Exhibit 2.1
CERTAIN CONFIDENTIAL INFORMATION, MARKED BY [***], HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
ASSET SALE AND SERVICES AGREEMENT
THIS ASSET SALE AND CONTENT SERVICES AGREEMENT (this “Agreement”) is made and entered into as of the later of the two dates in the below signature block (the “Effective Date”) by and between Hearst Newspapers, a division of Hearst Communications, Inc. with offices at 950 Eighth Avenue, New York, NY 10019 (“Hearst”) and Leaf Group Ltd., a Delaware corporation with offices at 1655 26th Street, Santa Monica, CA 90404 (“Leaf Group”) (each individually, a “Party”, and collectively, the “Parties”).
RECITALS
Hearst and Leaf Group have been parties to that certain Website Hosting, Advertising and Content Agreement dated as of March 31, 2010, as amended (the “Original Agreement”), pursuant to the terms of which Leaf Group was engaged to create or license content for, and to develop, host and manage the websites set forth in Schedule 5 attached hereto (together, the “Hosted Websites”).
Both Parties desire to terminate the Original Agreement and restructure the relationship in accordance with the terms of this Agreement.
In connection therewith, Hearst desires to obtain ownership of the Hosted Websites and Leaf Group wishes to assign and transfer the Hosted Websites to Hearst.
Hearst desires to engage Leaf Group to perform the services set forth on Schedule 1 attached hereto (the “Content Services”) and the services set forth on Schedule 2 attached hereto (the “Website Migration Services” and together with the Content Services, the “Services”), and Leaf Group wishes to provide such Services to Hearst.
In consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:
AGREEMENT
“AdSense Units” has the meaning set forth in Section 3.6(b).
“Advertising” means any paid sponsorship or advertising displayed on each Hosted Website in accordance with this Agreement.
“Affiliate” means, with respect to a Party, any entity that directly or indirectly controls, is controlled by, or is under common control with such Party.
“Assigned Personnel” has the meaning set forth in Section 6.1 of this Agreement.
“Branding Elements” means the service marks, trademarks, trade names, trade dress, logos and other business identifiers of a Party and its Affiliates, whether or not registered with the USPTO or other governmental agency.
“Business Day” means any day except Saturday, Sunday or any day on which banks are generally not open for business in the City of Los Angeles, California.
“Claims” has the meaning set forth in Section 9.1 of this Agreement.
“CMS” has the meaning set forth in Section 1(c) of Schedule 2.
“Confidential Information” means all documents, information, reports, financial or other data, records, forms, tools, products, services, methodologies, present and future research, technical knowledge, marketing plans, trade secrets, and other materials obtained by one Party (the “Receiving Party”) from the other Party or any of its Affiliates (the “Disclosing Party”) in the course of performing a Party’s obligations or exercising its rights under this Agreement, whether tangible or intangible and whether or not stored, compiled, or memorialized physically, electronically, graphically, in writing, or by any means now known or later invented, including any records and information: (a) that have been marked as proprietary or confidential; (b) whose confidential nature has been made known by the Disclosing Party; or (c) that due to their character and nature, a reasonable person under like circumstances would treat as confidential. The Hearst Data constitutes the Confidential Information of Hearst. Notwithstanding the foregoing, Confidential Information does not include information which: (i) is already known to the Receiving Party at the time of disclosure; (ii) is or becomes publicly known through no wrongful act or failure of the Receiving Party; (iii) is independently developed by the Receiving Party without the benefit of such Confidential Information; or (z) is received from a third party that is not under and does not thereby breach an obligation of confidentiality.
“Content” means textual, images, pictures, audio, graphics, video, audiovisual, hyperlinks, and all other content, data, and information, in any and all media.
“Content Services” has the meaning set forth in the preamble to this Agreement.
“Contributors” has the meaning set forth in Section 6.4 of this Agreement.
“Data File” means a file, in JSON file format, compressed as a file archive (tarball or equivalent) which includes all data related to the Existing Articles.
“Effective Date” has the meaning set forth in the preamble to this Agreement.
“Excluded Assets” means the specific assets set forth on Schedule 6.
“Existing Content” means (a) the articles identified on Schedule 3 (the “Existing Articles”) and (b) photographs identified on Schedule 4 (the “Existing Photos”).
“Excluded Liabilities” shall have the meaning set forth in Section 2.6.
“First Payment” shall have the meaning set forth in Section 2.5.
“Hearst AdSense Revenue Share” has the meaning set forth in Section 3.6(b).
“Hearst Articles” means the Existing Articles and the New Articles.
“Hearst Branding Elements” means the Branding Elements provided by Hearst to Leaf Group under limited license for inclusion in the Hosted Website(s).
“Hearst Cloud Account” has the meaning set forth in Section 1(a) of Schedule 2.
“Hearst Content” means all Content provided by Hearst for inclusion in a Hosted Website,
including the Hearst Branding Elements.
“Hearst Data” has the meaning set forth in Section 4.3(a).
“Hearst Photo Agreements” means the agreement between Hearst Communications, Inc. and Getty Images and the agreement between Hearst Technology Inc. and Adobe, Inc.
“Hosted Website(s)” has the meaning set forth in the preamble to this Agreement.
“Hosted Website URL” means the URL for the Hosted Website. The URL will include the domain name and Internet protocol address maintained by Hearst with respect to each Hosted Website.
“Indemnifying Party” and “Indemnified Party” has the meanings set forth in Section 9.3 of this Agreement.
“Initial Migration Date” means the date on or prior to Step 1.3 in Schedule 2A.
“Initial Quarterly Proposal” has the meaning set forth in Section 3.1(a) of this Agreement.
“Initial Term” has the meaning set forth in Section 11.1 of this Agreement.
“Intellectual Property Rights” means all or any of the following: (a) patents, patent disclosures and inventions (whether patentable or not); (b) trademarks, service marks, trade dress, trade names, logos, corporate names and domain names, together with all of the goodwill associated therewith; (c) copyrights and copyrightable works (including computer programs), mask works and rights in data and databases; (d) trade secrets, know-how and other confidential information; and (e) all other Intellectual Property Rights, in each case whether registered or unregistered and including all applications for, and renewals or extensions of, such rights, and all similar or equivalent rights or forms of protection provided by applicable Law in any jurisdiction throughout the world.
“Key Assigned Personnel” has the meaning set forth in Section 6.2 of this Agreement.
“Knowledge” means the actual knowledge, after reasonable investigation, of Brian Pike, Scott Messer and Justin Chandler.
“Law” means any applicable law, ordinance, rule, regulation, statute, order, license, permit and other requirement, now or hereafter in effect, as amended or supplemented from time to time, of any governmental authority of competent jurisdiction, including, without limitation, all applicable Privacy Laws.
“Leaf Group Branding Elements” means any Branding Elements of Leaf Group included in the Existing Content or on the Hosted Websites under the terms of the Original Agreement.
“Leaf Group Change in Control” refers to a merger or consolidation of Leaf Group with or into another corporation, entity or person, or the sale of all or substantially all of Leaf Group’s assets (or any material assets required to perform the Content Services or the Website Migration Services) or equity to another corporation, entity or person, where after such merger, consolidation or sale of assets or equity, less than 50% of the capital stock or equity interests in such other corporation, entity or person, or such assets (or any material assets required to perform the Content Services or the Website Migration Services) or equity are owned by persons who owned the capital stock of Leaf Group immediately before such merger, consolidation or sale of assets or equity, provided, however, that
ordinary course non-coordinated trading in the Company’s equity shall not result in a Leaf Group Change in Control, even if such trades result in 50% or more of the Company’s equity changing ownership.
“Leaf Group Proprietary Technology” refers to the proprietary platform and technologies employed by Leaf Group in connection with the operation of its business identified on Schedule X.
“Liability” means, with respect to any person, any liability, indebtedness or obligation of such person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, due or to become due.
“Migration Completion Date” has the meaning set forth in Schedule 2B of this Agreement.
“Migration Plan” means the migration plan as set forth in Schedule 2 of this Agreement.
“Missing Component” has the meaning set forth in Section 8.2(l) of the Agreement.
“New Articles” refers to new articles created by Leaf Group in connection with performance of the Content Services.
“New Photos” means any photos added to the Hosted Websites after the Effective Date.
“Net Revenues” means all amounts earned by Hearst and/or Leaf Group from third parties with respect to Advertising sold and displayed on the Hosted Websites, less (a) any taxes Hearst or Leaf Group (as applicable) is required to collect, withhold, or pay with respect to such earned amounts (except taxes on Hearst’s or Leaf Group’s net income); (b) credit card processing fees, bad debt and charge-backs, and (c) commissions or discounts allowed or paid to advertising agencies and refunds.
“Party” or “Parties” shall have the meaning set forth in the Preamble.
“Photo Agreements” refers to the Leaf Group agreements with Getty Images and Fotolia governing the use of the Existing Photos, copies of which have been provided to Hearst.
“Privacy Laws” means all applicable federal, state and international laws, rules, regulations, self-regulatory guidelines and prevailing industry standards, all as amended or supplemented from time to time, including but not limited to the NAI’s Code of Conduct, IAB’s Code of Conduct, and the DAA Self-Regulatory Principles, the California Consumer Privacy Act of 2018, Cal. Civ. Code § 1798.100 et seq. (“CCPA”), the United Kingdom Data Protection Act 1998, Regulation (EU) 2016/679 (“GDPR”) together with any national laws implementing the same, the European Directive 2002/58/EC (the "e-Privacy Directive") together with any national laws implementing the same.
"Privacy Shield Framework" means the EU-U.S. Privacy Shield framework, the Swiss-E.U. Privacy Shield framework and any new frameworks that come into effect established by the U.S. Department of Commerce or other competent agency or authority, located at https://www.privacyshield.gov/EU-US-Framework, as each of these frameworks may be amended from time to time.
“Purchase Price” has the meaning set forth in Section 2.5 of this Agreement.
“Purchase Price Allocation” has the meaning set forth in Section 2.7 of this Agreement.
“Quarterly Proposal” has the meaning set forth in Section 3.1 of this Agreement.
“Renewal Term” has the meaning set forth in Section 11.1 of this Agreement.
“Second Payment” has the meaning set forth in Schedule 2B of this Agreement.
“Seconded Employee” has the meaning set forth in Section 6.6 of this Agreement.
“Services” has the meaning set forth in the preamble to this Agreement.
“Term” has the meaning set forth in Section 11.1 of this Agreement.
“Third Party Photos” refers to New Photos and Existing Photos as licensed from third parties.
“Website Migration Services” has the meaning set forth in the preamble to this Agreement.
| 8.2. | Leaf Group Representations and Warranties. Leaf Group represents and warrants that |
| 9.4. | Infringement Remedy. |
EXCEPT WITH RESPECT TO EACH PARTY’S INDEMNIFICATION OBLIGATIONS IN SECTION 9, OR A BREACH BY EITHER PARTY OF THE CONFIDENTIALITY OBLIGATIONS IN SECTION 7, OR A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR INTENTIONAL BREACH, NEITHER PARTY SHALL IN ANY EVENT BE LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES). WITH THE EXCEPTION OF EACH PARTY’S INDEMNIFICATION OBLIGATIONS, A PARTY’S BREACH OF ITS OBLIGATIONS UNDER SECTION 7 (CONFIDENTIALITY), OR A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR INTENTIONAL BREACH, THE CUMULATIVE LIABILITY OF EITHER PARTY FOR ALL CLAIMS RELATING TO, ARISING UNDER, OR IN CONNECTION WITH THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED [***] ($[***]). THE FOREGOING LIMITATIONS OF LIABILITY SHALL IN NO WAY LIMIT HEARST’S PAYMENT OBLIGATIONS UNDER SECTIONS 2 AND 3 HEREUNDER. WITH RESPECT TO EACH PARTY’S INDEMNIFICATION OBLIGATIONS THE CUMULATIVE LIABILITY OF EITHER PARTY THEREUNDER SHALL NOT EXCEED [***].
Notices to Hearst:
Hearst Newspapers, a division of Hearst Communications, Inc.
300 West 57th Street
New York, NY 10019
Attn: Rob Barrett
With a copy to:
Hearst Corporation, Office of General Counsel
300 West 57th Street
New York, NY 10019
Attn: General Counsel
Notices to Leaf Group:
Leaf Group Ltd.
1655 26th Street
Santa Monica, CA 90404
Attn: Legal Department
legal@leafgroup.com
a. Workers’ Compensation insurance as prescribed by the law of the State in which the work is performed; and Employer’s Liability insurance with limits of at least $1,000,000 per occurrence.
b. Commercial General Liability insurance including contractual liability with limits of at least $2,000,000 per occurrence and $4,000,000 aggregate. This insurance must be written on an occurrence form basis. This requirement can be satisfied in combination with an umbrella policy.
c. Umbrella Liability insurance, with limits of at least $5,000,000 per occurrence.
d. Cyber liability insurance, in the amount of at least $5,000,000 per occurrence and $5,000,000 in the aggregate. Policy shall include coverage for loss, disclosure and theft of data in any form; media and content rights infringement and liability, including but not limited to, software copyright infringement; network security failure, including but not limited to, denial of service attacks and transmission of malicious code. Coverage shall include data breach regulatory fines and penalties, the cost of notifying individuals of a security or data breach, the cost of credit monitoring services and any other causally-related crisis management expense for up to one (1) year. If this coverage is provided on a claims-made basis, then it must be maintained for a period of three years after acceptance of the deliverables and/or services provided in connection with this Agreement. If policy is combined with Errors and Omissions Liability insurance, shared limits requirement shall be $8,000,000.
e. Errors and Omissions Liability insurance (media and technology errors & omissions liability) with limits of at least $5,000,000 per occurrence. Policy shall include coverage for intellectual property infringement (excluding patent infringement), privacy infringement, advertising and content offenses and defamation including cover for liabilities arising from errors, omissions, or negligent acts in rendering or failing to render computer or information technology services and technology products. Coverage for violation of software copyright should be included. Technology services should cover liabilities, punitive damages, and claim expenses arising from acts, errors and omissions, in rendering or failing to render all services and in the provision of all products in the performance of the Agreement, including the failure of products to perform the intended function or serve the intended purpose. If this coverage is provided on a claims-made basis, then it must be maintained for a period of three years after acceptance of the deliverables and/or services provided in connection with this Agreement. If policy is combined with Cyber Liability insurance, shared limits requirement shall be $8,000,000.
Hearst and its subsidiaries, affiliates, and partnerships shall be named as an Additional Insured under the General Liability, Cyber liability, Errors and Omissions Liability, and Umbrella Liability. All such insurance should be primary and non-contributory and is required to respond and pay prior to any other insurance or self-insurance available. Any other coverage available to Hearst shall apply on an excess basis. Leaf Group agrees that Leaf Group, Leaf Group’s insurer(s) and anyone claiming by, through or under the policy on Leaf Group’s behalf shall have no claim, right of action or right of subrogation against Hearst and its customers based upon any loss or liability insured against the foregoing insurance. Upon execution of this Agreement and for every policy renewal, Leaf Group shall provide a certificate evidencing such insurance to Hearst. Hearst shall be notified in writing at least thirty (30) days prior to cancellation in a policy. Insurance companies providing coverage will be rated to A.M. Best with at least an A-VII rating.
[The next page is the signature page.]
The Parties have caused this Agreement to be executed by their respective duly authorized representatives as of the date(s) written below.
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HEARST NEWSPAPERS, A DIVISION OF HEARST COMMUNICATIONS, INC. |
LEAF GROUP LTD. |
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Signature: /s/ Jeffrey M. Johnson |
Signature: /s/ Brian Pike |
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Printed Name: Jeffrey M. Johnson |
Printed Name: Brian Pike |
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Title: President and Group Head |
Title: COO |
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Date: April 24, 2020 |
Date: April 24, 2020 |