closing offer, employment to the
employees of the Sellers (or any of their Affiliates) listed in Section 3.19(a) of
the Disclosure Schedule (except those employees indicated as working in India)
on terms acceptable to the Buyer.  Any
such employee accepting a position with the Buyer hereunder shall be referred
to as a “Transferred Employee”. 
As of the commencement of any Transferred Employee’s employment with the
Buyer, such Transferred Employee’s employment with the applicable Seller (or
its Affiliates) shall terminate.  Nothing
herein shall restrict Sellers from terminating the employment of any employee
at or after the Closing if such employee’s employment with the Buyer does not
commence on the Closing Date.  The
Sellers consent to the hiring of the Transferred Employees by the Buyer or any
of its Affiliates and, except as assigned to the Buyer hereunder, waives in
perpetuity any claims or rights arising under any non-competition, employment,
assignment of inventions relating primarily to the Business or similar Contract
to which any Transferred Employee is a party after the termination date of such
employee’s employment by a Seller (“Termination Date”).


 


(b)           As promptly as practicable,
but in no event later than such date as is required by Law, the Sellers shall (i) pay
to each Transferred Employee all wages and other compensation earned through
the Termination Date, (ii) reimburse each Transferred Employee for all
reimbursable expenses incurred by him or her through the Termination Date, and (iii) 
make all other payments as may be owed to each Transferred Employee either
under any Contract, in accordance with any Seller policy or practice or
required by applicable law, except any accrued expense in respect to such
Transferred Employees.


 


(c)           As soon as
practicable after the Closing Date, the Buyer shall, or shall cause its
Affiliates to, permit each Transferred Employee to make a rollover from the
Employee Benefit Plan in which such employee participated prior to the Closing
Date to a 401(k) plan sponsored by the Buyer or one of its Affiliates
after the Closing Date, provided the amount to be rolled over is an eligible
rollover distribution as defined in Section 402(c)(4) of the Code.


 


5.6                                 Non-Solicitation.  For a period of twelve months from the date
hereof, except as otherwise provided herein, neither party will induce any of
the employees of the other party or such party’s Subsidiaries to leave their
employment, or employ or otherwise contract for the services of any person who
is employed by the other party prior to or on the date of Closing.  Notwithstanding anything contained in the
foregoing to the contrary, each party (the “Hiring Party”) may hire or
cause to be hired any person employed by the other party (the “Employer”)
responding to any advertisement which is directed at a broad audience.  Notwithstanding the restrictions contained
elsewhere in this paragraph, the Hiring Party may solicit for employment any
employee of the Employer either (i) whose employment was terminated by the
Employer or (ii) who was not employed by the Employer for at least 30 days
prior to such solicitation. 
Additionally, notwithstanding the terms of this Section, the Hiring
Party may hire or cause to be hired any person employed by the Employer in the
event of a liquidation of the Employer.


 


19

















 


ARTICLE VI



SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION


 


6.1                                 Survival
of Representations, Warranties and Covenants.  All representations and warranties contained
in Articles III and IV of this Agreement or in any certificate delivered by or
on behalf of either Seller or the Buyer pursuant to this Agreement shall
survive the Closing for a period of fifteen (15) months and a claim against the
Seller Indemnifying Parties or Buyer Indemnifying Parties may be brought under Section 6.2(a) or
Section 6.3(a), as applicable, in respect to a breach of any such
representation or warranty for a period of up to fifteen (15) months following
the Closing Date.  For convenience of
reference, the date upon which any representation or warranty shall terminate
is referred to herein as the “Survival Date.”  Unless otherwise expressly set forth in this
Agreement, the covenants and agreements set forth in this Agreement shall
survive the Closing and a claim in respect to a breach of covenant may be
brought under Section 6.2(b) or Section 6.3(b), as applicable,
until the expiration of the applicable statute of limitations.


 


6.2                                 Indemnification
of the Sellers.  From and after the
Closing, the Sellers (the “Seller Indemnifying Parties”), jointly and
severally, shall indemnify, defend and hold harmless the Buyer, ADI, their
Subsidiaries and Affiliates, their respective successors and assigns, and the
respective officers, directors, employees and agents of each of the foregoing
(the “Buyer Indemnified Parties”) from and against any and all Losses of
every kind, nature or description asserted against, or sustained, incurred or
accrued directly or indirectly by, such Buyer Indemnified Party which arise out
of or result from or as a consequence of any of the following:


 


(a)           the breach of any
representation or warranty of any Seller Indemnifying Party contained in this
Agreement, any Transaction Document or certificate delivered at Closing by any
Seller Indemnifying Party pursuant to this Agreement.


 


(b)           the breach of or
non-compliance with any agreement or covenant made by any Seller Indemnifying
Party in this Agreement or in any Transaction Document;  and


 


(c)           any of the Excluded
Liabilities.


 


6.3                                 Indemnification
of the Buyer and ADI.  From and after
the Closing, ADI and the Buyer (the “Buyer Indemnifying Parties”),
jointly and severally, shall indemnify, defend and hold harmless the Sellers,
their Subsidiaries and Affiliates, their respective successors and assigns, and
the respective officers, directors, employees and agents of each of the
foregoing (the “Seller Indemnified Parties”) from and against any and
all Losses of every kind, nature or description asserted against, or sustained,
incurred or accrued directly or indirectly by, such Seller Indemnified Party
which arise out of or result from or as a consequence of any of the following:


 


20

















 


(a)           the breach of any
representation or warranty of any Buyer Indemnifying Party contained in this
Agreement or in any Transaction Document or certificate delivered at Closing by
any Buyer Indemnifying Party pursuant to this Agreement;


 


(b)           the breach of or
non-compliance with any agreement or covenant made by any Buyer Indemnifying
Party in this Agreement or in any Transaction Document; and


 


(c)           any Assumed
Liability.


 


6.4                                 Limitations
on Indemnification.  Subject to the
provisions of Section 6.6, no indemnification shall be payable to any
Indemnified Persons as a result of any Losses arising under Section 6.2 or
Section 6.3 until the aggregate amount of all Losses incurred by such
Indemnified Persons exceeds $50,000, and then such Indemnifying Persons shall
only be liable for the amount by which the aggregate amount of all Losses
exceed $50,000.  Further, except as
provided in Section 6.6, the aggregate amount of Losses for which the
Indemnifying Persons may be responsible under Section 6.2 or Section 6.3
shall not exceed the Purchase Price, as adjusted pursuant to Section 2.1,
and in no event shall the Sellers be responsible to pay Losses, other than by
way of set-off against the Note, in excess of the cash portion of the Purchase
Price actually paid to them.  In
addition, in no event shall the Sellers be responsible for more than one-half
of any Losses arising from a misrepresentation in respect to the first sentence
of Section 3.12(f) unless it is determined that Sellers knowingly made
such misrepresentation.


 


6.5                                 Indemnification
Process.


 


(a)           Any Buyer
Indemnified Party or any Seller Indemnified Party seeking indemnification under
this Article VI (an “Indemnified Person”) shall give each party
from whom indemnification is being sought (each, an “Indemnifying Person”)
notice of any matter, including a Third Party Claim as described below (a “Notice
of Claim”), which such Indemnified Person has determined has given rise to
or could give rise to a right of indemnification under this Agreement, stating
the estimated amount of the loss, if known, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises as promptly as practicable after becoming aware of such
matter; provided, however, that the failure so to provide such Notice of Claim
will not relieve the Indemnifying Person(s) from any Liability which they
may have under this Agreement or otherwise (unless and only to the extent that
such failure results in the loss or compromise in any material respect of any
material rights or defenses of the Indemnifying Person(s)).  Notwithstanding the foregoing, no claim shall
be brought under this Article VI with respect to an event of
indemnification described in Section 6.2(a) or Section 6.3(a) unless
an Indemnified Person, at any time prior to the applicable Survival Date, gives
the Indemnifying Person(s) a Notice of Claim with respect to such
claim.  If a Notice of Claim has been
given on or prior to the applicable Survival Date, the relevant representations
and warranties shall survive as to such claim until the claim has been finally
resolved.


 


(b)           Claims for
indemnification hereunder resulting from the assertion of liability by third
parties (each, a “Third Party Claim”) shall be subject to the following
terms and conditions:


 


21

















 


(i)            Upon receiving a Notice of a Claim involving a Third
Party Claim, the Indemnifying Person shall have thirty (30) days to advise the
Indemnified Person whether the Indemnifying Person accepts the defense of such
claim, and the Indemnifying Person shall have no obligation to the Indemnified
Person for legal fees incurred by the Indemnified Person after the date of any
acceptance of the defense by the Indemnifying Person.  If the Indemnifying Person determines to
accept the defense of such Third Party Claim, it shall defend such Third Party
Claim with counsel of its own choice that is reasonably satisfactory to the
Indemnified Person and at its own expense, provided that, the Indemnified
Person shall have the right to be represented by its own counsel at its own
expense, but the Indemnifying Party shall control the defense.  If the Indemnifying Person fails to undertake
the defense of or settle or pay any such Third Party Claim within thirty (30)
days after the Indemnified Person has given Notice of the Claim to the
Indemnifying Person, then the Indemnified Person may take any and all necessary
action to dispose of such claim at the Indemnifying Person’s cost.  The Indemnifying Person and the Indemnified
Person shall have mutually agreed access to the other party’s employees,
properties, assets, books and records relating to any Third Party Claims, and
shall render to each other such assistance as may be reasonably required to
ensure the adequate defense of Third Party Claims. Each party shall act
reasonably and in accordance with its good faith business judgment in handling
a Third Party Claim.


 


(ii)           The party controlling the defense of a Third Party Claim
may settle such Third Party Claim on any terms which it may deem reasonable,
provided that such party shall not without the other party’s prior written
consent settle or compromise such proceeding, claim or demand, or consent to
the entry of any judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to the other party of a
written release from all liability in respect of such proceeding, claim or
demand.


 


(c)           In the event that Buyer or ADI is the Indemnified Person,
the Buyer Parties shall offset the amount claimed against any amount due under
the Note before proceeding against Sellers to collect such amount. If the
Sellers dispute the Notice of Claim or any of the alleged Losses, the amount in
dispute (up to the amount owed under the Note) that would be subject to offset
as set forth above shall promptly be deposited by Buyer in escrow, pending
resolution of the dispute, pursuant to an escrow agreement substantially in the
form attached hereto as Exhibit G with an escrow agent reasonably
satisfactory to the parties, it being agreed that a money center bank will be
satisfactory.


 


6.6           Fraud and Related Claims;
Characterization of Payments. 
Notwithstanding any provision of this Agreement to the contrary, nothing
contained in this Agreement shall in any way limit, impair, modify or otherwise
affect the rights of an Indemnified Person to bring any claim, demand, suit or
cause of action otherwise available to such Indemnified Person based upon, or
to seek or recover any Losses arising from or related to, nor shall any of the
limitations set forth in Section 6.4 apply with respect to, the fraud of
an Indemnifying Person or a willful and intentional misrepresentation under
with this Agreement or any of the Transaction Documents by an Indemnifying
Person.  The parties agree that any
payment pursuant to an indemnification obligation under this Article VI
shall be treated for Tax purposes as an adjustment to the Purchase Price.


 


22

















 


6.7                                 Additional
Indemnification Provisions.


 


(a)           If Losses with
respect to any claim for indemnification under Section 6.2 may be covered
by an insurance policy of any Indemnifying Party, at the request of an
Indemnified Party and without further consideration, such Indemnifying Party
shall use commercially reasonable efforts to seek and recover all payments
under any such insurance policy to which such Indemnifying Party may be
entitled with respect to such Losses and pay over such amounts to the
applicable Indemnified Party.


 


(b)           The Seller
Indemnifying Parties shall have no indemnity obligation with respect to any
claim for Losses that are wholly or partly attributable to any voluntary act,
omission, transaction or arrangement of the Buyer Parties from and after the
Closing Date.


 


(c)           In no event shall
any party have any liability pursuant to this Article VI for any
consequential, special, incidental, indirect or punitive damages, lost revenue,
profits or income, diminution in value, loss of business reputation or
opportunity or similar items.


 


(d)           With respect to the
indemnification obligation set forth in this Article VI;  (x) all Losses shall be calculated on an
After-Tax Basis; (y) all Losses shall be net of any third-party insurance
proceeds recoverable by the Indemnified Party in connection with the facts
giving rise to the right of indemnification; and (z) each
party shall mitigate any Losses for which that party seeks indemnification
pursuant to this Article VI.  In any case where an Indemnified Party
recovers from a third party any amount in respect of a matter for which an
Indemnifying Party has previously indemnified it pursuant to this Article VI,
the Indemnified Party shall promptly pay over to the Indemnifying Party the
amount so recovered (after deducting therefrom the amount of expenses incurred
by it in procuring such recovery), but not in excess of the sum of (i) any
amount previously paid by the Indemnifying Party to or on behalf of the
Indemnified Party in respect of such claim and (ii) any amount expended by
the Indemnifying Party in pursuing or defending any claim arising out of such
matter.  Upon payment in full of
any such amounts recovered, the Indemnifying Party shall be subrogated to the
extent of such payment to the rights of the Indemnified Party against any
Person (other than an Indemnified Party) with respect to the subject matter of
such claim.  Any Indemnified Party shall
assign or otherwise reasonably cooperate with the Indemnifying Party to pursue
any claims against, or otherwise recover amounts from, any Person liable or
responsible for any Losses for which indemnification has been received pursuant
to this Agreement.


 


6.8                                 Exclusive Remedy.  Except for (i) the availability of
injunctive relief, (ii) as provided in Section 6.6, and (iii) any
claim by the Sellers for payment of the Note, the Sellers and the Buyer Parties
acknowledge and agree that, from and after the Closing Date, the
indemnification provisions of this Article VI shall be the sole and
exclusive remedies of the Sellers and Buyer Parties, respectively, for any
breach of the representations or warranties in this Agreement, for any failure
to perform or comply with any covenants or agreements contained herein or
otherwise with respect to the subject matter of this Agreement.  In furtherance of the foregoing, except as
set forth in clauses (i) through (iii) in the first sentence of this Section 6.8,
each party hereto hereby waives, on behalf of itself and its Affiliates, any
and all rights, claims and causes of action they may have against the other
parties hereto and their Affiliates from and after the Closing Date arising
under or based upon any applicable Law or otherwise, with respect to the
subject matter of this Agreement except pursuant to the indemnification
provisions set forth in this Article VI.


 


23

















 


ARTICLE VII


 


CERTAIN
DEFINITIONS; INTERPRETATION


 


7.1           Certain Definitions.  For purposes of this Agreement, the following
terms have the meanings specified or referred to in this Article VII:


 


“Action”
means any suit, action, arbitration, cause of action, claim, complaint,
criminal prosecution, investigation, governmental or other administrative
proceeding, whether at law or at equity, before or by any Court or Governmental
Authority, before any arbitrator or other tribunal.


 


“Affiliate”
means, with respect to any Person, a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person; and “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 or policies of a Person, whether through the
ownership of stock or other securities, as trustee or executor, by contract or
credit arrangement or otherwise.


 


“After-Tax
Basis” means that, in determining the amount of the payment necessary to
indemnify any party against, or reimburse any party for, Losses, the amount of
such Losses shall be determined net of the present value Tax benefit, if any,
derived by the Indemnified Party as the result of sustaining such Losses,
reduced by the present value Tax cost, if any, incurred by the Indemnified Party
as the result of the receipt of such indemnification payment.  Such Tax consequences shall be computed
assuming that the Indemnified Party is subject to taxation at the highest
applicable marginal income Tax rate, and present value shall be determined
using a discount factor equal to LIBOR as of the close of business on the first
Business Day of the month in which the indemnification payment is to be made.


 


“Approval”
means any license, permit, consent, approval, authorization, registration,
filing, waiver, qualification or certification issued by a Governmental
Authority, including all pending applications therefor or renewals thereof.


 


“Business
Day” means any day other than a Saturday, Sunday or day on which banks are
permitted to close in the State of New York.


 


“Code”
means the Internal Revenue Code of 1986, as amended, and all Regulations
promulgated thereunder.


 


“Contract”
means any loan agreement, indenture, letter of credit (including related letter
of credit applications and reimbursement obligations), mortgage, security
agreement, pledge agreement, deed of trust, bond, note, guarantee, surety
obligation, warranty, license, franchise, permit, power of attorney, invoice,
quotation, purchase order, sales order, lease, endorsement agreement, and any
other agreement, contract, instrument, obligation, offer, commitment, plan,
arrangement or understanding, written or oral, express or implied, to which a
Person is a party or by which any of its properties, assets or Intellectual
Property may be bound or affected, in each case as amended, supplemented,
waived or otherwise modified.


 


24

















 


“Court”
means any court or arbitration tribunal of any country or territory, or any
state, province or other subdivision thereof.


 


“Employee
Benefit Plans” means each written or oral employee benefit plan, scheme,
program, policy, arrangement and contract (including, but not limited to, any “employee
benefit plan,” as defined in Section 3(3) of ERISA, whether or
not subject to ERISA, and any bonus, deferred compensation, stock bonuses,
stock purchase, restricted stock, stock option or other equity-based
arrangement, and any employment, termination, retention, bonus, change in
control or severance plan, program, policy arrangement or contract) for the
benefit of any current or former officer, employee or director of either Seller
or any of its Affiliates that is maintained or contributed to by either Seller
or any of its Affiliates, or with respect to which any of them could incur
material liability under the Code or ERISA or any similar non-U.S. Law.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and all
Regulations promulgated thereunder.


 


“GAAP”
means generally accepted accounting principles in the United States


 


“Governmental
Authority” means any (i) nation, state, county, city, town, village,
district, or other jurisdiction of any nature, (ii) federal, state, local,
municipal, foreign or other government, (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, commission, bureau, official or entity and any court or
other tribunal) or (iv) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature (including any self-regulatory organization).


 


 “Intellectual Property” means worldwide
trademarks, service marks, trade names, Uniform Resource Locators (URLs) and
Internet domain names and applications therefor (and all interest therein),
designs, logos, slogans and general intangibles of like nature, together with
all goodwill related to the foregoing (including any registrations and
applications for any of the foregoing) (collectively, “Trademarks”);
patents (including any pending applications, any registrations, patents based
on applications that are continuations, continuations-in-part, divisional,
reexamination, reissues, renewals of any of the foregoing and applications and
patents granted on applications that claim the benefit of priority to any of
the foregoing) (collectively, “Patents”); copyrights (including any
registrations, applications and renewals for any of the foregoing) and other
rights of authorship (collectively, “Copyrights”); trade secrets and
other confidential information, know-how, proprietary technology, processes,
formulae, algorithms, models, user interfaces, customer, supplier and user
lists, databases, pricing and marketing information, inventions, marketing
materials, inventions and trade dress (collectively, “Trade Secrets”);
computer programs and other Software, macros, scripts, source code, object
code, binary code, methodologies, architecture, structure, display screens,
layouts, development tools, instructions and templates; published and
unpublished works of authorship, including audiovisual works, databases and
literary works; rights in, or associated with a person’s name, voice,
signature, photograph or likeness, including rights of personality, privacy and
publicity; rights of attribution and integrity and other moral rights; domain
names, URLs, IP addresses, key word associations and related rights; all other
proprietary, intellectual property and other rights relating to any or all of
the foregoing; all copies and tangible embodiments of any or all of the foregoing
(in whatever form or medium, including electronic media; and all rights to sue
for and all remedies for past, present and future infringements of any or all
of the foregoing and rights of priority and protection of interests therein
under the Laws of any jurisdiction


 


25

















 


“IRS”
means the United States Internal Revenue Service and, to the extent relevant,
the United States Department of Treasury.


 


“knowledge
of the Sellers” (and similar terms and phrases) means the actual knowledge
of any director or officer of either of the Sellers.


 


“Laws”
means all laws, statutes, codes, written policies, licensing requirements,
ordinances and Regulations of any Governmental Authority including all Orders
having the effect of law in each such jurisdiction.


 


“Liabilities”
means any debts, liabilities, obligations, claims, charges, damages, demands
and assessments of any kind, including those with respect to any Governmental
Entity, whether accrued or not, known or unknown, disclosed or undisclosed,
fixed or contingent, asserted or unasserted, liquidated or unliquidated,
whenever or however arising (including, those 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, easement, right of way, charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction or adverse claim of any kind,
including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership, or any other encumbrance or
exception to title of any kind.


 


“Losses”
means losses, damages, liabilities, demands, taxes, sanctions, deficiencies,
assessments, judgments, costs, interest, penalties and expenses (including,
without limitation, reasonable attorneys’ fees, which shall include a
reasonable estimate of the allocable costs of in-house legal counsel and
staff).


 


“Material
Adverse Effect” means a material adverse effect on the condition (financial
or otherwise), properties, assets, liabilities, operations, results of
operations or prospects of the Business or either of the Sellers’ ability to
perform its obligations as contemplated in this Agreement.


 


 “Order” means any judgment, order,
writ, injunction, ruling, decision or decree of, or any settlement under the
jurisdiction of any Court or Governmental Authority.


 


“Organizational
Documents” means, with respect to any corporation, those instruments that
at the time constitute its corporate charter as filed or recorded under the
Laws of the jurisdiction of its incorporation, including the articles or
certificate of incorporation, organization or association, and its by-laws or
memorandum of association, in each case including all amendments thereto, as
the same may have been restated and, with respect to any other entity, the
equivalent organizational or governing documents of such entity.


 


“Party”
means a party to this Agreement.


 


26
















 


“Person”
means an individual, corporation, partnership, association, trust,
unincorporated organization, limited liability company or other legal entity.


 


“Personally
Identifiable Information” means information that can be used to identify or
contact Persons, which may include their first and last name, physical address,
e-mail address and telephone number.


 


“Post-Closing
Assigned Contract” shall be defined as provided in Section 1.7(c).


 


“Regulation”
means any rule or regulation of any Governmental Authority.


 


“Sellers’
Assets” shall be defined as provided in Section 3.7.


 


“Software”
means any and all (i) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in human
readable form (such as source code programs, macros or scripts) or machine
readable form (such as object code), (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, (iv) the
technology supporting any Internet site(s) operated by or on behalf of the
Sellers and (v) all documentation, including user manuals and training
materials, relating to any of the foregoing.


 


“Subsidiary”
means, with respect to any Person, any corporation, partnership, joint venture,
limited liability company, trust or other legal entity of which such Person
(either alone or through or together with any other Subsidiary) owns, directly
or indirectly, at least fifty percent (50%) of the stock or other equity
interests in such entity.


 


“Survival
Date”  shall have the meaning
provided in Section 6.1.


 


“Tax
Returns” means any and all returns, declarations, reports, claims for
refunds and information returns or statements relating to Taxes, including all
schedules or attachments thereto and including any amendment thereof, required
to be filed with any Governmental Authority, including consolidated, combined
and unitary tax returns.


 


“Taxes”
means all taxes and governmental impositions of any kind in the nature of (or
similar to) taxes, payable to any Governmental Authority, including but not
limited to those on or measured by or referred to as income, franchise,
profits, gross receipts, capital, ad valorem, custom duties, alternative or
add-on minimum taxes, estimated, environmental, disability, registration, value
added, sales, use, service, real or personal property, capital stock, license,
payroll, withholding, employment, social security, workers’ compensation,
unemployment compensation, health insurance, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains
taxes, and interest, penalties and additions to tax imposed with respect thereto.


 


“Termination
Date”  shall have the meaning
provided in Section 5.5(a).


 


27

















 


“Transaction
Documents” means the Note, Bill of Sale, Assignment and Assumption
Agreement, the Trademark Assignments, the Seller Non-Competition Agreement, and
the Transition Services Agreement.


 


7.2                                 Interpretation.


 


(a)                                  In
this Agreement, unless the context otherwise requires, references:


 


(i)                                     to
the recitals, articles, sections, exhibits or schedules are to a recital, article
or section of, or exhibit or schedule to, this Agreement;


 


(ii)                                  to
any agreement (including this Agreement), contract, statute or regulation are
to the agreement, contract, statute or regulation as amended, modified,
supplemented or replaced from time to time, and to any section of any statute
or regulation are to any successor to the section;


 


(iii)                               to
any Governmental Authority include any successor to that Governmental
Authority; and


 


(iv)                              to
this Agreement are to this Agreement and the exhibits and schedules to it,
taken as a whole.


 


(b)                                 The
table of contents and headings contained herein are for reference purposes only
and do not limit or otherwise affect any of the provisions of this Agreement.


 


(c)                                  Whenever
the words “include,” “includes” or “including” are used in
this Agreement, they will be deemed to be followed by the words “without
limitation.”


 


(d)                                 Whenever
the words “herein” or “hereunder” are used in this Agreement,
they will be deemed to refer to this Agreement as a whole and not to any specific
section, unless otherwise indicated.


 


(e)                                  The
terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa.


 


(f)                                    The
term “$” shall mean dollars of the United States of America.


 


(g)                                 This
Agreement is the result of negotiations between the parties hereto and shall
not be deemed or construed as having been drafted by any one party; each of the
parties hereto and its counsel have reviewed and negotiated the terms and
provisions of this Agreement (including the exhibits hereto, the Disclosure
Schedule) and have contributed to its preparation; the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
the terms and provisions of this Agreement shall be construed fairly as to all
parties hereto and not in favor of or against any party, regardless of which
party was generally responsible for the preparation of this Agreement.


 


28

















 


ARTICLE VIII


 


MISCELLANEOUS


 


8.1                                 Modification
or Amendment.  The parties hereto may
modify or amend this Agreement by a written agreement, specifically referring
to this Agreement, executed and delivered by duly authorized officers of the
Sellers, the Buyer and ADI.


 


8.2                                 Governing
Law; Waiver of Jury Trial.


 


(a)                                  THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF CALIFORNIA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.


 


(b)                                 EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 8.2.


 


8.3                                 Consent
to Jurisdiction.  Each of the parties
hereto hereby irrevocably submits to the exclusive jurisdiction of the Courts
of the State of California located in the County of Los Angeles for the purpose
of any action or proceeding arising out of or relating to this Agreement and
hereby irrevocably agrees that all claims in respect to such action or
proceeding shall be heard and determined exclusively in such federal
court.  Each of the parties hereto agrees
that a final judgment in any action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.


 


8.4                                 Notices.  Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by express mail or equivalent overnight
courier service, prepaid, or by facsimile:


 


29

















 


if to the Buyer to: 


 


ARTISTdirect, Inc.


1601 Cloverfield Boulevard, Suite 400S


Santa Monica, California 90404-4082


Attention: Chief Executive Officer


Facsimile: (310) 956-3301


 


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


 


TroyGould PC


1801 Century Park East, 16th Floor


Los Angeles, California 90067


Attention:  David L.
Ficksman, Esq.


Fax:  (310) 789-1290


 


if to the Sellers to:


 


SafeNet, Inc.


4690 Millennium Drive


Belcamp, Md. 21017


Attention:  Kevin
Hicks, Esq.


Fax: (443) 283-4046


 


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


 


Drinker Biddle & Reath LLP


1000 Westlakes Drive


Berwyn, PA 19312-2409


Attn:  Neil Haimm,Esq.


Fax: (215) 988-2757


 


or to
such other persons or addresses as may be designated in writing by the party to
receive such notice as provided above. 
All such notices or communications shall be deemed to be received (a) in
the case of personal delivery, on the date of such delivery, (b) in the
case of express mail or overnight courier, on the next business day after the
date when sent and (c) in the case of facsimile transmission, upon
confirmed receipt before 5:00 p.m. EST on the date of receipt, otherwise,
on the next Business Day following confirmed receipt.


 


8.5                                 Entire
Agreement.  This Agreement (including
the exhibits and schedules hereto) constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the
subject matter hereof. Without limiting the generality of this Section 8.5
and notwithstanding anything in this Agreement to the contrary, no party is
making any representation or warranty whatsoever, oral or written, express or
implied, in connection with the transactions contemplated by this Agreement and
the Transaction Documents other than those set forth in Articles III and IV of
this Agreement or in the Transaction Documents and no party is relying on any
statement, representation or warranty, oral or written, express or implied,
made by any other party except for the representations and warranties set forth
in Articles III and IV of this Agreement or in the Transaction Documents.


 


30

















 


The parties hereto
agree that, notwithstanding any access to information by any party or any right
of any party to this Agreement to investigate the affairs of any other party to
this Agreement, the party having such access and right to investigate shall
have the right to rely fully upon the representations and warranties of the
other party expressly contained in this Agreement and on the accuracy of any
schedule, exhibit or other document attached hereto or referred to herein or
delivered by such other party or pursuant to this Agreement.


 


8.6                                 No
Third Party Beneficiaries.  This
Agreement is not intended to confer upon any Person other than the parties
hereto and the Seller Indemnified Parties and the Buyer Indemnified Parties any
legal or equitable rights or remedies hereunder.


 


8.7                                 Severability.  The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof.  If any provision of this Agreement, or the
application thereof to any Person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.  Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.


 


8.8                                 Assignment.  This Agreement shall not be assignable by
operation of Law or otherwise by either Seller without the consent of the
Buyer.  Buyer may assign its rights
hereunder to ADI on any Subsidiary of ADI.


 


8.9                                 Legal
Counsel.  Each of the parties to this
Agreement acknowledges and represents that it has been represented by its own
legal counsel in connection with the negotiations and preparation of this
Agreement and each of the other Transaction Documents to which it is a party,
and in connection with the transactions contemplated hereby and thereby, with
the opportunity to seek advice as to its legal rights from such counsel.  Each party hereto further represents that it
is being independently advised as to the tax consequences of such transactions.


 


8.10                           Expenses.  Each of the parties shall bear its own fees,
costs and expenses incurred in connection with this Agreement (including the
preparation, negotiation and performance hereof) and the transactions
contemplated hereby (including fees and disbursements of attorneys,
accountants, agents, representatives and financial and other advisors)
(collectively, the “Transaction Expenses”).  The Sellers and the Buyer Parties shall each
pay one-half of any filing fee that is required to be paid to any Governmental
Authority as a result of the sale and transfer of the Acquired Assets to the
Buyer pursuant to this Agreement.


 


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Notwithstanding
the foregoing, in the event that a party institutes an Action to enforce its
rights under this Agreement or any Transaction Document, the prevailing party
in such Action shall be entitled to recover its reasonable costs and expenses
(including reasonable attorneys’ fees) incurred in connection with such Action
from the losing party.


 


8.11                           Specific
Performance.  The parties hereto
acknowledge that, in view of the uniqueness of the subject matter hereof, the
parties hereto may not have an adequate remedy at law for money damages if this
Agreement were not performed in accordance with its terms, and therefore agree
that the parties hereto may be entitled to specific enforcement of the terms
hereof in addition to any other remedy to which the parties hereto may be
entitled at law or in equity.


 


8.12                           Counterparts.  This Agreement may be executed in any number
of counterparts, all of which shall be considered one and the same agreement,
and shall become effective when counterparts have been signed by each party
hereto and delivered to each other party. 
Copies of executed counterparts transmitted by facsimile or other
electronic transmission service shall be considered original executed counterparts
for purposes of this Section 8.12, provided that receipt of copies of such
counterparts is confirmed.


 


8.13                           Joint
and Several.  The liability of the
Sellers hereunder shall be joint and several and the liability of the Buyer
Parties hereunder shall be joint and several.


 


[Remainder of Page Intentionally Left Blank]


 


32

















 


IN
WITNESS WHEREOF, each of the parties hereto has caused this Asset Purchase
Agreement to be executed on its behalf as of the day and year first above
written.


 


	
   

  	
  THE SELLERS:

  
	
   

  	
   

  
	
   

  	
  SAFENET, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Fedde

  
	
   

  	
   

  	
  Name:  Chris Fedde

  
	
   

  	
   

  	
  Title:    President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDIASENTRY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Fedde

  
	
   

  	
   

  	
  Name:  Chris Fedde

  
	
   

  	
   

  	
  Title:    President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BUYER PARTIES:

  
	
   

  	
   

  
	
   

  	
  ARTISTDIRECT INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dimitri Villard

  
	
   

  	
   

  	
  Name:  Dimitri Villard

  
	
   

  	
   

  	
  Title:    Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDIADEFENDER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dimitri Villard

  
	
   

  	
   

  	
  Name:  Dimitri Villard

  
	
   

  	
   

  	
  Title:    Chief Executive Officer

  



 


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