\n1.1 The Merger…………………………………………………………………………………..1
\n1.2 Effective Time……………………………………………………………………………….1
\n1.3 Effect of the Merger………………………………………………………………………….1
\n1.4 Supplementary Action………………………………………………………………………….2<\/p>\n ARTICLE II
\n THE SURVIVING CORPORATION
\n ————————-<\/p>\n
2.1 Certificate of Incorporation of the Surviving Corporation…………………………………………2
\n2.2 Bylaws of the Surviving Corporation…………………………………………………………….2
\n2.3 Directors and Officers of the Surviving Corporation………………………………………………2<\/p>\n
ARTICLE III
\n CONVERSION OF SHARES
\n ——————–<\/p>\n
3.1 Conversion of DWWC Capital Stock……………………………………………………………….2
\n3.2 Capital Stock of Acquisition Corp………………………………………………………………5
\n3.3 Earn Out…………………………………………………………………………………….5
\n3.4 Escrow Fund………………………………………………………………………………….6
\n3.5 Dissenters’Rights…………………………………………………………………………….8
\n3.6 Exchange of Certificates………………………………………………………………………8
\n3.7 Dividends……………………………………………………………………………………9
\n3.8 Adjustments………………………………………………………………………………….9<\/p>\n
ARTICLE IV
\n REPRESENTATIONS AND WARRANTIES OF THE SPORTSLINE COMPANIES
\n ———————————————————-<\/p>\n
4.1 Corporate Status…………………………………………………………………………….10
\n4.2 Capitalization of SportsLine………………………………………………………………….10
\n4.3 Authorization; Enforceability…………………………………………………………………10
\n4.4 No Violation………………………………………………………………………………..11
\n4.5 Consents, etc……………………………………………………………………………….11
\n4.6 SEC Filings…………………………………………………………………………………11
\n4.7 Absence of Certain Changes or Events…………………………………………………………..12
\n4.8 Reorganization Qualification………………………………………………………………….12
\n4.9 Brokers, Finders, etc………………………………………………………………………..12
\n4.10 Litigation………………………………………………………………………………….12<\/p>\n
i<\/p>\n
ARTICLE V
\n REPRESENTATIONS AND WARRANTIES OF DWWC AND THE PRINCIPAL SHAREHOLDERS
\n ———————————————————————<\/p>\n
5.1 Organization, Authority, Qualification; Locations and Names; Corporate Records……………………..13
\n5.2 Authorization; Enforceability…………………………………………………………………13
\n5.3 Capitalization………………………………………………………………………………14
\n5.4 No Violation………………………………………………………………………………..15
\n5.5 Consents, etc……………………………………………………………………………….15
\n5.6 Legal Proceedings……………………………………………………………………………16
\n5.7 Subsidiaries………………………………………………………………………………..16
\n5.8 Intellectual Property………………………………………………………………………..16
\n5.9 Compliance with Law, Charter Documents and Agreements……………………………………………19
\n5.10 Financial Statements; Books and Records………………………………………………………..20
\n5.11 Title and Related Matters…………………………………………………………………….20
\n5.12 Employee Benefit Matters……………………………………………………………………..21
\n5.13 Labor Relations……………………………………………………………………………..22
\n5.14 Contracts and Transactions……………………………………………………………………23
\n5.15 Related Party Transactions……………………………………………………………………24
\n5.16 Environmental Laws…………………………………………………………………………..24
\n5.17 Tax Returns and Payments……………………………………………………………………..24
\n5.18 Notes and Accounts Receivable…………………………………………………………………25
\n5.19 Notes and Loans Payable………………………………………………………………………26
\n5.20 Insurance…………………………………………………………………………………..26
\n5.21 Sales and Marketing; Customer Lists……………………………………………………………26
\n5.22 Trading in SportsLine Common Stock…………………………………………………………….26
\n5.23 Director and Shareholder Approvals…………………………………………………………….27
\n5.24 No Existing Discussions………………………………………………………………………27
\n5.25 Absence of Certain Changes or Events…………………………………………………………..28
\n5.26 Absence of Certain Business Practices………………………………………………………….28
\n5.27 No Commissions………………………………………………………………………………28
\n5.28 Tax Status of the Merger……………………………………………………………………..28
\n5.32 Reorganization Qualification………………………………………………………………….28
\n5.30 Disclosure………………………………………………………………………………….29<\/p>\n
ARTICLE VI
\n CERTAIN COVENANTS OF DWWC
\n ————————-<\/p>\n
6.1 Conduct of Business by DWWC Pending the Merger………………………………………………….29
\n6.2 Approval of Shareholders……………………………………………………………………..31<\/p>\n
ARTICLE VII
\n ADDITIONAL AGREEMENTS
\n ———————<\/p>\n
7.1 Best Efforts; Cooperation; Further Assurances…………………………………………………..31
\n7.2 Access to Information………………………………………………………………………..31<\/p>\n
ii<\/p>\n
7.3 Notification of Certain Matters……………………………………………………………….32
\n7.4 Publicity…………………………………………………………………………………..32
\n7.5 Exclusive Dealings; Failure by DWWC to Consummate Merger Without Cause…………………………….32
\n7.6 Trading in SportsLine Common Stock…………………………………………………………….32
\n7.7 Noncompetition and Nonsolicitation…………………………………………………………….32<\/p>\n
ARTICLE VIII
\n CONDITIONS TO THE OBLIGATIONS OF THE SPORTSLINE COMPANIES
\n ———————————————————<\/p>\n
8.1 Accuracy of Representations and Warranties and Compliance with Obligations…………………………34
\n8.2 Corporate Matters……………………………………………………………………………34
\n8.3 No Adverse Proceedings……………………………………………………………………….35
\n8.4 No Material Adverse Change……………………………………………………………………35
\n8.5 Consents and Approvals……………………………………………………………………….35
\n8.6 Resignations………………………………………………………………………………..35
\n8.7 Private Placement……………………………………………………………………………35
\n8.8 Releases……………………………………………………………………………………35
\n8.9 Termination of Certain Agreements and Rights……………………………………………………35
\n8.10 Escrow Agreement…………………………………………………………………………….36
\n8.11 Severance Letters……………………………………………………………………………36
\n8.12 SportsLine Loan……………………………………………………………………………..36
\n8.13 Dissenting Shareholders………………………………………………………………………36<\/p>\n
ARTICLE IX
\n CONDITIONS TO THE OBLIGATIONS OF DWWC
\n ————————————-<\/p>\n
9.1 Accuracy of Representations and Warranties and Compliance with Obligations…………………………36
\n9.2 Corporate Matters……………………………………………………………………………36
\n9.3 No Adverse Proceedings……………………………………………………………………….36
\n9.4 No Material Adverse Change……………………………………………………………………37
\n9.5 Governmental Consents………………………………………………………………………..37
\n9.6 Escrow Agreement…………………………………………………………………………….37<\/p>\n
ARTICLE X
\n CLOSING
\n ——-<\/p>\n
10.1 Closing…………………………………………………………………………………….37
\n10.2 Deliveries by DWWC…………………………………………………………………………..37
\n10.3 Deliveries by the SportsLine Companies…………………………………………………………38<\/p>\n
ARTICLE XI
\n COMPLIANCE WITH SECURITIES LAWS
\n ——————————-<\/p>\n
11.1 Limitation on Disposition of Shares……………………………………………………………38
\n11.2 Legend……………………………………………………………………………………..38<\/p>\n
iii<\/p>\n
ARTICLE XII
\n SURVIVAL; INDEMNIFICATION AND ESCROW
\n ————————————<\/p>\n
12.1 Survival……………………………………………………………………………………39
\n12.2 Indemnification……………………………………………………………………………..39
\n12.3 Special Damages……………………………………………………………………………..40
\n12.4 Escrow Period; Release of Escrow Fund………………………………………………………….41
\n12.5 Claims Upon the Escrow Fund…………………………………………………………………..42
\n12.6 Objections to Claims…………………………………………………………………………42
\n12.7 Resolution of Conflicts………………………………………………………………………42
\n12.8 Shareholders’Agent…………………………………………………………………………..43
\n12.9 Third Party Claims…………………………………………………………………………..44<\/p>\n
ARTICLE XIII
\n DEFINITIONS
\n ———–<\/p>\n
13.1 Defined Terms……………………………………………………………………………….46
\n13.2 Other Definitional Provisions…………………………………………………………………49<\/p>\n
ARTICLE XIV
\n TERMINATION
\n ———–<\/p>\n
14.1 Termination…………………………………………………………………………………49
\n14.2 Effect of Termination………………………………………………………………………..50<\/p>\n
ARTICLE XV
\n GENERAL PROVISIONS
\n ——————<\/p>\n
15.1 Notices…………………………………………………………………………………….50
\n15.2 Entire Agreement…………………………………………………………………………….51
\n15.3 Expenses……………………………………………………………………………………51
\n15.4 Amendment…………………………………………………………………………………..52
\n15.5 Waiver……………………………………………………………………………………..52
\n15.6 Binding Effect; Assignment……………………………………………………………………52
\n15.7 Interpretation………………………………………………………………………………52
\n15.8 Severability………………………………………………………………………………..52
\n15.9 Governing Law; Interpretation…………………………………………………………………52
\n15.10 Arm’s Length Negotiations…………………………………………………………………….53
\n15.11 Confidentiality……………………………………………………………………………..53
\n15.12 Counterparts………………………………………………………………………………..53
\n15.13 Access to Books and Records…………………………………………………………………..53<\/p>\n
iv<\/p>\n
LIST OF SCHEDULES AND EXHIBITS<\/p>\n
Exhibit Description
\n——- ———–<\/p>\n
3.4 Form of Escrow Agreement
\n 8.8 Form of Release
\n 8.11 Form of Severance Letter<\/p>\n
Schedule Description
\n——– ———–<\/p>\n
3.3(d) Business Plan
\n 7.8 Terms of Employment<\/p>\n
<\/c><\/s><\/caption>\n<\/table>\n
v<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
AGREEMENT AND PLAN OF MERGER (“Agreement”), dated as of December 6,
\n1999 (the “Agreement Date”), among SportsLine.com, Inc., a Delaware corporation
\n(“SportsLine”), Commissioner.com, Inc., a New York corporation and a wholly
\nowned subsidiary of SportsLine (“Acquisition Corp.” and together with SportsLine
\nsometimes hereinafter referred to as the “SportsLine Companies”), Daedalus World
\nWide Corporation, a New York corporation (“DWWC”), and James Price, Michael
\nGersh, Matthew Fortnow and Peter Pezaris (individually, a “Principal
\nShareholder” and collectively, the “Principal Shareholders”). Certain other
\ncapitalized terms used herein and not otherwise defined shall have the meanings
\nas set forth in Article XIII hereof.<\/p>\n
WHEREAS, the parties hereto desire to effect the merger of DWWC with
\nand into Acquisition Corp. (the “Merger”) pursuant to the applicable provisions
\nof the New York Business Corporation Law (the “NYBCL”);<\/p>\n
WHEREAS, the respective Boards of Directors of SportsLine, Acquisition
\nCorp. and DWWC have approved the Merger and the terms and conditions of this
\nAgreement and have determined that the Merger is in the best interests of their
\nrespective shareholders;<\/p>\n
WHEREAS, the Merger has been approved by the holders of at least
\ntwo-thirds of the outstanding shares of common stock, no par value, of DWWC
\n(“DWWC Common Stock”), but is subject to satisfaction of certain other
\nconditions described in this Agreement; and<\/p>\n
NOW, THEREFORE, in consideration of the mutual representations,
\nwarranties, covenants and agreements contained herein, the parties hereto hereby
\nagree as follows:<\/p>\n
ARTICLE I
\n THE MERGER
\n ———-<\/p>\n
1.1 The Merger. Subject to and upon the terms and conditions of this
\nAgreement and in accordance with the NYBCL, at the Effective Time (as defined in
\nSection 1.2 hereof), DWWC shall be merged with and into Acquisition Corp., which
\nshall be the surviving corporation (sometimes hereinafter referred to as the
\n“Surviving Corporation”) in the Merger, and as a result thereof the separate
\ncorporate existence of DWWC shall cease.<\/p>\n
1.2 Effective Time. If all the conditions to the Merger set forth in
\nArticles VIII and IX hereof shall have been fulfilled or waived in accordance
\nherewith and this Agreement has not been terminated as provided in Article XIV
\nhereof, on the Closing Date the parties hereto shall cause a certificate of
\nmerger in the form required by the NYBCL (the “Merger Filing”), to be duly
\nprepared and executed and filed in accordance with the NYBCL. The Merger shall
\nbecome effective at the time the Merger Filing is filed with the Secretary of
\nState of the State of New York in accordance with the NYBCL, or at such later
\ntime which the parties hereto have agreed upon and designated in such filing as
\nthe effective time of the Merger (the “Effective Time”).<\/p>\n
1.3 Effect of the Merger. From and after the Effective Time, the Merger
\nshall have all the effects set forth in the NYBCL. Without limiting the
\ngenerality of the foregoing, at the Effective Time, by virtue of the Merger, all
\nproperties, rights, privileges, powers and franchises of DWWC and Acquisition
\nCorp. shall vest in the Surviving Corporation and all debts, liabilities and
\nduties of DWWC and Acquisition Corp. shall become the debts, liabilities and
\nduties of the Surviving Corporation.<\/p>\n
1.4 Supplementary Action. If at any time after the Effective Time, any
\nfurther assignments or assurances in law or any other things are necessary or
\ndesirable to vest or to perfect or confirm of record in the Surviving
\nCorporation the title to any property or rights of DWWC or Acquisition Corp., or
\notherwise to carry out the provisions of this Agreement, the officers and
\ndirectors of the Surviving Corporation are hereby authorized and empowered, in
\nthe name of and on behalf of DWWC and Acquisition Corp., to execute and deliver
\nany and all things necessary or proper to vest or to perfect or confirm title to
\nsuch property or rights in the Surviving Corporation, and otherwise to carry out
\nthe purposes and provisions of this Agreement.<\/p>\n
ARTICLE II
\n THE SURVIVING CORPORATION
\n ————————-<\/p>\n
2.1 Certificate of Incorporation of the Surviving Corporation. The
\nCertificate of Incorporation of Acquisition Corp. as in effect at the Effective
\nTime shall be the certificate of incorporation of the Surviving Corporation
\nuntil thereafter amended in accordance with such certificate and applicable Law.<\/p>\n
2.2 Bylaws of the Surviving Corporation. The Bylaws of Acquisition
\nCorp. as in effect at the Effective Time shall be the bylaws of the Surviving
\nCorporation until thereafter amended in accordance with such bylaws and
\napplicable Law.<\/p>\n
2.3 Directors and Officers of the Surviving Corporation. The directors
\nand officers of Acquisition Corp. at the Effective Time shall be the directors
\nand officers of the Surviving Corporation until their respective successors are
\nduly elected and qualified in accordance with the Surviving Corporation’s
\ncertificate of incorporation, bylaws and applicable Law.<\/p>\n
ARTICLE III
\n CONVERSION OF SHARES
\n ——————–<\/p>\n
3.1 Conversion of DWWC Capital Stock.<\/p>\n
(a) At the Effective Time, by virtue of the Merger and
\nwithout any action on the part of any holder thereof, each share of DWWC Common
\nStock issued and outstanding immediately prior to the Effective Time, other than
\nshares of DWWC Common Stock held by DWWC as treasury stock or by any subsidiary
\nof DWWC or by any Dissenting Shareholder (as defined in Section 3.6) who, as of
\nthe Effective Time, has not effectively withdrawn or lost such shareholder’s
\ndissenter’s rights, shall be converted into the right to receive the following
\n(the “Merger Consideration”):<\/p>\n
(i) an amount in cash equal to the Cash Amount;<\/p>\n
2<\/p>\n
(ii) a number of validly issued, fully paid and
\n nonassessable shares of common stock, $0.01 par value per
\n share, of SportsLine (“SportsLine Common Stock”) equal to the
\n Conversion Number; and<\/p>\n
(iii) the Per Share Earn Out Amount, if any.<\/p>\n
(b) For purposes of this Agreement:<\/p>\n
(i) “Cash Amount” means an amount in cash equal to
\n the quotient of (i) Four Million Dollars ($4,000,000), divided
\n by (ii) the total number of Fully Diluted DWWC Shares.<\/p>\n
(ii) “Conversion Number” means the quotient (rounded
\n down to the nearest one-thousandth) obtained by dividing (i)
\n the SportsLine Merger Shares by (ii) the total number of Fully
\n Diluted DWWC Shares.<\/p>\n
(iii) “Earn Out Shares” means, with respect to an
\n installment of the Earn Out (as defined in Section 3.3), the
\n quotient of the dollar amount of that installment divided by
\n the Reference Price.<\/p>\n
(iv) “Excess Debt” means the sum of outstanding
\n principal balance of and accrued interest on all outstanding
\n Debt (as defined in Section 5.19) as of immediately prior to
\n the Effective Time after giving effect to the payment of the
\n SportsLine Loan (as defined in Section 8.12).<\/p>\n
(v) “Fully Diluted DWWC Shares” means the number of
\n shares of DWWC Common Stock that is equal to the sum of: (A)
\n the total number of shares of DWWC Common Stock that are
\n issued and outstanding immediately prior to the Effective
\n Time; plus (B) the total number of shares of DWWC Common Stock
\n that are ultimately subject to, and potentially issuable
\n (without regard to any vesting or other conditions to
\n exercise) under, all options and warrants that are issued and
\n outstanding immediately prior to the Effective Time; plus (C)
\n the total number of shares of DWWC Common Stock that are
\n ultimately subject to, and\/or are potentially issuable under
\n or upon the exercise, exchange or conversion of, all
\n promissory notes, debentures, debt instruments, evidences of
\n indebtedness, capital stock or other security of DWWC or any
\n of its subsidiaries that are issued and outstanding
\n immediately prior to the Effective Time and that are, directly
\n or indirectly, convertible or exchangeable for any shares of
\n DWWC Common Stock and\/or any other shares of capital stock of
\n DWWC of any class or series (“Convertible Securities”); plus
\n (D) the total number of shares of DWWC Common Stock that are
\n ultimately subject to, and\/or are potentially issuable under
\n or upon the exercise, exchange or conversion of, any and all
\n other warrants, options, rights, notes, evidences of
\n indebtedness, stock or other securities that are issued and
\n outstanding immediately prior to the Effective Time and that
\n entitle the holder thereof to purchase or otherwise acquire
\n any Convertible Securities or any other shares of the capital
\n stock of DWWC of any class or series.<\/p>\n
3<\/p>\n
(vi) “Income Tax Distribution” means a distribution
\n of cash in an amount which does not exceed an amount equal to
\n the sum of (A) the product of (1) DWWC’s taxable income for
\n federal income tax purposes for the period commencing on
\n January 1, 1999 and ending on the Effective Date, minus the
\n amount determined pursuant to clause (B), below, for such
\n period, times (2) the highest applicable marginal individual
\n federal income tax rate, plus (B) if the Shareholders are
\n obligated to pay any state or local income taxes on account of
\n DWWC’s income, the product of (x) DWWC’s taxable income for
\n federal income tax purposes for the period commencing on
\n January 1, 1999 and ending on the Effective Date, times (y)
\n the highest applicable marginal individual state or local
\n income tax rate, minus (C) any amounts distributed by DWWC to
\n the Shareholders prior to November 1, 1999 in respect of
\n income Taxes.<\/p>\n
(vii) “Per Share Earn Out Amount” means (i) with
\n respect to an installment of the Earn Out (as defined in
\n Section 3.3) which is paid in cash, an amount equal to the
\n quotient of (A) the dollar amount of that installment divided
\n by (B) the total number of Fully Diluted DWWC Shares and (ii)
\n with respect to an installment of the Earn Out which is paid
\n in shares of SportsLine Common Stock, the quotient (rounded
\n down to the nearest one-thousandth) obtained by dividing (A)
\n the Earn Out Shares for that installment by (ii) the total
\n number of Fully Diluted DWWC Shares.<\/p>\n
(viii) “SportsLine Merger Shares” means the quotient
\n of the Stock Consideration divided by the Reference Price.<\/p>\n
(ix) “Reference Price” means (i) with respect to the
\n Stock Consideration, $46.30 per share which is the average of
\n the daily closing sales prices of the SportsLine Common Stock
\n as quoted on the Nasdaq National Market System and reported in
\n The Wall Street Journal for the 15 trading days ending on (and
\n inclusive of) the business day immediately preceding the
\n Agreement Date, (ii) with respect to the installment of the
\n Earn Out Amount payable on the First Payment Date or the
\n Second Payment Date (as such terms are defined in Section
\n 3.3), the 20 trading days ending on (and inclusive of) the
\n business day immediately preceding the respective payment
\n date, and (iii) for the purposes of Article XII, $30.00 per
\n share.<\/p>\n
(x) “Stock Consideration” means the sum of (A) Twenty
\n Seven Million Seven Hundred and Eighty Thousand Dollars
\n ($27,780,000), minus (B) the sum of (x) any Excess Debt plus
\n (y) any Transaction Expenses (as defined in Section 15.3)
\n which are borne by DWWC plus (z) the amount of any cash
\n distributed by DWWC to the Shareholders (as defined in Section
\n 3.4) as a dividend or other distribution since November 1,
\n 1999, other than an Income Tax Distribution.<\/p>\n
Each fractional share of DWWC Common Stock issued and outstanding immediately
\nprior to the Effective Time shall be converted into the right to receive an
\namount of Merger Consideration determined by multiplying (i) the amounts of cash
\nand SportsLine Common Stock to which the <\/p>\n
4<\/p>\n
holder of one whole share of DWWC is entitled, times (ii) the fraction of a
\nshare of DWWC Common Stock (rounded to the nearest thousandth).<\/p>\n
(c) Upon conversion of the outstanding DWWC Common Stock
\nin accordance with this Section 3.1, all such shares shall no longer be
\noutstanding and shall automatically be canceled and retired and shall cease to
\nexist; and each certificate formerly representing any such shares (a
\n“Certificate”) shall thereafter represent only the right to receive the Merger
\nConsideration into which the shares represented by such Certificate have been
\nconverted in accordance with this Section 3.1. Certificates previously
\nrepresenting shares of DWWC Common Stock shall be exchanged for the Cash Amount,
\ncertificates representing whole shares of SportsLine Common Stock and cash in
\nlieu of any fractional share, without interest, issued in consideration therefor
\nupon the surrender of such certificates in accordance with Section 3.5 hereof.<\/p>\n
(d) At the Effective Time, each share of DWWC Common
\nStock issued and held in DWWC’s treasury or by any subsidiary of DWWC shall, by
\nvirtue of the Merger and without any action on the part of DWWC, cease to be
\noutstanding, shall be canceled and retired without payment of any consideration
\ntherefor and shall cease to exist.<\/p>\n
3.2 Capital Stock of Acquisition Corp. Each share of common stock, par
\nvalue $0.01 per share, of Acquisition Corp. issued and outstanding immediately
\nprior to the Effective Time shall by virtue of the Merger and without any action
\non the part of the Acquisition Corp. continue unchanged and remain outstanding
\nas a share of common stock of the Surviving Corporation.<\/p>\n
3.3 Earn Out.<\/p>\n
(a) If, during the calendar year commencing January 1,
\n2000 and ending December 31, 2000 (the “Measurement Period”), the Surviving
\nCorporation recognizes more than $3,000,000 (“Revenue Threshold”) in Fantasy
\nSubscription Revenue, then SportsLine shall pay to the holders of DWWC Common
\nStock, as additional Merger Consideration, an aggregate amount equal to
\n$1,000,000 for each $100,000 in Fantasy Subscription Revenue recognized in
\nexcess of the Revenue Threshold during the Measurement Period, up to a maximum
\nof $12,000,000 in additional Merger Consideration (the “Earn Out”). For purposes
\nof this Agreement, “Fantasy Subscription Revenue” means the amount of net
\nrevenue (gross subscription fees less credit card “chargebacks” and merchant
\ntransaction fees) recognized by the Surviving Corporation (on an accrual basis,
\ndetermined in accordance with SportsLine’s existing practices for determining
\nrevenue under the July 1998 Agreement between DWWC and SportsLine, consistently
\napplied), from the sale of “commissioner,” “challenge game” and “league” (i.e.,
\nproducts which allow a single player to participate in fantasy products using
\nleague formats similar to the format used by the “commissioner” product)
\nproducts; provided, that with respect to revenue derived from the distribution
\nof such fantasy products via distribution relationships other than through the
\nCBS SportsLine website and which relationships are not consummated as of the
\nEffective Time, such revenues shall only be counted for the purposes of the Earn
\nOut, if the distribution agreement was originated exclusively by the Principal
\nShareholders.<\/p>\n
(b) If at any time during the Measurement Period
\nSportsLine decides, in its sole and absolute discretion, not to charge
\nsubscribers for their use of the “commissioner,” “challenge game” <\/p>\n
5<\/p>\n
or “league” products, then notwithstanding the foregoing, the Earn Out shall be
\ndetermined as follows: if the Surviving Corporation receives subscriptions for<\/p>\n
“commissioner,” “challenge game” or “league” products from more than 750,000
\nsubscribers (“Subscriber Threshold”), then SportsLine shall pay to the holders
\nof DWWC Common Stock, as additional Merger Consideration, an aggregate amount
\nequal to $1,000,000 for each 41,667 subscribers in excess of the Subscriber
\nThreshold during the Measurement Period, up to a maximum of $12,000,000 in
\nadditional Merger Consideration.<\/p>\n
(c) The Earn Out shall be paid in two equal installments,
\nwhich shall payable on (i) March 1, 2001 (the “First Payment Date”), and (ii)
\nDecember 31, 2001 (the “Second Payment Date”), respectively. At SportsLine’s
\noption, either or both of the installments of the Earn Out shall be payable in
\ncash or, so long as SportsLine Common Stock is then publicly traded, SportsLine
\nCommon Stock, or a combination thereof. For each installment of the Earn Out,
\nSportsLine shall pay to each Shareholder in respect of that installment the Per
\nShare Earn Out Amount times the number of Fully Diluted DWWC Shares owned by
\nthat Shareholder immediately prior to the Merger.<\/p>\n
(d) Until the expiration of the Measurement Period,
\nSportsLine agrees that it will operate the business of the Surviving Corporation
\nduring calendar year 2000 substantially in accordance with the business plan
\nattached hereto as Schedule 3.3(d) and promote the “commissioner,” “challenge”
\nand “league” products on the CBS SportsLine website substantially in accordance
\nwith the level of promotion (including on the homepage of the CBS SportsLine
\nwebsite) during calendar year 1999 prior to the Effective Time. If SportsLine
\nbreaches the covenant in this Section 3.3(d) prior to the end of the Measurement
\nPeriod, then notwithstanding the foregoing, SportsLine shall pay to the
\nShareholders, as additional Merger Consideration the full amount of the Earn Out
\nequal to $12 million.<\/p>\n
(e) In the event SportsLine sells or otherwise disposes
\nof substantially all of the assets, business or properties of the Surviving
\nCorporation (whether by merger, consolidation, sale of stock or assets or
\notherwise) prior to the end of the Measurement Period, and as a result of such
\nsale or disposition the acquiring party does not agree to be bound by the terms
\nand conditions of the Earn Out as provided hereunder, then notwithstanding the
\nprevious determination of the Earn Out, SportsLine shall within 60 days of the
\nconsummation of the sale or disposition pay to the Shareholders as additional
\nMerger Consideration the full amount of the Earn Out equal to $12 million. A
\nmerger or consolidation of SportsLine with or into any other Person shall not
\nconstitute a sale or disposition purposes of this Section 3.3(e).<\/p>\n
3.4 Escrow Fund.<\/p>\n
(a) As soon as practicable following the Effective Time
\n(or at such later time as may be provided in Section 3.6 hereof with respect to
\nshares issuable to Dissenting Shareholders who withdraw or lose their
\ndissenter’s rights), and subject to and in accordance with Article XII hereof,
\nSportsLine will withhold from the Merger Consideration payable to each holder of
\nDWWC Common Stock (each, a “Shareholder”) in accordance with this Article III,
\nand deliver to SunTrust Bank, South Florida, N.A., as escrow agent (the “Escrow
\nAgent”), (i) a certificate or certificates representing ten percent (10%) of the
\nnumber of shares of SportsLine Common Stock issuable to such Shareholder
\n(rounded down to the nearest whole number of shares to be issued to each
\nShareholder) plus a certificate or certificates representing an additional
\n18,000 shares of SportsLine Common Stock (the “Escrow Shares”) and (ii) ten
\npercent <\/p>\n
6<\/p>\n
(10%) of the cash payable to such Shareholder plus an additional amount of cash
\nequal to $270,000 (the “Escrow Cash”). Such deposit and any amount of Earn Out
\ndelivered into escrow pursuant to Section 12.5 below shall constitute the escrow
\nfund (“Escrow Fund”) and be governed by the terms set forth herein and in the
\nEscrow Agreement to be entered into among SportsLine, the Surviving Corporation,
\nthe Escrow Agent and the Shareholders’ Agent (as defined in Section 12.8) in
\nsubstantially the form attached hereto as Exhibit 3.4 (the “Escrow Agreement”).
\nThe Escrow Shares shall be registered in the name of the Escrow Agent as nominee
\nfor, and held by the Escrow Agent in escrow on behalf of, the Shareholders on a
\npro rata basis (in accordance with the Shareholders’ percentage ownership of
\nDWWC Common Stock immediately prior to the Effective Time). In the event
\nSportsLine issues any Additional Escrow Shares (as defined in Section 3.4(b)),
\nsuch shares will be issued in the name of the Escrow Agent and delivered to the
\nEscrow Agent in the same manner as set forth above, and such Additional Escrow
\nShares shall constitute a part of the Escrow Fund and be deemed to be “Escrow
\nShares” for all purposes hereof. The Escrow Fund shall be available to
\ncompensate SportsLine and the Indemnified Persons (as defined in Section 12.2)
\nfor certain damages and, to the extent not used for such purposes, shall be
\nreleased to the persons otherwise entitled thereto, all as provided in Article
\nXII and the Escrow Agreement.<\/p>\n
(b) Each Shareholder will have voting rights with respect
\nto the Escrow Shares deposited in the Escrow Fund with respect to such
\nShareholder so long as such Escrow Shares are held in escrow, and SportsLine
\nwill take all necessary steps to allow the exercise of such rights. In addition,
\nwhile the Escrow Shares remain in the Escrow Agent’s possession pursuant to this
\nAgreement and the Escrow Agreement, the Shareholders will retain and be able to
\nexercise all other incidents of ownership of said Escrow Shares consistent with
\nthe terms and conditions of this Agreement and the Escrow Agreement. Except for
\ndividends paid in SportsLine Common Stock declared with respect to the Escrow
\nShares (“Additional Escrow Shares”), which shall be deposited in escrow pursuant
\nto Section 3.6 hereof, any cash dividends, dividends payable in other securities
\nor other distributions of any kind made in respect of the Escrow Shares will be
\ndelivered to the Shareholders on a pro rata basis in accordance with the number
\nof Escrow Shares deposited on behalf of such Shareholder.<\/p>\n
(c) By virtue of the approval of this Agreement and the
\nMerger by the Shareholders, each Shareholder, without any further act, shall be
\ndeemed to have consented to and approved (i) the use of the Escrow Fund as
\ncollateral for the indemnification obligations set forth in Article XII in the
\nmanner set forth in such Article and the Escrow Agreement, (ii) the appointment
\nof the Shareholders’ Agent in accordance with Section 12.8 as the
\nattorney-in-fact and agent for and on behalf of each Shareholder (other than
\nholders of Dissenting Shares), and the taking by the Shareholders’ Agent of any
\nand all actions and the making of any decisions required or permitted to be
\ntaken by the Shareholders’ Agent under Article XII and the Escrow Agreement,
\n(iii) the exercise by the Shareholders’ Agent of the power to: (A) execute and
\ndeliver the Escrow Agreement; (B) authorize delivery to SportsLine of Escrow
\nShares or Escrow Cash in satisfaction of claims made by SportsLine; (C) agree
\nto, negotiate, enter into settlements and compromises of and demand arbitration
\nand comply with orders of courts and awards of arbitrators with respect to such
\nclaims; (D) resolve any claim made pursuant to Article XII; and (E) take all
\nactions necessary in the judgment of the Shareholders’ Agent for the
\naccomplishment <\/p>\n
7<\/p>\n
of the foregoing), and (iii) all of the other terms, conditions and limitations
\nin Article XII and the Escrow Agreement.<\/p>\n
3.5 Dissenters’ Rights. If holders of DWWC Common Stock are entitled to
\ndissenters’ rights in connection with the Merger under the NYBCL, any shares of
\nDWWC Common Stock (“Dissenting Shares”) held by persons who have complied with
\nall requirements for perfecting dissenter’s rights under the NYBCL (“Dissenting
\nShareholders”) shall not be converted into or represent the right to receive the
\nMerger Consideration but shall be converted into the right to receive such
\nconsideration as may be determined to be due with respect to such Dissenting
\nShares pursuant to the NYBCL. DWWC shall give SportsLine prompt notice of any
\ndemand received by DWWC to require DWWC to purchase shares of DWWC Common Stock,
\nwithdrawals of such demands and any instruments served pursuant to the NYBCL and
\nreceived by DWWC with respect to Dissenting Shares, and SportsLine shall have
\nthe right to participate in all negotiations and proceedings with respect to any
\nsuch demand. DWWC agrees that, except with the prior written consent of
\nSportsLine, it will not voluntarily make any payment with respect to, or settle
\nor offer to settle, any such demands.<\/p>\n
Each Dissenting Shareholder who, pursuant to the provisions of the
\nNYBCL, becomes entitled to payment of the fair value of shares of DWWC Common
\nStock shall receive payment therefor (but only after the value therefor shall
\nhave been agreed upon or finally determined pursuant to such provisions). If,
\nafter the Effective Time, any Dissenting Shareholder shall effectively withdraw
\nor lose (through failure to perfect or otherwise) his dissenter’s rights under
\nthe NYBCL, then, as of the later of the Effective Time or the occurrence of such
\nevent, such Dissenting Shareholder’s shares of DWWC Common Stock shall
\nautomatically be converted into the right to receive the Merger Consideration;
\nprovided, that at such time SportsLine will deposit into escrow with the Escrow
\nAgent certificates representing ten percent (10%) of the SportsLine Common Stock
\nand cash to which such Dissenting Shareholder would otherwise be entitled.<\/p>\n
3.6 Exchange of Certificates.<\/p>\n
(a) At the Closing, or as soon as practicable thereafter,
\nthe Shareholders shall surrender their Certificate(s), duly endorsed, for
\ncancellation as of the Effective Time, together with the Release contemplated by
\nSection 8.8. On the Closing Date or as soon thereafter as SportsLine receives
\nsuch Certificates and such Release: (i) SportsLine will cause its transfer agent
\nto issue to each tendering holder of a Certificate (a “Tendering Holder”) (A) a
\ncertificate representing the number of whole shares of SportsLine Common Stock
\nto which such Tendering Holder is entitled pursuant to Section 3.1 less the
\nnumber of Escrow Shares of such Tendering Holder that are to be withheld and
\nplaced in escrow pursuant to Section 3.4 and the Escrow Agreement, and (ii)
\nSportsLine or its transfer agent will pay by check to such Tendering Holder (or
\nto DWWC’s counsel in escrow for the Tendering Shareholder) an amount in cash,
\nwithout interest equal to the sum of (A) the amount payable to the Tendering
\nHolder pursuant to Section 3.1(a)(i), plus (B) the amount payable to the
\nTendering Holder with respect to a fractional share in accordance with Section
\n3.6(b) less the amount of cash of such Tendering Holder that is to be withheld
\nand placed in escrow pursuant to Section 3.4 and the Escrow Agreement. As soon
\nas practicable following the Effective Time, SportsLine will deliver the
\ncertificates representing the Escrow Shares and the cash representing the Escrow
\nCash to the Escrow Agent pursuant to the Escrow Agreement.<\/p>\n
8<\/p>\n
(b) No certificates or scrip representing fractional
\nshares of SportsLine Common Stock shall be issued as part of the Merger
\nConsideration, and such fractional interests shall not entitle the owner thereof
\nto vote or to any rights as a stockholder of SportsLine. All fractional shares
\nof SportsLine Common Stock that a Shareholder would otherwise be entitled to
\nreceive as part of the Merger Consideration shall be aggregated and if a
\nfractional share results from such aggregation, such Shareholder shall be
\nentitled to receive, in lieu thereof, an amount in cash determined by
\nmultiplying (i) the Reference Price, times (ii) the fraction of a share of
\nSportsLine Common Stock to which such Shareholder would otherwise have been
\nentitled. No such cash in lieu of fractional shares of SportsLine Common Stock
\nshall be paid to any Shareholder until Certificates are surrendered and
\nexchanged in accordance with Section 3.6(a).<\/p>\n
(c) Except for the Merger Shares to be registered in the
\nname of the Escrow Agent, if any Merger Consideration is to be delivered to a
\nperson other than the person in whose name the Certificates for shares of DWWC
\nCommon Stock surrendered for exchange are registered, it shall be a condition to
\nthe payment of such Merger Consideration that (i) the Certificate(s) so
\nsurrendered shall be transferable, and shall be properly assigned, endorsed or
\naccompanied by appropriate stock powers, (ii) the person requesting such
\ntransfer shall pay SportsLine, or its transfer agent, any transfer or other
\ntaxes payable by reason of the foregoing or establish to the satisfaction of
\nSportsLine that such taxes have been paid or are not required to be paid and
\n(iii) such transfer shall otherwise be proper.<\/p>\n
(d) The Merger Consideration shall be deemed to have been paid
\nand issued in full satisfaction of all rights pertaining to the shares of DWWC
\nCommon Stock.<\/p>\n
(e) Notwithstanding anything to the contrary in this
\nSection 3.6, none of SportsLine, the Surviving Corporation or any party hereto
\nshall be liable to any person for any shares or amounts properly delivered or
\npaid to a public official pursuant to any applicable abandoned property, escheat
\nor similar Law.<\/p>\n
3.7 Dividends. No dividends or other distributions that are declared or
\nmade after the Effective Time with respect to SportsLine Common Stock payable to
\nholders of record thereof after the Effective Time shall be paid to a
\nShareholder entitled to receive certificates representing SportsLine Common
\nStock until such Shareholder has properly surrendered such Shareholder’s
\nCertificates. Upon such surrender, there shall be paid to the Shareholder in
\nwhose name the certificates representing such SportsLine Common Stock shall be
\nissued any dividends which shall have become payable with respect to such
\nSportsLine Common Stock between the Effective Time and the time of such
\nsurrender, without interest. After such surrender, there shall also be paid to
\nthe Shareholder in whose name the certificates representing such SportsLine
\nCommon Stock shall be issued any dividend on such SportsLine Common Stock that
\nshall have a record date subsequent to the Effective Time and prior to such
\nsurrender and a payment date after such surrender; provided that such dividend
\npayments shall be made on such payment dates. In no event shall the Shareholders
\nentitled to receive such dividends be entitled to receive interest on such
\ndividends.<\/p>\n
3.8 Adjustments. If, subsequent to the Agreement Date but prior to the
\nEffective Time, SportsLine changes the number of shares of SportsLine Common
\nStock issued and outstanding as a result of a stock split, reverse stock split,
\nstock dividend, recapitalization or other similar change with a record date
\nprior to the Effective Time, the Conversion Number shall be proportionately and<\/p>\n
9<\/p>\n
equitably adjusted to reflect the effect of any such stock split, reverse stock
\nsplit, stock dividend, recapitalization or other similar change.<\/p>\n
ARTICLE IV
\n REPRESENTATIONS AND WARRANTIES OF THE SPORTSLINE COMPANIES
\n ———————————————————-<\/p>\n
The SportsLine Companies hereby joint and severally represent and
\nwarrant to DWWC and the Principal Shareholders as follows:<\/p>\n
4.1 Corporate Status. SportsLine is a corporation duly organized,
\nvalidly existing and in good standing under the laws of the State of Delaware.
\nAcquisition Corp. is a corporation duly organized, validly existing and in good
\nstanding under the laws of the State of New York. Each of the SportsLine
\nCompanies (i) has the corporate power and authority to own, lease and operate
\nits properties and assets and to conduct and carry on its business as it is now
\nbeing conducted and operated and as proposed to be conducted and operated and
\n(ii) is duly qualified or licensed to conduct business as a foreign corporation
\nand is in good standing in all jurisdictions that require such qualification or
\nlicensing, except where the failure to be so qualified or licensed or to be in
\ngood standing does not and would not reasonably be expected to have,
\nindividually or in the aggregate, a Material Adverse Effect on SportsLine.<\/p>\n
4.2 Capitalization of SportsLine.<\/p>\n
(a) The authorized capital stock of SportsLine consists
\nof 200,000,000 shares of SportsLine Common Stock and 1,000,000 shares of
\nPreferred Stock, $0.01 par value per share. As of September 30, 1999, (i)
\n23,590,885 shares of SportsLine Common Stock were issued and outstanding and
\n(ii) no shares of Preferred Stock were issued and outstanding. Upon consummation
\nof the Merger, the shares of SportsLine Common Stock to be issued in exchange
\nfor the DWWC Common Stock in accordance with this Agreement will be, when so
\nissued, duly authorized, validly issued, fully paid and nonassessable and will
\nnot violate any preemptive rights.<\/p>\n
(b) Except as set forth in the SEC Filings, as of
\nSeptember 30, 1999, there were no outstanding (i) securities convertible into or
\nexchangeable for capital stock of SportsLine; (ii) obligations, options,
\nwarrants or other rights of any kind or character to acquire, purchase or
\nsubscribe for capital stock of SportsLine or securities convertible into or
\nexchangeable for capital stock of SportsLine, other than options and warrants to
\npurchase SportsLine Common Stock granted in the ordinary course of business
\nsince the date of the SEC Filings; or (iii) agreements, arrangements or
\nunderstandings of any kind relating to the authorization, issuance or sale of
\ncapital stock of SportsLine or securities convertible into or exchangeable for
\ncapital stock of SportsLine, except such issuances or sales as are contemplated
\npursuant to acquisition agreements entered (or to be entered) into since the
\ndate of the SEC Filings.<\/p>\n
4.3 Authorization; Enforceability. Each of the SportsLine Companies has
\nthe corporate power and authority to execute and deliver this Agreement and all
\nTransaction Documents to which it is or will be a party, to perform its
\nrespective obligations hereunder and thereunder and to consummate the
\ntransactions contemplated hereby and thereby. The execution, delivery and
\nperformance of this Agreement and the Transaction Documents has been duly
\nauthorized by all necessary corporate action on the part of each of the
\nSportsLine Companies. This Agreement has been duly executed and delivered by
\neach of the SportsLine Companies and constitutes, and, when<\/p>\n
10<\/p>\n
executed by SportsLine or Acquisition Corp. (as applicable) each Transaction
\nDocument will constitute, a valid and binding obligation of the SportsLine
\nCompanies, enforceable against them in accordance with its terms, except as the
\nsame may be limited by applicable bankruptcy, insolvency, reorganization,
\nmoratorium or other similar laws of general application affecting the
\nenforcement of creditors’ rights generally and general equitable principles
\nregardless of whether such enforceability is considered in a proceeding at law
\nor in equity, and except to the extent that any provisions requiring
\nindemnification in connection with the offering, issuance or sale of securities
\nmay violate public policy.<\/p>\n
4.4 No Violation. The execution, delivery and performance of this
\nAgreement and the Transaction Documents by the SportsLine Companies does not and
\nwill not (i) conflict with or violate any provision of the SportsLine Companies’
\nrespective Certificate or Articles of Incorporation or Bylaws, each as amended
\nto date; (ii) violate or breach any provision of, or result, through the mere
\npassage of time, in a violation of, or result in the termination or acceleration
\nof, or entitle any party to terminate or accelerate (whether after the giving of
\nnotice or lapse of time or both), any obligation under, be in conflict with or
\nconstitute or result in a default (or an event which, with notice or lapse of
\ntime or both, would constitute such a default) under, or result in the
\nimposition of any Lien upon or with respect to the stock or any assets, business
\nor properties of the SportsLine Companies pursuant to, any material Permit,
\nContract or other instrument, commitment or obligation to which either of the
\nSportsLine Companies is a party or by which either of the SportsLine Companies
\nor any of their respective assets is bound or subject, or violate or conflict
\nwith any other material restriction of any kind or character to which the
\nSportsLine Companies, or any of their respective properties or assets, is
\nsubject or bound; (iii) violate any Order to which the SportsLine Companies is a
\nparty or it or its respective properties or assets is subject or bound; or (iv)
\nviolate any Law applicable to the SportsLine Companies.<\/p>\n
4.5 Consents, etc. No consent, approval, order or authorization of, or
\nregistration, qualification, designation, declaration or filing with, any
\nGovernmental Authority or any other Person on the part of the SportsLine
\nCompanies is required in connection with the execution, delivery and performance
\nby SportsLine or Acquisition Corp. of this Agreement and the Transaction
\nDocuments, except (a) filings required to comply with applicable federal and
\nstate securities laws, (b) the filing with the Nasdaq National Market of a
\nNotification Form for Listing of Additional Shares with respect to the shares of
\nSportsLine Common Stock issuable upon conversion of the DWWC Common Stock in the
\nMerger, (c) the Merger Filings, (d) such other consents, authorizations,
\nfilings, approvals and registrations which, if not obtained or made, would not
\nhave a Material Adverse Effect on SportsLine and would not prevent, materially
\nalter or delay any of the transactions contemplated by this Agreement or the
\nTransaction Documents.<\/p>\n
4.6 SEC Filings. SportsLine has previously made available to the DWWC
\ncopies of the following reports filed by SportsLine with the SEC: (i) Annual
\nReport on Form 10-K for the fiscal year ended December 31, 1998 (the “10-K”),
\n(ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30,
\n1999 and September 30, 1999 (the “10-Qs”), (iii) definitive Proxy Statement
\nfiled with respect to SportsLine’s Annual Meeting of Shareholders held on June
\n17, 1999 (the “Proxy Statement”) and (iv) all other reports, proxy statements or
\nother reports filed by SportsLine with the SEC pursuant to Sections 13, 14 or
\n15(d) of the Exchange since January 1, 1999 (collectively, such reports and
\nproxy statements, together with the 10-K, the 10-Qs and the Proxy Statement are
\nreferred to as the “SEC Filings”). As of the date of filing, each SEC Filing (i)
\ncomplied (and, with respect to SEC Filings filed after the Agreement Date, such
\nSEC Filings will <\/p>\n
11<\/p>\n
comply as of the date of filing) in all material respects with the requirements
\nof the Securities Act and the Exchange Act, as applicable, and the rules and
\nregulations of the SEC thereunder applicable to such SEC Filings and (ii) did
\nnot contain (and, with respect to SEC Filings filed after the Agreement Date,
\nwill not contain as of the date of filing) any untrue statement of a material
\nfact or omit to state a material fact required to be stated therein or necessary
\nto make the statements therein, in light of the circumstances under which they
\nwere made, not misleading.<\/p>\n
The audited consolidated financial statements and unaudited interim
\nfinancial statements of SportsLine included in the SEC Filings (collectively,
\nthe “Financial Statements”) were prepared in accordance with GAAP (except as may
\nbe indicated therein or in the notes thereto and except with respect to
\nunaudited statements as permitted by Form 10-Q) and fairly present in all
\nmaterial respects the financial position of SportsLine as of the respective
\ndates thereof or the results of operations and cash flows for the respective
\nperiods then ended, as the case may be, subject, in the case of unaudited
\ninterim financial statements, to normal, recurring adjustments which are not
\nmaterial in the aggregate. Since October 1, 1999 and until the date of this
\nAgreement, there has been no material change in SportsLine’s accounting policies
\nwhich would require disclosure in the Financial Statements under GAAP.<\/p>\n
4.7 Absence of Certain Changes or Events. Except as disclosed in the
\nSEC Filings, and except as expressly contemplated by this Agreement, since
\nDecember 31, 1998, there has not been: (i) any change in the business,
\noperations, assets, liabilities, financial condition or operating results of
\nSportsLine and its Subsidiaries which has had or would reasonably be expected to
\nhave a Material Adverse Effect on SportsLine, or (ii) any damage, destruction or
\nloss, whether or not covered by insurance to or of the assets of SportsLine
\nwhich has had or would reasonably be expected to have a Material Adverse Effect
\non SportsLine.<\/p>\n
4.8 Reorganization Qualification . SportsLine has no current plan or
\nintention to (i) reacquire any of the SportsLine Merger Shares, (ii) liquidate
\nthe Surviving Corporation (iii) merge Surviving Corporation with and into
\nanother corporation, (iv) sell or otherwise dispose of the stock of Surviving
\nCorporation, or cause Surviving Corporation to sell or otherwise dispose of any
\nof the assets of DWWC acquired in the Merger, except for dispositions made in
\nthe ordinary course of business or transfers described in Section 368(a)(2)(C)
\nof the Code. Prior to the Closing, SportsLine will be in control of Acquisition
\nCorp. within the meaning of Section 368(c)(1) of the Code. It is SportsLine’s
\ncurrent intention that following the Merger, Surviving Corporation will continue
\nthe historic business of DWWC or use a significant portion of the assets of DWWC
\nin a business and will not issue additional shares of its stock that would
\nresult in SportsLine losing control of Surviving Corporation within the meaning
\nof Section 368(c) of the Code.<\/p>\n
4.9 Brokers, Finders, etc. No broker, finder or investment banker is
\nentitled to any brokerage, finder’s or other fee or commission in connection
\nwith this agreement and the Transaction Documents or the transactions
\ncontemplated hereby and thereby based upon any agreements, written or oral, made
\nby or on behalf of the SportsLine Companies or by or on behalf of any director,
\nofficer, employee, agent or Affiliate of the SportsLine Companies.<\/p>\n
4.10 Litigation. Except as disclosed in the SEC Filings, there are no
\nlegal proceedings pending or, to SportsLine’s knowledge, threatened against
\nSportsLine or Acquisition Corp.<\/p>\n
12<\/p>\n
(i) challenging the merger, or seeking to restrain or prohibit the consummation
\nof the Merger, or (ii) which, if determined adversely to SportsLine,
\nindividually or in the aggregate, would have or would reasonably be expected to
\nhave a material Adverse Effect on SportsLine. There are no Orders of any
\nGovernmental Authority or arbitrator outstanding against SportsLine which have
\nor would reasonably be expected to have, individually or in the aggregate, a
\nMaterial Adverse Effect on SportsLine.<\/p>\n
ARTICLE V
\n REPRESENTATIONS AND WARRANTIES OF DWWC AND THE PRINCIPAL SHAREHOLDERS
\n ———————————————————————<\/p>\n
DWWC and the Principal Shareholders, jointly and not severally, hereby
\nrepresent and warrant to the SportsLine Companies as follows:<\/p>\n
5.1 Organization, Authority, Qualification; Locations and Names;
\nCorporate Records.<\/p>\n
(a) DWWC is a corporation duly incorporated, validly
\nexisting and in good standing under the laws of the State of New York. DWWC (i)
\nhas the corporate power and authority to own, lease and operate its properties
\nand assets and to conduct and carry on its business as it is now being conducted
\nand operated and as proposed to be conducted and operated and (ii) is duly
\nqualified or licensed to conduct business as a foreign corporation and is in
\ngood standing in all jurisdictions that require such qualification or licensing,
\nexcept where the failure to be so qualified or licensed or to be in good
\nstanding does not and would not reasonably be expected to have, individually or
\nin the aggregate, a Material Adverse Effect on DWWC.<\/p>\n
(b) The addresses of DWWC’s principal place of business
\nand principal executive offices are identified in Paragraph 5.1(b) of the
\nDisclosure Letter. As of the Agreement Date, DWWC neither owns nor leases any
\nreal property nor has any employees, sales representatives or agents in any
\nstate in the United States or in any other jurisdiction, other than those
\nidentified in Paragraph 5.1(b) of the Disclosure Letter. Except as set forth in
\nParagraph 5.1(b) of the Disclosure Letter, during the past three years, DWWC has
\nnot changed its name or used any assumed or fictitious name nor has it been the
\nsurviving entity in a merger, acquired any business or changed its principal
\nplace of business or principal executive offices from the locations thereof as
\nof the Agreement Date.<\/p>\n
(c) The copies of the Certificate of Incorporation, as
\namended, and Bylaws of DWWC which have been provided to SportsLine are true,
\naccurate and complete and reflect all amendments made through the Agreement
\nDate. Except for the transactions involving Scott Harger, the minute books of
\nDWWC provided to SportsLine contain a complete summary of all meetings of DWWC’s
\ndirectors and stockholders since the time of incorporation and reflect all
\ntransactions referred to in such minutes accurately in all material respects.
\nThe copies of stock ledgers of DWWC which have been provided to SportsLine
\ncontain accurate and complete records of all issuances, transfers and
\ncancellations of shares of the capital stock of DWWC.<\/p>\n
5.2 Authorization; Enforceability. DWWC has the corporate power and
\nauthority to execute and deliver this Agreement and all Transaction Documents to
\nwhich it is or will be a party, to perform its respective obligations hereunder
\nand thereunder and to consummate the transactions<\/p>\n
13<\/p>\n
contemplated hereby and thereby. The execution, delivery and performance of this
\nAgreement and the Transaction Documents has been duly authorized by all
\nnecessary corporate action on the part of DWWC. The affirmative vote of the
\nholders of at least two-thirds of the shares of DWWC Common Stock outstanding on
\nthe record date for the shareholders meeting or written consents relating to
\nsuch approval is the only vote of the holders of any of DWWC’s capital stock
\nnecessary to approve this Agreement, the Merger and the transactions
\ncontemplated hereby under the NYBCL, DWWC’s Certificate of Incorporation, Bylaws
\nand other charter documents, and under any Contract regarding the voting of
\nshares of DWWC’s capital stock. This Agreement has been duly executed and
\ndelivered by DWWC and each of the Principal Shareholders and constitutes and,
\nwhen executed by DWWC and each of the Principal Shareholders each Transaction
\nDocument will constitute, a valid and binding obligation of DWWC and each of the
\nPrincipal Shareholders, enforceable against each of DWWC and the Principal
\nShareholders in accordance with its terms, except as the same may be limited by
\napplicable bankruptcy, insolvency, reorganization, moratorium or other similar
\nlaws of general application affecting the enforcement of creditors’ rights
\ngenerally and general equitable principles regardless of whether such
\nenforceability is considered in a proceeding at law or in equity.<\/p>\n
5.3 Capitalization.<\/p>\n
(a) The authorized capital stock of DWWC consists of
\n1,000 shares of DWWC Common Stock. As of the Agreement Date, there were issued
\nand outstanding, and immediately prior to the Effective Time there will be
\nissued and outstanding, 355.555 shares of DWWC Common Stock. All of the issued
\nand outstanding shares of DWWC Common Stock have been duly authorized and
\nvalidly issued, are (except as provided under Section 630 of the NYBCL) fully
\npaid and nonassessable, are not, except for the Stockholders Agreement, dated
\nJune 15, 1998 among the Principal Shareholders and DWWC (the “Stockholders
\nAgreement”), subject to any claim, Lien, preemptive right, right of first
\nrefusal, right of first offer or right of rescission, and were offered, issued,
\nsold and delivered by DWWC in compliance with all registration or qualification
\nrequirements (or applicable exemptions therefrom) of all applicable federal and
\nstate securities Laws. No Shareholder owes DWWC any money or other consideration
\nrepresenting any part of the purchase price of any outstanding shares of DWWC
\nCommon Stock, including without limitation any money due under a promissory note
\npayable to DWWC. DWWC has no liability (or potential liability) to any
\nshareholder for any dividends that have been declared or accrued and remain
\nunpaid. Paragraph 5.3(a) of the Disclosure Letter sets forth a true and correct
\nlist of all holders of DWWC Common Stock as of the Agreement Date, including the
\nnumber of shares of DWWC Common Stock owned of record and beneficially by each
\nsuch holder.<\/p>\n
(b) Except for the Stockholders Agreement, there are no
\noptions, warrants, convertible securities or other securities, calls,
\ncommitments, conversion privileges, preemptive rights, rights of first refusal,
\nrights of first offer or other rights or agreements outstanding to which DWWC or
\nany Shareholder is party to purchase or otherwise acquire (whether directly or
\nindirectly) any shares of DWWC’s authorized but unissued capital stock or any
\nsecurities convertible into or exchangeable for any shares of DWWC’s capital
\nstock or obligating DWWC to grant, issue, extend, or enter into any such option,
\nwarrant, convertible security or other security, call, commitment, conversion
\nprivilege, preemptive right, right of first refusal, right of first offer or
\nother right or agreement. Except for the DWWC Common Stock to be converted into
\nSportsLine Common Stock upon the Merger, no warrants, convertible debentures, or
\nany other securities of DWWC or rights to acquire shares of DWWC stock or any
\nwarrants or other securities of DWWC will become an option, warrant, convertible
\ndebenture, security or other right to purchase or otherwise acquire any<\/p>\n
14<\/p>\n
capital stock or other securities of SportsLine, or any other obligation or
\nliability of SportsLine by reason of the Merger or this Agreement. To DWWC’s and
\nthe Principal Shareholders’ best Knowledge, no person or entity holds, or has
\nany option, warrant or other right to acquire, any issued and outstanding shares
\nof the capital stock of DWWC from any holder of shares of the capital stock of
\nDWWC.<\/p>\n
(c) Except as set forth in Paragraph 5.3(c) of the
\nDisclosure Letter, there are no outstanding or existing proxies, voting
\nagreements, voting trusts, preemptive rights, rights of first refusal, rights of
\nfirst offer, rights of co-sale or tag-along rights, shareholder agreements or
\nother rights, understandings or arrangements regarding the voting or disposition
\nof the capital stock of DWWC, or any other restrictions (other than restrictions
\non transfer under applicable federal and state securities laws) applicable to
\nany of DWWC’s outstanding stock or other securities or to the conversion of any
\nshares of DWWC’s capital stock in the Merger pursuant to any agreement or
\nobligation to which DWWC or, to DWWC’s and the Principal Shareholders’ best
\nKnowledge, any of its Shareholders is a party. DWWC has not granted or agreed to
\ngrant to any person or entity any rights (including piggyback registration
\nrights) to have any securities of DWWC, or any securities into which the
\nsecurities of DWWC are converted or for which such securities are exchanged
\n(including any SportsLine Common Stock into which such DWWC Common Stock is
\nconverted pursuant to the Merger), registered with under the Securities Act or
\nany other Law.<\/p>\n
(d) From November 1, 1999 through the Agreement Date,
\nDWWC has not declared or paid any cash dividends, dividends payable in other
\nsecurities or other distributions of any kind in respect of the DWWC Common
\nStock other than cash distributions in the aggregate amount of $200,000 made on
\nDecember 3, 1999. DWWC has not paid, and will not pay, nor will DWWC be
\nobligated after the Effective Time to pay, any Transaction Expenses.<\/p>\n
5.4 No Violation. Except as set forth in Paragraph 5.4 of the
\nDisclosure Letter, the execution, delivery and performance of this Agreement and
\nthe Transaction Documents by DWWC does not and will not (i) upon receipt of the
\nrequisite approval of DWWC’s Shareholders referred to in Section 6.2, conflict
\nwith or violate any provision of DWWC’s Certificate of Incorporation or Bylaws,
\neach as amended to date; (ii) violate or breach any provision of, or result,
\nthrough the mere passage of time, in a violation of, or result in the
\ntermination or acceleration of, or entitle any party to terminate or accelerate
\n(whether after the giving of notice or lapse of time or both), any obligation
\nunder, be in conflict with or constitute or result in a default (or an event
\nwhich, with notice or lapse of time or both, would constitute such a default)
\nunder, or result in the imposition of any Lien upon or with respect to the stock
\nor any assets, business or properties of DWWC pursuant to, any Permit, Contract
\nor other instrument, commitment or obligation to which DWWC is a party or by
\nwhich DWWC or any of its assets is bound or subject, or violate or conflict with
\nany other restriction of any kind or character to which DWWC, or any of its
\nproperties or assets, is subject or bound, with such exceptions as would not
\nindividually or in the aggregate have a Material Adverse Effect on DWWC or the
\nSurviving Corporation; (iii) violate any Order to which DWWC is a party or it or
\nits properties or assets is subject or bound, with such exceptions as would not
\nindividually or in the aggregate have a Material Adverse Effect on DWWC or the
\nSurviving Corporation; or (iv) violate any Law applicable to DWWC with such
\nexceptions as would not individually or in the aggregate have a Material Adverse
\nEffect on DWWC or the Surviving Corporation.<\/p>\n
5.5 Consents, etc. No consent, approval, order or authorization of, or
\nregistration, qualification, designation, declaration or filing with, any
\nGovernmental Authority or any other <\/p>\n
15<\/p>\n
Person on the part of DWWC is required in connection with the execution,
\ndelivery or performance by DWWC of this Agreement and the Transaction Documents,
\nexcept (a) the Merger Filings, and (b) as set forth in Paragraph 5.5 of the
\nDisclosure Letter.<\/p>\n
5.6 Legal Proceedings. Except as set forth in Paragraph 5.6 of the
\nDisclosure Letter, there are no Legal Proceedings pending or, to DWWC’s and the
\nPrincipal Shareholders’ best Knowledge, threatened against DWWC (or against any
\nofficer, director, employee, key consultant or agent of DWWC in their capacity
\nas such or relating to their employment, services or relationship with DWWC).
\nThere are no Orders of any Governmental Authority or arbitrator outstanding
\nagainst DWWC or, to DWWC’s and the Principal Shareholders’ best Knowledge,
\nagainst any officer or director of DWWC in their capacity as such. Except as set
\nforth in Paragraph 5.6 of the Disclosure Letter, to DWWC’s and the Principal
\nShareholders’ best Knowledge, there is no basis for any shareholder or former
\nshareholder of DWWC, or any other Person, to assert a claim against DWWC or
\nSportsLine based upon: (i) a disputed claim of ownership of options, warrants or
\nother rights to acquire ownership of, any shares of the capital stock of DWWC,
\n(ii) any rights as a shareholder of DWWC, including any option, warrant or
\npreemptive rights, right of refusal, rights of co-sale or tag along rights or
\nrights to notice or to vote, (iii) any rights under any agreement among DWWC and
\nits shareholders or among the shareholders of DWWC, or (iv) subject to the
\nsatisfaction of the requirements of Section 6.2, DWWC entering into this
\nAgreement or any Transaction Document or consummating the Merger or any of the
\ntransactions contemplated by this Agreement or any Transaction Document.<\/p>\n
5.7 Subsidiaries. Except as set forth in Paragraph 5.7 of the
\nDisclosure Letter, DWWC (i) does not presently own or control, directly or
\nindirectly, any ownership, equity or profit interest in any other corporation,
\nlimited liability company, association or other business entity and (ii) is not
\na participant in any joint venture, partnership or similar arrangement.<\/p>\n
5.8 Intellectual Property.<\/p>\n
(a) DWWC IP Rights; Intellectual Property. DWWC owns, or has
\nthe valid right or license to use, possess, sell or license, all Intellectual
\nProperty (as defined below) necessary or required for the conduct of the
\nbusiness of DWWC as presently conducted and as presently proposed to be
\nconducted, including without limitation, the operation of each of the DWWC
\nWebsites (such Intellectual Property being hereinafter collectively referred to
\nas the “DWWC IP Rights”), and such rights to use, possess, sell or license are
\nsufficient for the conduct of such business. As used herein, the term
\n“Intellectual Property” means, collectively, all worldwide industrial and
\nintellectual property rights, including, without limitation, patents, patent
\napplications, rights to file for patent applications (including but not limited
\nto continuations, continuations-in-part, divisionals and reissues), trademarks,
\nlogos, service marks, trade names and service names (in each case whether or not
\nregistered) and applications for and the right to file applications for
\nregistration thereof, Internet domain name or application for an Internet domain
\nname, Internet and World Wide Web URLs or addresses, copyrights (whether or not
\nregistered) and applications for and the right to file applications for
\nregistration thereof, moral rights, mask work rights, mask work registrations
\nand applications therefor, franchises, licenses, inventions, trade secrets,
\ntrade dress, know-how, customer lists, supplier lists, proprietary processes and
\nformulae, software source code and object code, algorithms, net lists,
\narchitectures, structures, screen displays, layouts, inventions, development
\ntools, designs, blueprints, specifications, technical drawings (or similar
\ninformation in electronic format), publicity and privacy rights and any other
\nintellectual property rights arising under the laws<\/p>\n
16<\/p>\n
of the United States of America, any State thereof, or any country or province,
\nand all documentation and media (in whatever form) constituting, describing or
\nrelating to the foregoing, including, without limitation, manuals, programmers’
\nnotes, memoranda and records.<\/p>\n
(b) No Default. Neither the execution, delivery and
\nperformance of this Agreement or the consummation of the Merger and the other
\nagreements and transactions contemplated hereby and\/or by the Transaction
\nDocuments will: (i) constitute a breach, violation or default of any instrument,
\ncontract, license or other agreement governing any DWWC IP Right to which DWWC
\nis a party; (ii) cause the forfeiture or termination of, or give rise to a right
\nof forfeiture or termination of, any DWWC IP Right held or owned by DWWC; or
\n(iii) impair the right of DWWC or the Surviving Corporation or their
\nsubsidiaries to use, possess, sell or license any DWWC IP Right or portion
\nthereof. There are no royalties, honoraria, fees or other payments payable by
\nDWWC or any of its subsidiaries to any third person by reason of the ownership,
\nuse, possession, license, sale, marketing, advertising or disposition of any
\nDWWC IP Rights by DWWC.<\/p>\n
(c) No Infringement by DWWC. Neither the manufacture,
\nmarketing, license, sale, furnishing or intended use of any product or service
\n(including without limitation any product or service offered to users of the
\nDWWC Websites) currently licensed, utilized, sold, provided or furnished by DWWC
\nor currently under development by DWWC violates any license or agreement between
\nDWWC and any third party or infringes or misappropriates any Intellectual
\nProperty right of any other party; and there is no pending or, to DWWC’s and the
\nPrincipal Shareholders’ best Knowledge, threatened, claim or litigation
\ncontesting the validity, ownership or right of DWWC to use, possess, sell,
\nmarket, distribute, advertise, license, or dispose of any DWWC IP Right nor, to
\nDWWC’s and the Principal Shareholders’ best Knowledge, is there any basis for
\nany such claim, nor has DWWC received any notice asserting that any DWWC IP
\nRight or the proposed use, sale, distribution, license or disposition thereof
\nconflicts or will conflict with the rights of any other party, nor, to the
\nknowledge of DWWC, is there any basis for any such assertion. Except as set
\nforth in Paragraph 5.8(c) of the Disclosure Letter, DWWC possesses all rights
\nand interests necessary to (A) sell all products and services currently sold by
\nit and (B) to use the names and\/or likenesses of persons used in such catalogs
\nor on the DWWC websites or in any other Marketing Materials for the specific
\npurpose and in the specific web pages or Marketing Materials in which such
\nlikenesses appeared, in the case of both (A) and (B), without infringing the
\nIntellectual Property rights of any other Person.<\/p>\n
(d) No Breach by Employees or Consultants. No employee,
\nconsultant or independent contractor of DWWC: (i) is in material violation of
\nany term or covenant of any employment contract, patent disclosure agreement,
\ninvention assignment agreement, non-disclosure agreement, non-competition
\nagreement or any other contract or agreement with any other party by virtue of
\nsuch employee’s, consultant’s, or independent contractor’s being employed by, or
\nperforming services for, DWWC or using trade secrets or proprietary information
\nof others, that would be likely to have a Material Adverse Effect on DWWC; or<\/p>\n
(ii) has developed any technology, software or other copyrightable, patentable,
\nor otherwise proprietary work for DWWC that is subject to any agreement under
\nwhich such employee, consultant or independent contractor has assigned or
\notherwise granted to any third party any rights (including without limitation
\nIntellectual Property) in or to such technology, software or other
\ncopyrightable, patentable or otherwise proprietary work or any Intellectual
\nProperty related thereto. To DWWC’s and the Principal Shareholders’ best<\/p>\n
17<\/p>\n
Knowledge, the employment of any employee of DWWC or the use by DWWC of the
\nservices of any consultant or independent contractor does not subject DWWC to
\nany liability to any third party.<\/p>\n
(e) Protection of Proprietary Information. DWWC has taken
\nall necessary and appropriate steps to protect, preserve and maintain the
\nsecrecy and confidentiality of all trade secrets contained in the DWWC IP Rights
\nand all DWWC’s ownership interests and proprietary rights therein. All officers,
\nemployees, consultants and contractors of DWWC having access to proprietary
\ninformation of DWWC, its customers or business partners, or who have developed
\nany software, proprietary information or inventions for use by DWWC, have
\nexecuted and delivered to DWWC an agreement whereby they have agreed to hold
\nsuch software, proprietary information and inventions in confidence, and copies
\nof the form of all such agreements have been delivered to SportsLine’s counsel.
\nDWWC has secured valid written assignments from all consultants, contractors
\nand, where applicable, employees who were involved in, or who contributed to,
\nthe creation or development of any DWWC IP Rights, of the rights to such
\ncontributions that may be owned by such persons or that DWWC does not already
\nown by operation of law. No current or former employee, officer, director,
\nconsultant or independent contractor of DWWC has any right, license, claim or
\ninterest whatsoever in or with respect to any DWWC IP Rights (except those DWWC
\nIP Rights that exist by reason of a license by such Person to DWWC).<\/p>\n
(f) Registered and Unregistered Intellectual Property.
\nParagraph 5.8(f) of the Disclosure Letter contains a true and correct list of
\n(i) all worldwide registrations of any patents, copyrights, mask works,
\ntrademarks, service marks, Domain Names or Internet or World Wide Web URLs or
\naddresses with any governmental or quasi-governmental authority; (ii) all
\napplications, registrations, filings and other formal actions made or taken
\npursuant to federal, state and foreign laws by DWWC to secure, perfect or
\nprotect its interest in DWWC IP Rights, including, without limitation, all
\npatent applications, copyright applications, and applications for registration
\nof trademarks and service marks, (iii) all unregistered trademarks and service
\nmarks and (iv) all 800- or 888- prefix phone numbers used by DWWC in connection
\nwith the conduct of its business. Except as set forth in Paragraph 5.8(f) of the
\nDisclosure Letter, to the Knowledge of DWWC and the Principal Shareholders all
\nregistered trademarks held by DWWC are valid and enforceable.<\/p>\n
(g) Licenses. Paragraph 5.8(g) of the Disclosure Letter
\ncontains a complete list of (i) all licenses, sublicenses and other agreements
\nas to which DWWC is a party and pursuant to which any person or entity is
\nauthorized to use any DWWC IP Rights, and (ii) all licenses, sublicenses and
\nother agreements as to which DWWC is a party and pursuant to which DWWC is
\nauthorized to use any third party patents, trademarks, Internet domain names,
\nInternet or World Wide Web URLs or addresses, or copyrights, including but not
\nlimited to software (“Third Party IP Rights”) which would be infringed by, or
\nare incorporated in, or form a part of, any product or service sold, licensed,
\ndistributed, provided or marketed by DWWC.<\/p>\n
(h) Source Code. Except as set forth in Paragraph 5.8(h)
\nof the Disclosure Letter, neither DWWC, nor any other party acting on its
\nbehalf, has disclosed or delivered to any party (other than independent
\ncontractors bound by nondisclosure agreements in favor of DWWC), or permitted
\nthe disclosure or delivery to any escrow agent or other party, of any DWWC
\nSource Code (as defined below). No event has occurred, and no circumstance or
\ncondition exists, that (with or without notice or lapse of time) will, or would
\nreasonably be expected to, result in the disclosure or delivery to any such
\nparty of any DWWC Source Code (as defined below). Paragraph 5.8(h) of the
\nDisclosure Letter identifies each Contract (whether written or oral) pursuant to
\nwhich DWWC <\/p>\n
18<\/p>\n
has deposited, or is or may be required to deposit, with an escrow holder or any
\nother party, any DWWC Source Code and further describes whether the execution of
\nthis Agreement or the consummation of the Merger or any of the other
\ntransactions contemplated hereby, in and of itself, would reasonably be expected
\nto result in the release from escrow of any DWWC Source Code. As used in this
\nSection 5.8(h), “DWWC Source Code” means, collectively, any software source
\ncode, or any material portion or aspect of the software source code, or any
\nmaterial proprietary information or algorithm contained in or relating to any
\nsoftware source code, of any DWWC IP Rights or any other product or service
\nmarketed by DWWC but such definition does not include software normally provided
\nto end users in source code form, such as HTML files, scripts, and any
\ninterpreted code sent to the user’s business.<\/p>\n
(i) No Infringement by Third Parties. To DWWC’s and the
\nPrincipal Shareholders’ best knowledge, there is no unauthorized use,
\ndisclosure, infringement or misappropriation of any DWWC IP Rights or any
\nIntellectual Property Right of DWWC by any third party, including any employee
\nor former employee of DWWC. DWWC has not agreed to indemnify any person for any
\ninfringement of any Intellectual Property of any third party by any product or
\nservice that has been sold, licensed, leased, supplied, marketed, distributed,
\nor provided by DWWC.<\/p>\n
(j) Year 2000 Compliance. All internal computer systems
\nof DWWC which are material to its business are, both individually and in
\nconjunction with all other systems with which they work or interface, Year 2000
\nCompliant (as defined below). Without limiting the generality of the foregoing,
\nthe DWWC Websites, and all services, products and software developed, owned,
\nlicensed and\/or marketed or distributed by DWWC or utilized by DWWC in
\nconnection with any of the DWWC Websites or otherwise, both individually and
\nwhen operating in conjunction with all other systems and products with which
\nthey are designed to work or interface, are Year 2000 Compliant. DWWC has made
\ninquiries of the manufacturers, suppliers, vendors and customers and, to DWWC’s
\nknowledge, is not relying on any third party whose systems are not Year 2000
\nCompliant. DWWC has no material expenses or other material liabilities
\nassociated with securing Year 2000 Compliance, or making contingency
\narrangements to address Year 2000 Compliance issues, with respect to the DWWC
\nWebsites, the services or products of DWWC, the internal computer systems of
\nDWWC or the computer systems or products or services of manufacturers,
\nsuppliers, vendors or customers of DWWC. “Year 2000 Compliant” or “Year 2000
\nCompliance” means, as applied to hardware and software, that: (i) such hardware
\nand software will operate and correctly store, represent and process (including
\nsort) all dates (including single and multi-century formulas and leap year
\ncalculations), such that errors will not occur when the date being used is in
\nthe Year 2000, or in a year preceding or following the Year 2000; (ii) such
\nhardware and software has been written, developed and tested to support numeric
\nand date transitions from the twentieth century to the twenty-first century, and
\nback (including without limitation all calculations, aging, reporting, printing,
\ndisplays, reversals, disaster and vital records recoveries) without error,
\ncorruption or impact to current and\/or future operations; and (iii) such
\nhardware and software will function without error or interruption related to any
\ndate information, specifically including errors or interruptions from functions
\nwhich may involve date information from more than one century.<\/p>\n
5.9 Compliance with Law, Charter Documents and Agreements. DWWC is not
\nin violation or default of any provisions of its Certificate of Incorporation or
\nBylaws, and (i) has all material Permits and other authorizations necessary to
\nown its properties and assets and carry on its business as it is presently being
\nconducted and proposed to be conducted, (ii) is in compliance in all material
\nrespects with all applicable Laws of all Governmental Authorities having
\njurisdiction over <\/p>\n
19<\/p>\n
its business or properties, and all material Permits held by it, and (iii)
\nexcept as set forth in Paragraph 5.9 of the Disclosure Letter, is in compliance
\nin all material respects with all of the terms and provisions of all Contracts
\nlisted in Paragraph 5.14 of the Disclosure Letter. Paragraph 5.9 of the
\nDisclosure Letter sets forth a true and complete list of all Permits held by
\nDWWC; no other Permits are necessary for DWWC to own its properties and assets
\nand carry on its business as it is presently being conducted and proposed to be
\nconducted with such exceptions as do not individually or in the aggregate have a
\nMaterial Adverse Effect on DWWC or the Surviving Corporation. Each Permit listed
\nin Paragraph 5.9 of the Disclosure Letter is in full force and effect with such
\nexceptions as do not individually or in the aggregate have a Material Adverse
\nEffect on DWWC or the Surviving Corporation. DWWC has not received any notice or
\nother communication from any Governmental Authority (or quasi-governmental
\nauthority) regarding (a) any actual or possible violation of Law or any Permit
\nor any failure to comply with any term or requirement of any Law or Permit, or
\n(b) any actual or possible revocation, withdrawal, suspension, cancellation,
\ntermination or modification of any Permit with such exceptions as do not
\nindividually or in the aggregate have a Material Adverse Effect on DWWC or the
\nSurviving Corporation. DWWC has not been the subject of any audit by any
\nGovernmental Authority for the purpose of determining whether DWWC has complied
\nwith applicable Law<\/p>\n
5.10 Financial Statements; Books and Records.<\/p>\n
(a) Paragraph 5.10 of the Disclosure Letter contains a
\ntrue and correct copy of (i) DWWC’s unaudited financial statements (balance
\nsheet and profit and loss statement) as of December 31, 1998 and for the year
\nthen ended, and as of October 31, 1999 and for the ten-month period then ended
\n(collectively, the “Financial Statements”). Except as set forth in Paragraph
\n5.10 of the Disclosure Letter, all of the Financial Statements present in all
\nmaterial respects the financial condition and operating results of DWWC as of
\nthe dates and for the periods indicated therein. Except as set forth in DWWC’s
\nOctober 31, 1999 balance sheet (the “Balance Sheet”), DWWC has no debts,
\nliabilities or obligations of any nature, whether accrued, absolute, contingent
\nor otherwise, other than (A) debts or liabilities incurred in the ordinary
\ncourse of business subsequent to October 31, 1999 and (B) obligations under
\ncontracts and commitments incurred or to be performed in the ordinary course of
\nbusiness subsequent to October 31, 1999. DWWC is not a guarantor or indemnitor
\nof any indebtedness of any other Person.<\/p>\n
(b) The books, records and accounts of DWWC (i) are in
\nall material respects true, complete and correct, (ii) have been maintained in
\naccordance with customary business practices, and (iii) accurately and fairly
\nreflect in all material respects the basis for the Financial Statements.<\/p>\n
5.11 Title and Related Matters. DWWC owns no real property. The Balance
\nSheet reflects all of the properties and assets used by DWWC in its business,
\nexcept for (i) properties or assets acquired or disposed of in the ordinary
\ncourse of business since the date(s) thereof, and (ii) properties or assets not
\nrequired under GAAP to be reflected thereon. Except as set forth in Paragraph
\n5.11 of the Disclosure Letter, the properties and assets DWWC owns are owned by
\nDWWC free and clear of all Liens, except statutory Liens for the payment of
\ncurrent taxes that are not yet delinquent and such imperfections of title and
\nencumbrances, if any, which are not material in character, amount or extent, and
\ndo not detract from the value or interfere with the present use, of the property
\nsubject thereto or affected thereby. The properties and assets of DWWC used in
\nthe operation of its business (i) are in all material respects adequate for the
\nconduct of DWWC’s <\/p>\n
20<\/p>\n
business as currently conducted and as proposed to be conducted, and (ii) are in
\ngood condition and repair, normal wear and tear excepted. With respect to the
\nproperties and assets it leases, DWWC holds valid leasehold interests free and
\nclear of all Liens and such leases are fully effective and afford DWWC peaceful
\nand undisturbed possession of the subject matter of the lease. DWWC is not in
\nviolation of any material zoning, building, safety or environmental ordinance,
\nregulation or requirement or other Law applicable to the operation of owned or
\nleased properties, and has not received any notice of such violation with which
\nit has not complied.<\/p>\n
5.12 Employee Benefit Matters. Paragraph 5.12 of the Disclosure Letter
\ncontains a list of each of the following, if any, which is sponsored, maintained
\nor contributed to by DWWC for the benefit of its employees or agents, or under
\nwhich DWWC has any liability: (i) each “employee benefit plan”, as defined in
\nSection 3(3) of ERISA (including, but not limited to, employee benefit plans
\nwhich are not subject to the provisions of ERISA) (“Plan”), and (ii) each
\ncollective bargaining agreement, profit sharing, stock option, stock purchase,
\npension, bonus, incentive, retirement, incentive award plan or arrangement,
\nvacation policy, severance pay policy or agreement, deferred compensation
\nagreement or arrangement, consulting agreement, employment contract, medical
\nreimbursement, life insurance or other material benefit plan, agreement,
\narrangement, program, practice or understanding which is not described in clause
\n(i), above (“Benefit Program”). True, correct and complete copies or
\ndescriptions of each Plan and each Benefit Program, and related trusts and
\nagreements, if applicable, including all amendments thereto, have been furnished
\nto SportsLine. There has also been furnished to SportsLine, with respect to each
\nPlan required to file such report and description, the three most recent reports
\non Form 5500 and the summary plan description. Except as otherwise set forth in
\nParagraph 5.12 of the Disclosure Letter, (iii) DWWC neither contributes nor has
\nany obligation to contribute to, and has not at any time contributed to or had
\nan obligation to contribute to, a multiemployer plan within the meaning of
\nSection 3(37) of ERISA (“Multiemployer Plan”) or a multiple employer plan within
\nthe meaning of Section 413(b) and (c) of the Code; (iv) DWWC has substantially
\nperformed all obligations, whether arising by operation of law or by contract,
\nrequired to be performed by it before or on the Agreement Date in connection
\nwith the Plan and Benefit Programs (including without limitation the filing of
\nany required Form 5500 for any of the Plans); (v) all reports and disclosures
\nrelating to the Plans required to be filed with or furnished to Governmental
\nAuthorities, Plan participants or Plan beneficiaries have been filed or
\nfurnished in accordance with applicable Law in a timely manner, other than any
\nfailure to file or furnish such documents which would not result in a material
\nliability to DWWC or the Surviving Corporation, and each Plan and Benefit
\nProgram has been administered in substantial compliance with its governing
\ndocuments; (vi) each Plan intended to be qualified under Section 401 of the Code
\nsatisfies the requirements of such section and has received a favorable
\ndetermination letter from the Internal Revenue Service regarding such qualified
\nstatus and has not, since receipt of the most recent favorable determination
\nletter, been amended or operated in a way which could adversely affect such
\nqualified status; (vii) there are no Legal Proceedings pending (other than
\nroutine claims for benefits) or to the Knowledge of DWWC or the Principal
\nShareholders threatened against, or with respect to, any Plan or Benefit
\nPrograms or their assets which would have a Material Adverse Effect on DWWC or
\nthe Surviving Corporation; (viii) all contributions required to be made to the
\nPlans by DWWC or its Affiliates pursuant to their terms and provisions and
\napplicable Law have, in all material respects, been made timely; (ix) as to any
\nPlan subject to Title IV of ERISA, there has been no event or condition which
\npresents the material risk of Plan termination, no accumulated funding
\ndeficiency, whether or not waived, within the meaning of Section 302 of ERISA or
\nSection 412 of the Code has been incurred, no reportable event within the<\/p>\n
21<\/p>\n
meaning of Section 4043 of ERISA (for which the disclosure requirements of
\nRegulation Section 2615.3 promulgated by the Pension Benefit Guaranty
\nCorporation (“PBGC”) have not been waived) has occurred, no notice of intent to
\nterminate the Plan has been given under Section 4041 of ERISA, no proceeding has
\nbeen instituted under Section 4042 of ERISA to terminate the Plan, there has
\nbeen no termination or partial termination of the Plan within the meaning of
\nSection 411(d)(3) of the Code, no liability to the PBGC has been incurred, and
\nthe assets of the Plan equal or exceed the aggregate present value of the
\nbenefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
\nthe Plan, computed on a “plan termination basis” based upon reasonable actuarial
\nassumptions and the asset valuation principles established by the PBGC; (x) to
\nthe Knowledge of DWWC or the Principal Shareholders, none of the Plans nor any
\ntrust created thereunder or with respect thereto has engaged in any “prohibited
\ntransaction” or “party-in-interest transaction” as such terms are defined in
\nSection 4975 of the Code and Section 406 of ERISA which could subject any Plan,
\neither DWWC or the Surviving Corporation or any officer, director or employee
\nthereof to a material tax or penalty on prohibited transactions or
\nparty-in-interest transactions pursuant to Section 4975 of the Code or Section
\n502(i) of ERISA; (xi) each trust funding a Plan, which trust is intended to be
\nexempt from federal income taxation pursuant to Section 501(c)(9) of the Code,
\nsatisfies the requirements of such section and has received a favorable
\ndetermination letter from the Internal Revenue Service regarding such exempt
\nstatus and has not, since receipt of the most recent favorable determination
\nletter, been amended or operated in a way which would adversely affect such
\nexempt status; and (xii) DWWC has not incurred any liability or taken any
\naction, and no action or event has occurred that could cause DWWC to incur any
\nliability (A) under Section 412 of the Code or Title IV of ERISA with respect to
\nany “single-employer plan” within the meaning of Section 4001(a)(15) of ERISA,
\nor (B) to any Multiemployer Plan, including without limitation on account of a
\npartial or complete withdrawal within the meaning of Sections 4203 and 4205 of
\nERISA.<\/p>\n
5.13 Labor Relations. Paragraph 5.13 of the Disclosure Letter sets
\nforth a true and correct list of all employees employed by DWWC as of the
\nAgreement Date, together with their respective job titles, dates of hire,
\ncompensation and status as a full-time or part-time employee. DWWC does not pay
\nor provide any material benefits (other than wages) to part-time employees in
\nthe ordinary course of business. Except as set forth in Paragraph 5.13 of the
\nDisclosure Letter, DWWC is not a party to or bound by any agreements or
\narrangements on behalf of any officer, director or employee providing for
\nseverance payments, accelerated vesting or similar termination benefits
\nfollowing termination of their employment with DWWC or for any payment,
\naccelerated vesting or other benefits to such person contingent upon the
\nexecution of this Agreement or the Closing. There are no collective bargaining
\nagreements to which DWWC is a party. DWWC has not experienced any organized slow
\ndown, work interruption, strike or work stoppage. There are no existing or, to
\nthe best Knowledge of DWWC or the Principal Shareholder, threatened material
\nlabor disputes. Except as set forth on Paragraph 5.13 of the Disclosure Letter,
\nDWWC has in all material respects paid when due all wages, bonuses, commissions,
\ntaxes, penalties or assessments, owed to, or arising out of the employment of,
\nany officer, director or employee. DWWC is in compliance, in all material
\nrespects, with all applicable laws respecting employment and employment
\npractices, terms and conditions of employment, wages and hours, occupational
\nsafety and health, and is not engaged in any unfair labor or unfair employment
\npractices which could result in a material liability to DWWC or the Surviving
\nCorporation. There is no unfair labor practice charge or complaint or any other
\nmatter against (or to DWWC’s and the Principal Shareholders’ best Knowledge,
\ninvolving) DWWC pending or, to DWWC’s and the Principal Shareholders’ best
\nKnowledge, threatened before any Governmental Authority. There are no
\ninvestigations, administrative proceedings or formal<\/p>\n
22<\/p>\n
complaints of discrimination (including discrimination based upon sex, age,
\nmarital status, race, national origin, sexual preference, handicap or veteran
\nstatus) pending or, to DWWC’s and the Principal Shareholders’ best Knowledge,
\nthreatened before the Equal Employment Opportunity Commission or any federal,
\nstate or local agency or court against or involving DWWC. There are no
\ncitations, investigations, administrative proceedings or formal complaints of
\nviolations of local, state or federal occupational safety and health laws
\npending or, to DWWC’s and the Principal Shareholders’ best Knowledge, threatened
\nbefore the Occupational Safety and Health Review Commission or any federal,
\nstate or local agency or court against or involving DWWC. No agreement,
\narbitration or court decision or governmental order to which DWWC is a party or
\nto the Knowledge of DWWC or Principal Shareholders to which it or any of its
\nproperties or assets is bound or subject in any way limits or restricts DWWC
\nfrom relocating or closing any of its operations. DWWC is not aware that any
\nofficer or Principal Shareholder, intends to terminate their employment with
\nDWWC, and DWWC does not have a present intention to terminate the employment of
\nany of the foregoing.<\/p>\n
5.14 Contracts and Transactions. Except as set forth in Paragraph 5.14
\nof the Disclosure Letter: (a) there are no Contracts or proposed Contracts
\ninvolving amounts in excess of $5,000 to which DWWC is a party or by which it or
\nits properties or assets is subject or bound; (b) there are no Contracts,
\ntransactions or proposed transactions to which DWWC is a party or by which it or
\nits properties or assets is subject or bound involving any of DWWC’s directors,
\nofficers, shareholders or other Affiliates or Associates of DWWC or any entity
\nin which any such director, officer, shareholder or other Affiliate or
\nAssociate, or their respective Affiliates or Associates, has a direct or
\nindirect interest; (c) other than the any existing contracts with SportsLine,
\nDWWC is not a party to and is not bound by or subject to any Contract, or
\nsubject to any restriction under its Certificate of Incorporation or Bylaws,
\nthat limits or restricts DWWC from engaging in any business in any jurisdiction
\nor adversely affects its ability to carry on its business as now conducted or as
\nproposed to be conducted, its properties or its financial condition; and (d)
\nDWWC has not engaged since January 1, 1999 in any discussions or negotiations,
\nor entered into any Contract, letter of intent or other instrument (whether or
\nnot binding), with any Person other than SportsLine regarding the consolidation
\nor merger of DWWC with or into any Person, the sale, conveyance or disposition
\nof all or substantially all of the assets of DWWC or a transaction or series of
\nrelated transactions in which more than fifty percent (50%) of the voting power
\nof DWWC would be disposed of, or any other form of acquisition, liquidation,
\ndissolution or winding up of DWWC which would in any way obligate or bind
\nSportsLine or the Surviving Corporation or would result in any liability to
\nDWWC, SportsLine or the Surviving Corporation; and DWWC has suspended or
\nterminated, and has the legal right without liability to any Person to suspend
\nor terminate, all such discussions and negotiations, Contracts, letters of
\nintent or other instruments.<\/p>\n
True and complete copies of all Contracts set forth in Paragraph 5.14
\nof the Disclosure Letter, including all amendments thereto have been provided to
\nSportsLine prior to the Agreement Date. Other than any Contracts with SportsLine
\nor its Affiliates, the Contracts set forth in Paragraph 5.14 of the Disclosure
\nLetter are valid and enforceable in accordance with their respective terms with
\nrespect to DWWC and valid and, to DWWC’s and the Principal Shareholders’ best
\nKnowledge, enforceable in accordance with their respective terms with respect to
\nany other party to any such Contract, in each subject to applicable bankruptcy,
\ninsolvency and other similar laws affecting the enforceability of creditors’
\nrights generally, general equitable principles and the discretion of courts in
\ngranting equitable remedies and with such exceptions as do not individually or
\nin the aggregate have a Material Adverse Effect on DWWC or the Surviving
\nCorporation. Other than any Contracts<\/p>\n
23<\/p>\n
with SportsLine or its Affiliates, there is not under any of the Contracts set
\nforth in Paragraph 5.14 of the Disclosure Letter any existing material breach,
\ndefault or event of default by DWWC or event that with notice or lapse of time
\nor both would constitute a breach, default or event of default by DWWC, nor has
\nDWWC received notice of, or made a claim with respect to, any material breach or
\ndefault by any other party to any such Contract. Other than any Contracts with
\nSportsLine or its Affiliates, to DWWC’s and the Principal Shareholders’ best
\nKnowledge, no party to any Contract set forth in Paragraph 5.14 of the
\nDisclosure Letter intends to withdraw, cancel, modify or amend such Contract.<\/p>\n
5.15 Related Party Transactions. Except as set forth in Paragraph 5.15
\nof the Disclosure Letter, no director, officer or other Affiliate or Associate
\nof DWWC or any entity in which any such director, officer or other Affiliate or
\nAssociate, or their respective Affiliates or Associates, has any direct or
\nindirect interest in, or owns any beneficial interest in any Person (other than
\na publicly held corporation whose stock is traded on a national securities
\nexchange or in the over-the-counter market and less than 1% of the stock of
\nwhich is beneficially owned by any such persons) that has any direct or indirect
\ninterest in: (i) any property (real, personal or mixed), tangible, or
\nintangible, used or currently intended to be used in, the business or operations
\nof DWWC, or (ii) any Person that competes with DWWC.<\/p>\n
5.16 Environmental Laws. To DWWC’s and the Principal Shareholders’ best
\nKnowledge, DWWC is not in violation of any applicable Environmental Law and DWWC
\nis not and will not be required to make any expenditures to comply with any
\nEnvironmental Law.<\/p>\n
5.17 Tax Returns and Payments. Except as set forth in the Paragraph
\n5.17 of the Disclosure Letter, DWWC has timely filed all Tax Returns required by
\napplicable Law and all such Tax Return are true and correct in all material
\nrespects. The foregoing Tax Returns are not subject to penalties under Section
\n6662 of the Code, relating to accuracy-related penalties (or any corresponding
\nprovision of the state, local or foreign Tax law) or any predecessor provision
\nof law. An extension of time within which to file any Tax Return that has not
\nbeen filed has not been requested or granted.<\/p>\n
DWWC has paid all Taxes (including estimated Taxes) and other
\nassessments due on or prior to the Agreement Date, except those, if any,
\ncurrently being contested by it in good faith and which are listed in Paragraph
\n5.17 of the Disclosure Letter; and DWWC is not delinquent in the payment of any
\nTax nor delinquent in the filing of any Tax Return. Without limiting the
\ngenerality of the foregoing, DWWC has reported and duly paid state and local
\nsales and use Taxes in all states (which are listed in Paragraph 5.17 of the
\nDisclosure Letter) in which it is required to report and pay such Taxes.<\/p>\n
DWWC has not filed a consent pursuant to the provisions of Section
\n341(f) (or any corresponding provision of state, local or foreign income tax
\nlaw) or agreed to have Section 341(f)(2) of the Code (or any corresponding
\nprovision of state, local or foreign income tax law) apply to any disposition of
\nany asset owned by it.<\/p>\n
DWWC has not made any other elections pursuant to the Code (other than
\nelections that relate solely to methods of accounting, depreciation or
\namortization) other than in the ordinary course of business consistent with past
\npractices. DWWC has never had any Tax deficiency threatened, claimed, proposed
\nor assessed against it and has not executed any waiver of any statute<\/p>\n
24<\/p>\n
of limitations on or extending the period for the assessment or collection of
\nany Tax, assessment or other governmental charge. DWWC has not received any
\nnotification or other communication indicating that any issues have been raised
\n(and are currently pending) by the Internal Revenue Service or any other
\nGovernmental Authority regarding DWWC. None of DWWC’s Tax Returns has ever been
\naudited by the Internal Revenue Service or any other Governmental Authority.
\nExcept as disclosed in Paragraph 5.17 of the Disclosure Letter, DWWC has
\nwithheld or collected from each payment made to each of its employees, whether
\nin cash, stock or in kind, the amount of all Taxes (including, but not limited
\nto, federal income taxes, Federal Insurance Contribution Act taxes and Federal
\nUnemployment Tax Act taxes) required to be withheld or collected therefrom, and
\nhas paid the same to the proper Governmental Authority or authorized
\ndepositories. No material special charges, penalties, fines, liens or other
\nsimilar encumbrances have been asserted against DWWC with respect to the payment
\nor failure to pay any Taxes which have not been paid or received without further
\nliability to DWWC. DWWC has provided to SportsLine prior to the Agreement Date
\ncopies of all Tax Returns for all taxable periods ending on or after the date of
\nDWWC’s incorporation.<\/p>\n
DWWC has never been a member of an affiliated group of corporations,
\nwithin the meaning of Section 1504 of the Code. DWWC has not agreed to make nor
\nis it required to make any adjustments under Section 481(a) of the Code by
\nreason of a change in accounting method or otherwise. DWWC has not participated
\nin and will not participate in an international boycott within the meaning of
\nSection 999 of the Code. DWWC is not a party to any joint venture, partnership
\nor other arrangement or contract that could be treated as a partnership for
\nfederal income tax purposes.<\/p>\n
DWWC is, and has been since January 1, 1999, an S corporation as
\ndefined in Section 1361(a) of the Code and DWWC has delivered to SportsLine a
\ncopy of its IRS Form 2553 which was timely filed with the Internal Revenue
\nService. The Internal Revenue Service has not sent any correspondence to DWWC
\nquestioning DWWC’s status as an S corporation nor is DWWC aware of any facts
\nthat would make DWWC ineligible to be an S corporation.<\/p>\n
5.18 Notes and Accounts Receivable. Paragraph 5.18 of the Disclosure
\nLetter sets forth a true and complete list as of the Agreement Date of all notes
\nreceivable of DWWC owing by any Person, including any director, officer,
\nstockholder or employee of DWWC or any Affiliate or Associate of any such person
\n(including those notes receivable reflected on the Balance Sheet and those
\nincurred since the date of the Balance Sheet). Except as set forth in Paragraph
\n5.18 of the Disclosure Letter, all such notes receivable have been paid in full
\nprior to the Agreement Date or will be paid in full prior to the Closing Date.
\nOther than any accounts receivable from SportsLine or its Affiliates, all
\naccounts receivable of DWWC which are reflected on the Balance Sheet and those
\narising since the date thereof (i) are valid, existing and collectible in a
\nmanner consistent with DWWC’s past practice without (to DWWC’s and the Principal
\nShareholders’ best Knowledge) resort to Legal Proceedings or collection
\nagencies, (ii) arose from bona fide transactions in the ordinary course of
\nbusiness and represent amounts due for goods sold and delivered or services
\nrendered in the ordinary course of business and (iii) are payable in full in
\ncash and are not subject to any refunds or adjustments or any defenses, rights
\nof set-off, assignment, restrictions or any Liens. Except as set forth in
\nParagraph 5.18 of the Disclosure Letter and other than any accounts receivable
\nfrom SportsLine or its Affiliates, all such accounts receivable are current, and
\nthere are no disputes regarding the collectibility of any such accounts
\nreceivable. Other than any accounts receivable from SportsLine or its
\nAffiliates, the allowance for doubtful accounts set forth in the Balance Sheet
\nis<\/p>\n
25<\/p>\n
adequate from a historical perspective for the nonpayment of claims previously
\nsubmitted and for which revenues have been accrued in the Financial Statements.<\/p>\n
5.19 Notes and Loans Payable. Paragraph 5.19 of the Disclosure Letter
\nsets forth a true and complete list of all notes and loans payable and other
\nindebtedness for borrowed money other than the SportsLine Loan, excluding trade
\npayables arising in the ordinary course of business (“Debt”) owing by DWWC as of
\nthe Agreement Date, including, the Person to whom such note, loan or other
\nindebtedness is payable, the amount thereof, the interest rate and other payment
\nterms, the maturity date and a description of any collateral therefor. All Debt
\nconstituting Excess Debt (as defined in Section 3.1(b)) shall be deducted from
\nthe Stock Consideration in accordance with Section 3.1(b)(vii)(x); provided,
\nthat, if, for any reason, any such Excess Debt is not deducted in the
\ncalculation of the Stock Consideration in accordance with Section
\n3.1(b)(vii)(x), the full amount of such Excess Debt shall be recoverable by
\nSportsLine from the Escrow Fund as Damages.<\/p>\n
5.20 Insurance. Paragraph 5.20 of the Disclosure Letter sets forth a
\ntrue and complete list of all insurance policies in force naming DWWC or
\nemployees thereof as an insured or beneficiary or as a loss payable payee or for
\nwhich DWWC has paid or is obligated to pay all or part of the premiums. DWWC has
\nnot received notice of any pending or threatened cancellation or premium
\nincrease (retroactive or otherwise) with respect thereto, and DWWC is in
\ncompliance with all conditions contained therein. There are no pending claims
\nagainst such insurance by DWWC as to which insurers are defending under
\nreservation of rights or have denied liability, and there exists no material
\nclaim under such insurance that has not been properly filed by DWWC. Except for
\nthe self-insurance retentions or deductibles set forth in the policies listed on
\nParagraph 5.20 of the Disclosure Letter, DWWC believes the policies maintained
\nby DWWC are adequate in scope and amount to cover all prudent and reasonably
\nforeseeable risks which may arise in the conduct of DWWC’s business as currently
\nconducted and as proposed to be conducted.<\/p>\n
5.21 Sales and Marketing; Customer Lists.<\/p>\n
(a) Each of the DWWC Websites and all other Marketing
\nMaterials distributed by DWWC have at all times made all material disclosures to
\nusers or customers other than SportsLine or its Affiliates required by
\napplicable Law and none of such disclosures made or contained in any DWWC
\nWebsites or in any such Marketing Materials have been inaccurate, misleading or
\ndeceptive or in violation of applicable Law. DWWC has at all times been in
\ncompliance with applicable Laws relating to the privacy of users of each of the
\nDWWC Websites.<\/p>\n
(b) Except as set forth in Paragraph 5.21(b) of the Disclosure
\nLetter, DWWC maintains a true and complete lists of all customers who have
\npurchased products or service from DWWC during the past three years other than
\nSportsLine or its Affiliates (the “Customer Lists”). The use of the Customer
\nLists by DWWC does not violate the Intellectual Property rights or rights of
\npublicity or privacy of any Person, and is not in violation of any applicable
\nLaw or Order. Except as set forth in Paragraph 5.21(b) of the Disclosure Letter,
\nDWWC has not granted to any Person any rights to use the Customer Lists or any
\ninformation therein or derived therefrom.<\/p>\n
5.22 Trading in SportsLine Common Stock. Except as set forth in
\nParagraph 5.22 of the Disclosure Letter, during the six month period prior to
\nthe Agreement Date, neither DWWC nor any officer, director, Affiliate or
\nAssociate of DWWC has directly or indirectly purchased or sold (including short
\nsales) any shares of SportsLine Common Stock (or any put, call, option or
\nderivative <\/p>\n
26<\/p>\n
security or the like relating thereto) in any transactions effected on the
\nNasdaq National Market or otherwise.<\/p>\n
5.23 Director and Shareholder Approvals. The Agreement, the Transaction
\nDocuments and the Merger have been approved by the Board of Directors and
\nshareholders of DWWC in accordance with its Certificate of Incorporation and
\nBylaws and the NYBCL. True and correct copy of the resolutions approving the
\nTransaction Documents and the Merger have been furnished to SportsLine on or
\nprior to the Agreement Date. No other approval of the directors or shareholders
\nof DWWC is necessary under applicable Law for the execution, delivery or
\nperformance by DWWC of this Agreement and the Transaction Documents or the
\nconsummation by DWWC of the Merger and the other transactions contemplated
\nhereby and thereby.<\/p>\n
5.24 No Existing Discussions. Neither DWWC nor any director, officer,
\nshareholder, employee or agent of DWWC is engaged, directly or indirectly, in
\nany discussions or negotiations with any third party other than SportsLine and
\nits Affiliates relating to any Acquisition Proposal (as defined in Section 7.5).<\/p>\n
5.25 Absence of Certain Changes or Events.<\/p>\n
(a) Except as set forth in Paragraph 5.25(a) of the Disclosure
\nLetter and, since September 30, 1999, DWWC has not: (i) amended or otherwise
\nchanged its Certificate of Incorporation or Bylaws; (ii) issued, sold, pledged,
\ndisposed of or encumbered, or authorized the issuance, sale, pledge, disposition
\nor encumbrance of, any shares of its capital stock of any class or any options,
\nwarrants, convertible or exchangeable securities or other rights of any kind to
\nacquire any shares of such capital stock, or any other ownership interest, of
\nit; (iii) reclassified, combined, split, subdivided or redeemed, purchased or
\notherwise acquired, directly or indirectly, any of its capital stock; (iv)
\ndeclared, set aside, made or paid any dividend or other distribution, whether
\npayable in cash, stock, property or otherwise, with respect to any of its
\ncapital stock; (v) acquired (including, without limitation, for cash or shares
\nof stock, by merger, consolidation or acquisition of stock or assets) any
\ninterest in any corporation, partnership or other business organization or
\ndivision thereof or any assets, or made any investment either by purchase of
\nstock or securities, contributions of capital or property transfer, or purchased
\nany property or assets of any other Person; (vi) created, incurred or assumed
\nany material indebtedness for borrowed money, whether or not in the ordinary
\ncourse of business, issued any debt securities, or assumed, guaranteed, endorsed
\nor otherwise become liable or responsible (whether directly, contingently or
\notherwise) for, any material obligations of any other Person; (vii) made any
\nloans or advances to any other Person other than in the ordinary course of
\nbusiness consistent with past practice; (viii) made any capital expenditures in
\nexcess of $10,000; (ix) sold, pledged, disposed of or encumbered, or authorized
\nthe sale, pledge, disposition or encumbrance of properties or assets, tangible
\nor intangible, having a value in any single transaction in excess of $5,000, or
\nsold, licensed, assigned or transferred any DWWC IP Rights, except sales of
\ninventory in the ordinary course of business; (x) except in the ordinary course
\nof business, consistent with past practices or pursuant to the terms of a Plan
\nor Benefit Program increased the compensation payable or to become payable to
\nits officers or salaried employees, granted any severance or termination pay to,
\nor entered into any employment or severance agreement with, any of its
\ndirectors, officers or salaried personnel, or established, adopted, entered into
\nor amended any bonus, profit sharing, trust, compensation, stock option,
\nrestricted stock, pension, retirement, deferred compensation, employment,
\ntermination, severance or other plan, agreement, trust, fund, policy or
\narrangement for the benefit of any directors, officers, personnel or<\/p>\n
27<\/p>\n
employees, or taken any action to accelerate any rights or benefits thereunder;
\n(xi) changed any accounting policies or procedures or made any change in any
\naccounting methods or systems of internal accounting controls, except as may be
\nappropriate to conform to changes in GAAP; (xii) made any Tax election, other
\nthan in the ordinary course of business consistent with past practice; or (xiii)
\nagreed, in writing or otherwise, to take or authorize any of the foregoing.<\/p>\n
(b) Except as set forth in Paragraph 5.25(b) of the
\nDisclosure Letter, since January 1, 1999, there has not been with respect to
\nDWWC: (i) any material change in the business, operations, financial condition
\nor operating results of DWWC, whether or not arising in the ordinary course of
\nbusiness, which change by itself or in conjunction with all other such changes
\nhas had or would reasonably be expected to have a Material Adverse Effect on
\nDWWC; (ii) any damage, destruction or loss, whether or not covered by insurance
\nto or of the assets of DWWC which has had or would reasonably be expected to
\nhave a Material Adverse Effect on DWWC; or (iii) any other event or condition of
\nany character that, individually or in the aggregate, could reasonably be
\nexpected to have a Material Adverse Effect on DWWC.<\/p>\n
5.26 Absence of Certain Business Practices. Neither DWWC nor any
\nemployee, agent or other Person acting on DWWC’s behalf, acting alone or
\ntogether, has: (a) received, directly or indirectly, any rebates, payments,
\ncommissions, promotional allowances or any other economic benefits, regardless
\nof their nature or type, from any customer, supplier, employee or agent of any
\ncustomer or supplier, official or employee of any Governmental Authority
\n(domestic or foreign), or any political party or candidate for office (domestic
\nor foreign) or other Person; or (b) directly or indirectly, given or agreed to
\ngive any money, gift or similar benefit to any customer, supplier, employee or
\nagent of any customer or supplier, official or employee of any Governmental
\nAuthority (domestic or foreign), or any political party or candidate for office
\n(domestic or foreign), or other Person who was, is or may be in a position to
\nhelp or hinder DWWC’s business (or assist DWWC in connection with any actual or
\nproposed transaction) which (i) may subject DWWC to any damage or penalty in any
\nLegal Proceeding, (ii) if not given in the past, may have had a Material Adverse
\nEffect on DWWC or the Surviving Corporation, or (iii) if not continued in the
\nfuture, may have a Material Adverse Effect on DWWC or the Surviving Corporation.<\/p>\n
5.27 No Commissions. Other than commissions and\/or fees owing Broadview
\nInt’l LLC which will be paid by the Shareholders, neither the Principal
\nShareholders, DWWC, nor any of DWWC’s officers, directors or employees, has
\nemployed any broker or finder or incurred any liability for any financial
\nadvisory fees, brokerage fees, commissions, or finder’s fees, and no broker or
\nfinder has acted directly or indirectly for DWWC, in connection with this
\nAgreement, the Merger or any of the transactions contemplated hereby.<\/p>\n
5.28 Tax Status of the Merger. Except as set forth in Section 4.8,
\nneither SportsLine nor Acquisition Corp. has made or shall be deemed to have
\nmade any representations or warranty to DWWC or its shareholders regarding the
\ntax treatment of the Merger, or any of the tax consequences to any such
\nshareholder of this Agreement, the Merger or any of the other transactions or
\nagreements contemplated hereby. DWWC represents and warrants that it and its
\nshareholders are relying solely on their own tax advisors in connection with
\nthis Agreement, the Merger and the other transactions contemplated by this
\nAgreement.<\/p>\n
5.29 Reorganization Qualification. The aggregate cash consideration
\npaid to the Shareholders, including any cash distributions made to the
\nshareholders as part of the transaction, <\/p>\n
28<\/p>\n
will be less than 50 percent of the fair market value of the DWWC Common Stock
\noutstanding as of the Effective Time. Acquisition Corp. will acquire at least 90
\npercent of the fair market value of the net assets and at least 70 percent of
\nthe fair market value of the gross assets held by DWWC immediately prior to the
\nMerger. For purposes of this representation, (i) amounts paid by DWWC to
\nshareholders who received cash, (ii) amounts paid by DWWC to holders of stock
\noptions, (iii) assets used to pay DWWC’s reorganization expenses, and (iv) all
\nredemptions and distributions (except for regular, normal dividends) made by
\nDWWC immediately preceding the transfer, will be considered as assets of DWWC
\nheld immediately prior to the Merger.<\/p>\n
5.30 Disclosure. Neither this Agreement nor any representation,
\nwarranty or statement made in this Agreement or in the Transaction Documents
\ncontain (or will contain) any untrue statement of a material fact or omits to
\nstate (or will omit to state) a material fact necessary to make the statements
\nherein or therein not misleading.<\/p>\n
ARTICLE VI
\n CERTAIN COVENANTS OF DWWC
\n ————————-<\/p>\n
6.1 Conduct of Business by DWWC Pending the Merger. DWWC hereby
\ncovenants and agrees that, between the Agreement Date and the Effective Time,
\nDWWC shall operate its business only in the ordinary course consistent with past
\npractice and will not engage in any new line of business or enter into any new
\nContract, transaction or activity or make any commitment except in the ordinary
\ncourse of business consistent with past practice. DWWC shall use its
\ncommercially reasonable efforts to preserve intact its business organization, to
\nkeep available the services of its current officers, employees and consultants,
\nand to preserve its present relationships with customers, suppliers and other
\npersons with which it has business relations. By way of amplification and not
\nlimitation, except as contemplated by this Agreement, DWWC shall not, between
\nthe Agreement Date and the Effective Time, directly or indirectly, do or propose
\nor agree to do any of the following absent prior consultation with SportsLine
\nand receipt of SportsLine’s prior written consent:<\/p>\n
(a) (i) amend or otherwise change its Certificate of
\nIncorporation or Bylaws; (ii) issue, sell, pledge, dispose of, or encumber, or,
\nauthorize the issuance, sale, pledge, disposition, or encumbrance of any shares
\nof its capital stock of any class or any options, warrants, convertible or
\nexchangeable securities or other rights of any kind to acquire any shares of
\nsuch capital stock, or any other ownership interest, of it; (iii) reclassify,
\ncombine, split, subdivide or redeem, purchase or otherwise acquire, directly or
\nindirectly, any of its capital stock; or (iv) declare, set aside, make or pay
\nany dividend or other distribution, whether payable in cash, stock, property or
\notherwise, with respect to any of its capital stock;<\/p>\n
(b) acquire (including, without limitation, for cash or shares
\nof stock, by merger, consolidation or acquisition of stock or assets) any
\ninterest in any corporation, partnership or other business organization or
\ndivision thereof or any assets, or make any investment either by purchase of
\nstock or securities, contributions of capital or property transfer, or purchase
\nany property or assets of any other Person;<\/p>\n
(c) (i) create, incur or assume any indebtedness for
\nborrowed money, whether or not in the ordinary course of business, or issue any
\ndebt securities; (ii) assume, guarantee, endorse or otherwise become liable or
\nresponsible (whether directly, contingently or otherwise) for, the obligations
\nof any Person; (iii) make any loans or advances to any other Person other than
\nto <\/p>\n
29<\/p>\n
employees in the ordinary course of business consistent with past practice;
\nor (iv) make any capital expenditures, other than those proposed to be made in
\nany financial budgets delivered to SportsLine prior to the Agreement Date;<\/p>\n
(d) (i) sell, pledge, dispose of or encumber, or
\nauthorize the sale, pledge, disposition or encumbrance of any of its properties
\nor assets, tangible or intangible, or sell, license, assign or transfer any DWWC
\nIP Rights, except in each case in the ordinary course of business pursuant to
\nContracts set forth in Paragraph 5.14 of the Disclosure Letter; (ii) enter into
\nany new Contract other than in the ordinary course of business, consistent with
\npast practice; or (iii) amend, terminate or cancel any Contract identified in
\nParagraph 5.14 of the Disclosure Letter, or fail to perform in any material
\nrespect any of its obligations thereunder;<\/p>\n
(e) except in the ordinary course of business, consistent
\nwith past practice or pursuant to the terms of a Plan or Benefit Program, (i)
\nincrease the compensation payable or to become payable to its officers or
\nsalaried employees; (ii) grant any severance or termination pay to, or enter
\ninto any employment or severance agreement with, any of its directors, officers
\nor salaried personnel; (iii) establish, adopt, enter into or amend any bonus,
\nprofit sharing, trust, compensation, stock option, restricted stock, pension,
\nretirement, deferred compensation, employment, termination, severance or other
\nplan, agreement, trust, fund, policy or arrangement for the benefit of any
\ndirectors, officers, personnel or employees, or take any action to accelerate
\nany rights or benefits thereunder; or (iv) accelerate, amend or change the
\nperiod of exercisability or the vesting schedule of options granted under any
\nemployee stock plan or agreements or authorize cash payments in exchange for any
\noptions granted under any of such plans;<\/p>\n
(f)(i) change any accounting policies or procedures,
\nchange any annual accounting period or make any change in any accounting methods
\nor systems of internal accounting controls, except as may be appropriate to
\nconform to changes in GAAP; (ii) revalue any of its assets, including writing
\ndown the value of any assets or writing off any notes or accounts receivable;
\n(iii) make or change any Tax election, file any amended Tax Return (except as
\ndisclosed in Paragraph 5.17 of the Disclosure Letter), enter into any closing
\nagreement, settle any Tax claim or assessment, surrender any right to claim
\nrefund of Taxes, consent to any extension or waiver of the limitation period
\napplicable to any Tax claim or assessment, or take any other action or omit to
\ntake any action, if any such action or omission would have the effect of
\nincreasing the Tax liability of DWWC or SportsLine;<\/p>\n
(g) pay, discharge or satisfy any Liens, claims, debts,
\nliabilities or obligations (absolute, accrued, asserted or unasserted,
\ncontingent or otherwise), other than the payment, discharge or satisfaction in
\nthe ordinary course of business and consistent with past practice of due and
\npayable liabilities reflected or reserved against in the Financial Statements,
\nas appropriate, or liabilities incurred after the date of the Balance Sheet in
\nthe ordinary course of business and consistent with past practice;<\/p>\n
(h) increase or decrease prices charged to its customers,
\nother than in the ordinary course of business consistent with past practice, or
\nfail to use all commercially reasonable efforts to enforce any Contract or other
\nagreement with any customer or supplier, collect its accounts receivable, or pay
\nits accounts payable, in each case in the ordinary course of business consistent
\nwith past practice;<\/p>\n
30<\/p>\n
(i) enter into any Contract or transaction with or for
\nthe benefit of any of its directors, officers, shareholders, Affiliates or
\nAssociates or any entity in which any such director, officer, shareholder,
\nAffiliate or Associate, or their respective Affiliates or Associates, has a
\ndirect or indirect interest, whether or not in the ordinary course of business;
\nor<\/p>\n
(j) agree, in writing or otherwise, to take or authorize
\nany of the foregoing actions or any action which would make any representation
\nor warranty in Article V hereof untrue or incorrect in any respect.<\/p>\n
6.2 Approval of Shareholders. Prior to the Agreement Date, DWWC has
\nreceived approval from its shareholders of this Agreement, the Merger and
\nrelated matters in accordance with the NYBCL. Prior to the Closing, DWWC shall
\ndistribute to its shareholders and shall obtain from each shareholder to execute
\nsuch offeree questionnaires and\/or representation letters (“Shareholder
\nRepresentations”) as may be requested by SportsLine so as to permit compliance
\nby SportsLine with the applicable securities Laws.<\/p>\n
ARTICLE VII
\n ADDITIONAL AGREEMENTS<\/p>\n
7.1 Best Efforts; Cooperation; Further Assurances. Each of the parties
\nhereto shall use its commercially reasonable efforts to take, or cause to be
\ntaken, all appropriate actions, and to do, or cause to be done, all things
\nnecessary, proper or advisable under applicable Laws to consummate and make
\neffective the transactions contemplated herein, including, without limitation,
\n(i) cooperating with the other in the preparation and filing of all forms,
\nnotifications, reports and information, if any, required or reasonably deemed
\nadvisable pursuant to any Law or the rules of the Nasdaq National Market or any
\nother exchange on which the SportsLine Common Stock is listed, in connection
\nwith the transactions contemplated by this Agreement; (ii) using its reasonable
\nbest efforts to obtain all licenses, Permits, consents, approvals,
\nauthorizations, qualifications and orders of any Governmental Authority or other
\nPersons (including parties to Contracts with DWWC) as are necessary for the
\nconsummation of the transactions contemplated hereby; (iii) making on a prompt
\nand timely basis all governmental or regulatory notifications and filings
\nrequired to be made by it for the consummation of the transactions contemplated
\nhereby; (iv) defending all Legal Proceedings challenging this Agreement or the
\nconsummation of the transactions contemplated hereby and to lift or rescind any
\ninjunction or restraining order or other order adversely affecting the ability
\nof the parties to consummate the transactions contemplated hereby; and (v)
\nexecuting and delivering such additional instruments and other documents and
\ntaking such further actions as may be necessary or appropriate to effectuate,
\ncarry out and comply with all of the terms of this Agreement and the
\ntransactions contemplated hereby.<\/p>\n
7.2 Access to Information. From the Agreement Date to the Effective
\nTime, DWWC shall (and shall cause its directors, officers, employees, auditors,
\ncounsel and agents to) afford SportsLine and SportsLine’s officers, employees,
\nauditors, counsel and agents full and complete access during business hours to
\nall assets, properties, books, records, accounts, contracts and documents of or
\nrelating to DWWC and such other information as SportsLine may reasonably request
\nconcerning the businesses, finances and properties of DWWC and its operations.
\nNo information provided to or obtained by SportsLine either before or after the
\nAgreement Date shall limit or otherwise affect any representation or warranty in
\nthis Agreement. Until the Effective Time, <\/p>\n
31<\/p>\n
all confidential information provided pursuant to this Section 7.2 will be
\nsubject to the confidentiality agreement previously executed by SportsLine and
\nDWWC (the “Confidentiality Agreement”).<\/p>\n
7.3 Notification of Certain Matters. DWWC shall give prompt written
\nnotice to SportsLine of (i) any material change in the normal course of its
\nbusiness; (ii) the receipt by it of notice of any governmental complaints,
\ninvestigations or hearings (or communications indicating that the same may be
\ncontemplated) or the receipt by it of a notice of the institution or the threat
\nof litigation or other legal proceedings involving it; and (iii) the occurrence
\nor non-occurrence of any other event which causes, or would be reasonably likely
\nto cause, any representation or warranty of DWWC contained herein to be untrue
\nor inaccurate in any respect, or any covenant, condition or agreement of DWWC
\ncontained herein not to be complied with or satisfied in any respect.<\/p>\n
7.4 Publicity. No press release or other public announcement related to
\nthis Agreement or the transactions contemplated hereby shall be issued by any
\nparty without the prior approval of the other parties hereto, except that
\nSportsLine may make such public disclosure which it believes in good faith to be
\nrequired by applicable Law or the rules of the Nasdaq National Market (in which
\ncase SportsLine will consult with an officer of DWWC prior to making such
\ndisclosure).<\/p>\n
7.5 Exclusive Dealings; Failure by DWWC to Consummate Merger Without
\nCause. From the Agreement Date until the Effective Time, or earlier termination
\nof this Agreement as provided in Article XIV hereof, DWWC and its Affiliates and
\nAssociates shall not, nor shall DWWC authorize or permit any of its officers,
\ndirectors, employees, agents or representatives to, directly or indirectly: (i)
\nsolicit, initiate, encourage the initiation or submission by others of any
\nAcquisition Proposal (as hereinafter defined); (ii) enter into or participate in
\ndiscussions or negotiations with, respond to solicitations relating to, furnish
\nto any Person any information with respect to, or take any other action to
\nencourage or facilitate any inquiries or the making of any proposal that
\nconstitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
\nor (iii) enter into any Contract, agreement or commitment (whether or not
\nbinding) with respect to any Acquisition Proposal. For purposes of this
\nAgreement, the term “Acquisition Proposal” means any proposal with respect to a
\nsale or other disposition of all or any part of the assets, business or
\nproperties of DWWC (whether by merger, consolidation, sale of stock or assets or
\notherwise), or a purchase or other acquisition by DWWC of all or any part of the
\nassets, business or properties of any other Person (whether by merger,
\nconsolidation, sale of stock or assets or otherwise). DWWC will immediately
\nnotify SportsLine if any third party initiates any solicitation, discussion or
\nnegotiation with respect to any Acquisition Proposal.<\/p>\n
7.6 Trading in SportsLine Common Stock. From the Agreement Date until
\nthe Effective Time, neither DWWC nor any officer, director, Affiliate or
\nAssociate thereof will directly or indirectly purchase or sell (including short
\nsales) any shares of SportsLine Common Stock (or any put, call, option or
\nderivative security or the like relating thereto) in any transactions effected
\non the Nasdaq National Market or otherwise.<\/p>\n
7.7 Noncompetition and Nonsolicitation<\/p>\n
(a) Noncompetition. For a period of five years after the
\nClosing Date, each of the Principal Shareholders agrees that he shall not,
\ndirectly or indirectly, (A) acquire or own in any manner any interest or
\ninvestment in (whether as a security holder, creditor or otherwise) any Person<\/p>\n
32<\/p>\n
that directly or indirectly owns, operates, manages or distributes a business
\nthat markets, sells or otherwise distributes or participates in the distribution
\nof fantasy products, including software, services, statistical information or
\nother content (“fantasy products”), whether such fantasy business is conducted
\nby mail, telephone, an online service accessed through the Internet or
\ncommercial on-line service, other communication devices or otherwise (a “Fantasy
\nBusiness”) or otherwise engages, directly or indirectly, in a Fantasy Business,
\n(B) be employed by or serve as an employee, agent, officer, director of, or
\nconsultant to, any Person that engages, directly or indirectly, in any Fantasy
\nBusiness unless such employment or service is related solely to non-Fantasy
\nBusiness and such Shareholder provides no direct or indirect assistance to such
\nFantasy Business, (C) offer or sell fantasy products through or to the customers
\nof any of Person that owns, operates, manages or distributes fantasy products or
\notherwise engages, directly or indirectly, in any Fantasy Business, regardless
\nof whether such business is conducted by mail, telephone, an online service
\naccessed through the Internet or commercial on-line service, other communication
\ndevices or otherwise, other than a business owned, operated or managed by
\nSportsLine or its Affiliates, (D) provide fantasy products for sale to customers
\nof, or fulfillment services for such products to the owner or operator of, any
\nFantasy Business, other than to SportsLine or to an Fantasy Business owned,
\noperated, managed or distributed by SportsLine or its Affiliates, or (E)
\nadvertise or promote in any manner any Fantasy Business, other than a Fantasy
\nBusiness owned, operated, managed or distributed by SportsLine or its
\nAffiliates; provided, however, that nothing herein shall be construed to prevent
\neach of the Principal Shareholders from owning as an investment up to 1% of a
\nclass of securities issued by any competitor of SportsLine or its Affiliates
\nthat is publicly traded and registered under Section 12 of the Securities and
\nExchange Act of 1934.<\/p>\n
(b) Nonsolicitation of Employees. For a period of five
\nyears after the Closing Date, each of the Principal Shareholders agrees that he
\nshall not, directly or indirectly, for himself or for any other Person, attempt
\nto employ or enter into any employment, consulting or similar relationship or
\narrangement, directly or indirectly, with any employee or former employee of
\nDWWC or the SportsLine Companies, unless such employee or former employee has
\nnot been employed by DWWC or the SportsLine Companies, as the case may be, for a
\nperiod of more than twelve (12) months.<\/p>\n
(c) Injunction. It is recognized and hereby acknowledged
\nby the parties hereto that a breach by the Principal Shareholders of any of the
\ncovenants contained in Sections 7.7(a) and (b) of this Agreement will cause
\nirreparable harm and damage to SportsLine, the monetary amount of which may be
\nvirtually impossible to ascertain. As a result, the Principal Shareholders
\nrecognize and hereby acknowledge and agree that SportsLine shall be entitled to
\nan injunction from any court of competent jurisdiction enjoining and restraining
\nany violation of any or all of the covenants contained in Section 7.7 by the
\nPrincipal Shareholders or any of their Affiliates, Associates, partners or
\nagents, either directly or indirectly, and that such right to injunction shall
\nbe cumulative and in addition to whatever other remedies SportsLine may possess.<\/p>\n
7.8 Employment of Certain DWWC Employees Following the Effective Time,
\nJames Price, Michael Gersh, Matthew Fortnow, Peter Pezaris, Khaled Matar, David
\nHersh (the “Key Employees”) shall continue to be employed by the Surviving
\nCorporation, on the terms and conditions outlined in Schedule 7.8 hereto. Such
\nemployment shall be at will, subject to the terms, as applicable, of the
\nSeverance Letters (as defined in Section 8.11 hereof).<\/p>\n
33<\/p>\n
7.9 Termination of Existing Agreement The parties hereto agree that as
\nof the Effective Time, the July 1998 Agreement between DWWC and SportsLine and
\nall agreements entered into in connection therewith (the “1998 Agreements”)
\nshall be terminated and each party thereto hereby absolutely and forever
\nremises, releases, acquits, satisfies and discharges the other party and any and
\nall of their respective directors, officers, employees, shareholders, parent and
\nsubsidiary corporations, predecessors, successors and affiliates, of and from
\nany and all rights, claims, demands, damages, debts, liabilities, accounts,
\ncovenants, rights to indemnification, liens, attorneys’ fees, costs, expenses,
\nactions and causes of action of every kind and nature whatsoever, now known or
\nunknown, suspected or unsuspected, in law or in equity, which such party owns or
\nholds, or at any time heretofore has ever had, owned or held, or may hereafter
\nhave, own or hold, based upon, related to or arising out of such 1998
\nAgreements. The parties hereto further covenant and agree that they shall never
\ninstitute or participate in any suit or action, at law or in equity, against any
\nother party, by reason of, or based upon, the 1998 Agreements.<\/p>\n
ARTICLE VIII
\n CONDITIONS TO THE OBLIGATIONS OF THE SPORTSLINE COMPANIES
\n ———————————————————<\/p>\n
The obligations of the SportsLine Companies to effect the Merger and
\nthe other transactions contemplated hereunder shall be subject to the
\nfulfillment at or prior to the Effective Time of the following conditions, any
\nor all of which may be waived in whole or in part by SportsLine:<\/p>\n
8.1 Accuracy of Representations and Warranties and Compliance with
\nObligations. The representations and warranties of DWWC and the Principal
\nShareholders contained in this Agreement shall be true and correct in all
\nmaterial respects (except for such representations and warranties that are
\nqualified by their terms by a reference to materiality or knowledge, which
\nrepresentations and warranties shall be true and correct in all respects) at and
\nas of the Effective Time with the same force and effect as though made at and as
\nof that time except that those representations and warranties which address
\nmatters only as of a particular date shall have been true and correct as of such
\ndate. DWWC shall have performed and complied in all material respects with all
\nof its obligations required by this Agreement to be performed or complied with
\nat or prior to the Effective Time. DWWC shall have delivered to the SportsLine
\nCompanies a certificate, dated as of the Closing Date and signed by its
\nPresident, certifying that such representations and warranties are true and
\ncorrect in all material respects and that all such obligations have been
\nperformed and complied with in all material respects. In addition, each
\nPrincipal Shareholder shall have delivered to SportsLine a certificate, dated as
\nof the Effective Time, certifying that such Principal Shareholder’s
\nrepresentations and warranties are true and correct in all material respects.<\/p>\n
8.2 Corporate Matters. DWWC shall have delivered to the SportsLine
\nCompanies: (a) copies of the Certificate of Incorporation and Bylaws of DWWC as
\nin effect immediately prior to the Effective Time; (b) copies of resolutions
\nadopted by the Board of Directors and shareholders of DWWC authorizing this
\nAgreement and the consummation of the transactions contemplated hereby; and (c)
\na certificate of good standing of DWWC issued by the Secretary of State of the
\nState of New York and each other state in which DWWC is qualified to do business
\nas of a date not more than five (5) days prior to the Closing Date, certified in
\nthe case of subsections (a) and (b) of this Section 8.2 as of the Closing Date
\nby the President of DWWC as being true, correct and complete.<\/p>\n
34<\/p>\n
8.3 No Adverse Proceedings. No court or Governmental Authority or other
\nregulatory body shall have enacted, issued, promulgated, enforced or entered any
\nLaw or Order (whether temporary, preliminary or permanent) which is then in
\neffect and has the effect of making illegal, materially restricting or
\npreventing or prohibiting the Merger or the transactions contemplated by this
\nAgreement. No Legal Proceeding shall be overtly threatened or pending against
\nthe SportsLine Companies or DWWC before any court or Governmental Authority
\nwhich seeks to restrain, prohibit, invalidate or collect damages arising out of
\nthe Merger or any other transaction contemplated hereby or obtain damages or
\nother relief from any such party, in connection with this Agreement or the
\nconsummation of the transactions contemplated hereby.<\/p>\n
8.4 No Material Adverse Change. Between the Agreement Date and the
\nEffective Time, there shall have not been any Material Adverse Change with
\nrespect to DWWC.<\/p>\n
8.5 Consents and Approvals. In addition, DWWC shall have delivered to
\nSportsLine copies of (a) all consents, approvals, orders and authorizations of,
\nand all registrations, qualifications, designations, declarations or filings
\nwith, any Governmental Authority or other Persons required in connection with
\nthe execution and delivery by DWWC of this Agreement or the consummation by DWWC
\nof the transactions contemplated hereby and (b) all consents to the transactions
\ncontemplated hereby and waivers of rights to terminate or modify any Contracts,
\nrights or obligations of DWWC from any Person from whom such consent or waiver
\nis required under any Contract or instrument, or who, as a result of the
\ntransactions contemplated hereby, would have such rights to terminate or modify
\nsuch Contracts or instruments, either by the terms thereof or as a matter of
\nLaw.<\/p>\n
8.6 Resignations. SportsLine shall have received from each of the
\ndirectors and officers of DWWC a written resignation letter thereby resigning
\nfrom their corporate offices with DWWC, in form and substance satisfactory to
\nSportsLine, such resignations to be effective at the Effective Time.<\/p>\n
8.7 Private Placement. The offering and issuance of shares of
\nSportsLine Common Stock in the Merger shall be in compliance with applicable
\nfederal and state securities Laws to the satisfaction of SportsLine and its
\ncounsel, and DWWC shall have taken all steps reasonably required by SportsLine
\nto ensure such compliance. Without limiting the generality of the foregoing,
\neach Principal Shareholder shall have executed and delivered to SportsLine such
\nofferee questionnaires and\/or representation letters as may have been requested
\nby SportsLine.<\/p>\n
8.8 Releases. Each Principal Shareholder shall have delivered to
\nSportsLine a release in the form of Exhibit 8.8.<\/p>\n
8.9 Termination of Certain Agreements and Rights. DWWC shall have
\ncaused all registration rights agreements, all preemptive rights to purchase
\nshares of DWWC capital stock, all rights of first refusal, co-sale, tag-along
\nand similar rights to purchase or sell shares of DWWC capital stock, and all
\nvoting agreements and proxies applicable to or affecting any outstanding shares
\nor other securities of DWWC to be terminated and canceled by no later than
\nimmediately prior to the Effective Time; and SportsLine shall have received
\nevidence, in form and substance acceptable to SportsLine, to the effect that all
\nsuch agreements and rights have been terminated and that neither SportsLine nor
\nthe Surviving Corporation shall have any obligations thereunder.<\/p>\n
35<\/p>\n
8.10 Escrow Agreement DWWC, the Escrow Agent and the Shareholders’
\nAgent shall have entered into the Escrow Agreement in substantially the form
\nattached hereto as Exhibit 3.4.<\/p>\n
8.11 Severance Letters. Each of the Key Employees shall have
\nacknowledged and agreed to the terms of a Severance Letter in substantially the
\nform attached to this Agreement as Exhibit 8.11 and on terms acceptable to
\nSportsLine (the “Severance Letters”).<\/p>\n
8.12 SportsLine Loan. DWWC shall have repaid in full all principal,
\naccrued interest and other charges, fees or expenses owing SportsLine by DWWC
\nunder the loan from SportsLine to the DWWC in the amount of $185,000 (the
\n“SportsLine Loan”).<\/p>\n
8.13 Dissenting Shareholders. The number of Dissenting Shares (as
\ndefined in Section 3.5) shall not exceed one percent of the shares of DWWC
\nCommon Stock outstanding immediately prior to the Effective Time.<\/p>\n
ARTICLE IX
\n CONDITIONS TO THE OBLIGATIONS OF DWWC
\n ————————————-<\/p>\n
The obligations of DWWC to effect the Merger shall be subject to the
\nfulfillment at or prior to the Effective Time of the following conditions, any
\nor all of which may be waived in whole or in part by DWWC:<\/p>\n
9.1 Accuracy of Representations and Warranties and Compliance with
\nObligations. The representations and warranties of the SportsLine Companies
\ncontained in this Agreement shall be true and correct in all material respects
\n(except for such representations and warranties that are qualified by their
\nterms by a reference to materiality or knowledge, which representations and
\nwarranties shall be true and correct in all respects) at and as of the Effective
\nTime with the same force and effect as though made at and as of that time except
\nthat those representations and warranties which address matters only as of a
\nparticular date shall have been true and correct as of such date. Each of the
\nSportsLine Companies shall have performed and complied in all material respects
\nwith all of its obligations required by this Agreement to be performed or
\ncomplied with at or prior to the Effective Time. Each of the SportsLine
\nCompanies shall have delivered to DWWC a certificate, dated as of the Closing
\nDate and signed by an executive officer, certifying that such representations
\nand warranties are true and correct and that all such obligations have been
\nperformed and complied with.<\/p>\n
9.2 Corporate Matters. SportsLine shall have delivered to DWWC: (a)
\ncopies of the Certificate or Articles of Incorporation and Bylaws of each of
\nSportsLine and Acquisition Corp. as in effect immediately prior to the Effective
\nTime; (b) copies of resolutions adopted by the Board of Directors of SportsLine
\nand the Board of Directors and shareholder of Acquisition Corp. authorizing this
\nAgreement and the consummation of the transactions contemplated hereby; and (c)
\na certificate of good standing of SportsLine issued by the Secretary of State of
\nthe State of Delaware as of a date not more than five (5) days prior to the
\nClosing Date, certified in the case of subsections (a) and (b) of this Section
\n9.2 as of the Closing Date by an executive officer of SportsLine as being true,
\ncorrect and complete.<\/p>\n
9.3 No Adverse Proceedings. No court or Governmental Authority or other
\nregulatory body shall have enacted, issued, promulgated, enforced or entered any
\nLaw or Order <\/p>\n
36<\/p>\n
(whether temporary, preliminary or permanent) which is then in effect and has
\nthe effect of making illegal, or preventing or prohibiting the Merger or the
\ntransactions contemplated by this Agreement.<\/p>\n
9.4 No Material Adverse Change. Between the Agreement Date and the
\nEffective Time, there shall not have been any Material Adverse Change with
\nrespect to SportsLine, and SportsLine shall have delivered to DWWC a certificate
\nto such effect, dated as of the Closing Date and signed by an executive officer.<\/p>\n
9.5 Governmental Consents. SportsLine shall have delivered to DWWC
\ncopies of all consents, approvals, orders and authorizations of, and all
\nregistrations, qualifications, designations, declarations or filings with, any
\nGovernmental Authority required in connection with the execution and delivery by
\nSportsLine of this Agreement or the consummation by SportsLine of the
\ntransactions contemplated hereby.<\/p>\n
9.6 Escrow Agreement. SportsLine and the Escrow Agent shall have
\nentered into the Escrow Agreement in substantially the form attached hereto as
\nExhibit 3.4.<\/p>\n
9.7 Severance Letters. The Acquisition Corp. shall have delivered the
\nSeverance Letters to the Key Employees.<\/p>\n
ARTICLE X
\n CLOSING
\n ——-<\/p>\n
10.1 Closing. Unless this Agreement shall have been terminated pursuant
\nto the provision of Article XIV hereof, the closing of the transactions
\ncontemplated by this Agreement (the “Closing”) shall take place at the offices
\nof Hughes Hubbard & Reed LLP, 1 Battery Place, 12th Floor, New York, New York,
\nat 10:00 am., local time, on December 6, 1999 or, if the conditions set forth in
\nArticle VIII and IX have not been satisfied or waived on such date, no later
\nthan five (5) business days after the day on which all such conditions have been
\nsatisfied or waived. The date on which the Closing occurs is referred to as the
\n“Closing Date.” The Closing shall be deemed completed as of 12:01 a.m. on the
\nmorning of the Closing Date.<\/p>\n
10.2 Deliveries by DWWC. At or prior to the Closing, DWWC shall deliver
\n(or cause to be delivered) to SportsLine:<\/p>\n
(a) each certificate or other letter, agreement and other
\ndocument or instruments required to be delivered by DWWC to SportsLine in
\naccordance with Article VIII hereof;<\/p>\n
(b) the stock book, stock ledger and minute book of DWWC;<\/p>\n
(c) constructive possession of all originals and copies
\nof agreements, instruments, documents, deeds, books, records, files, tax returns
\nand other data and information within the possession of DWWC;<\/p>\n
(d) evidence satisfactory to SportsLine that with respect
\nto each of DWWC’s accounts, credit lines, safe deposits boxes or vaults the
\nauthority of all individuals with respect thereto has been terminated, other
\nthan those individuals designated by SportsLine in writing;<\/p>\n
37<\/p>\n
(e) the Merger Filing, duly executed by DWWC; and<\/p>\n
(f) such other documents, instruments, agreements and all
\ncertificates and other evidence as SportsLine or its counsel may reasonably
\nrequest as to the satisfaction of the conditions to SportsLine’s obligations set
\nforth herein.<\/p>\n
10.3 Deliveries by the SportsLine Companies. At or prior to the
\nClosing, the SportsLine Companies shall deliver (or cause to be delivered) to
\nDWWC:<\/p>\n
(a) each certificate or other letter, agreement and other
\ndocument or instruments required to be delivered by SportsLine to DWWC in
\naccordance with Article IX hereof;
\n (b) the Merger Filing, duly executed by Acquisition Corp.; and<\/p>\n
(c) such other documents, instruments, agreements and all
\ncertificates and other evidence as DWWC or its counsel may reasonably request as
\nto the satisfaction of the conditions to DWWC’s obligations set forth in Article
\nIX hereof.<\/p>\n
ARTICLE XI
\n COMPLIANCE WITH SECURITIES LAWS
\n ——————————-<\/p>\n
11.1 Limitation on Disposition of Shares. The shares of SportsLine
\nCommon Stock to be issued to the shareholders of DWWC pursuant to the Merger
\nhave not been registered under the Securities Act, and may not be sold,
\ntransferred or otherwise disposed of, except pursuant to an exemption from the
\nregistration requirements under the Securities Act or an effective registration
\nstatement filed by SportsLine with the SEC under the Securities Act. In
\naddition, without the prior written consent of SportsLine, the Shareholders
\nshall not, directly or indirectly, offer, sell, solicit an offer to buy, make
\nany short sale, pledge, grant any option to purchase, contract to sell, or
\notherwise dispose of or transfer any such shares of SportsLine Common Stock or,
\nin any manner, transfer all or a portion of the economic consequences associated
\nwith the ownership of such SportsLine Common Stock (including, without
\nlimitation, by way of equity swap, hedging, or any other form of derivative
\ntransaction) (any of the foregoing, a “Transfer”), in each case for a period of
\none year from the Effective Time; provided, however, that the Shareholders may
\nTransfer any of such shares of SportsLine Common Stock as a bona fide gift or to
\nany person who, at or prior to the time of such Transfer, has executed and
\ndelivered to SportsLine an agreement to the foregoing effect. SportsLine may,
\nwith respect to any such shares, cause its transfer agent to note, during the
\nabove period, stop transfer instructions with respect to such shares.<\/p>\n
11.2 Legend. All certificates representing shares of SportsLine Common
\nStock issued pursuant to the Merger shall bear the following legend:<\/p>\n
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
\n REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
\n “ACT”) AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
\n OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
\n STATEMENT FILED UNDER THE ACT, AND IN COMPLIANCE WITH
\n APPLICABLE SECURITIES LAWS OF <\/p>\n
38<\/p>\n
ANY STATE WITH RESPECT THERETO, OR IN ACCORDANCE WITH AN
\n OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
\n SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM SUCH
\n REGISTRATION IS AVAILABLE.”<\/p>\n
SportsLine may place stop transfer orders with its transfer agent with respect
\nto such certificates in accordance with federal securities laws.<\/p>\n
ARTICLE XII
\n SURVIVAL; INDEMNIFICATION AND ESCROW
\n ————————————<\/p>\n
12.1 Survival. All representations, warranties and covenants of DWWC
\nand the Principal Shareholders and the SportsLine Companies contained in this
\nAgreement will survive the Effective Time and remain operative and in full force
\nand effect, regardless of any investigation made by or on behalf of SportsLine
\nor DWWC and\/or Principal Shareholders, for one year after the Closing Date (the
\n“Release Date”); provided, that (i) if Escrow Shares and\/or the Escrow Cash are
\nretained in the Escrow Fund after the Release Date as provided in this Article
\nXII, then (notwithstanding the expiration of such time period) the
\nrepresentation, warranty, covenant or agreement applicable to such claim shall
\nsurvive until, but only for purposes of, the resolution of the claim to which
\nsuch retained Escrow Shares or Escrow Cash relate, (ii) notwithstanding the
\nforegoing, SportsLine may seek recovery of Special Damages (as defined below) as
\nprovided in this Article XII at any time prior to the expiration of the
\napplicable statute of limitations for such claim, and (iii) the representations
\nand warranties contained in Section 5.17 and 4.2 shall survive the Release Date
\nuntil the expiration of the applicable statute of limitations.<\/p>\n
12.2 Indemnification.<\/p>\n
(a) Agreement to Indemnify. Subject to the terms and
\nconditions of Article XII, the Principal Shareholders agree, and each other
\nShareholder will (to the extent of the Escrow Fund deposited in escrow pursuant
\nto Section 3.4 and the Escrow Agreement), jointly and severally indemnify and
\nhold harmless SportsLine and the Surviving Corporation and their respective
\nofficers, directors, agents, stockholders and employees, and each person, if
\nany, who controls or may control SportsLine or the Surviving Corporation within
\nthe meaning of the 1933 Act or the 1934 Act (each hereinafter referred to
\nindividually as an “Indemnified Person” and collectively as “Indemnified
\nPersons”) from and against (i) the full amount of all Excess Debt and\/or
\nTransaction Expenses that are not deducted in the calculation of the Merger<\/p>\n
Consideration in accordance with Section 3.1; (ii) any and all claims, demands,
\nsuits, actions, proceedings, investigations, audits, causes of actions, losses,
\ndamages, liabilities, costs and expenses including, without limitation,
\nreasonable attorneys’ fees, other professionals’ and experts’ fees and court or
\narbitration costs (hereinafter collectively referred to as “Damages”) (excluding
\nany Damages to the extent recovered by SportsLine or the Surviving Corporation
\nfrom any third party under any contract with such party or under any applicable
\ninsurance policy) that are directly or indirectly incurred, result from or arise
\nout of any inaccuracy, misrepresentation, breach of, or default in, any of the
\nrepresentations, warranties or covenants given or made by DWWC or the Principal
\nShareholders in this Agreement or in the Disclosure Letter or in any certificate
\ndelivered by or on behalf of DWWC or the Principal Shareholders pursuant hereto;
\nand (iii) any Special Damages. In determining the amount of any <\/p>\n
39<\/p>\n
Damage attributable to a breach, any materiality standard or knowledge
\nqualification contained in a representation, warranty or covenant of DWWC shall
\nbe disregarded.<\/p>\n
Subject to the terms and conditions of Article XII, SportsLine
\nagrees to indemnify and hold harmless the Shareholders from and against any
\nDamages (excluding any Damages to the extent recovered by a Shareholder from any
\nthird party under any contract with such party or under any applicable insurance
\npolicy) that are directly or indirectly incurred, result from or arise out of
\nany inaccuracy, misrepresentation, breach of, or default in, any of the
\nrepresentations, warranties or covenants given or made by the SportsLine
\nCompanies in the Agreement or in any certificate delivered by or on behalf of
\nthe SportsLine Companies pursuant hereto. In determining the amount of any
\nDamage attributable to a breach, any materiality standard or knowledge
\nqualification contained in a representation, warranty or covenant of the
\nSportsLine Companies shall be disregarded.<\/p>\n
(b) Time to Bring Escrow Claims. Any claim for
\nindemnification made by SportsLine or any other Indemnified Person under this
\nSection 12.2 must be raised in a writing delivered to the Escrow Agent prior to
\nthe Release Date, and, if raised by such date, such claim shall survive the
\nRelease Date until final resolution thereof; provided, that the foregoing
\nprovisions will not impose any time limitation on when SportsLine and\/or any
\nother Indemnified Person may raise a claim for indemnification (or any other
\ncause of action) to recover any Special Damages against any person or entity who
\nis a Special Damages Obligor (as defined below).<\/p>\n
(c) Limitations on Indemnity Obligations. For purposes of
\nthis Agreement: (i) other than respect to Title Special Damages, Fraud Special
\nDamages or Tax Special Damages applicable to a specific shareholder, in seeking
\nindemnification from such Shareholder (other than the Principal Shareholders),
\nSportsLine and the other Indemnified Persons will exercise their remedies solely
\nwith respect to the Escrow Fund and any other assets deposited in escrow
\npursuant to the Escrow Agreement and no Shareholder other than the Principal
\nShareholders will have any liability to an Indemnified Person under this Section
\n12.2 except to the extent of such Shareholder’s pro rata portion of the Escrow
\nFund and any other assets deposited under the Escrow Agreement; (ii) the rights
\nand remedies set forth in this Section 12.2 and in the Escrow Agreement will be
\nthe exclusive rights and remedies of SportsLine and the other Indemnified
\nPersons against any Shareholder other than the Principal Shareholders under
\nSection 12.2 of this Agreement; (iii) all claims made for indemnification by
\nSportsLine or any Indemnified Person against any Principal Shareholders, shall
\nbe first made against, and to the extent of, the Escrow Fund, (iv) other than
\nwith respect to Special Damages, no Principal Shareholder shall have any
\nliability to an Indemnified Person in excess of the aggregate amount of Merger<\/p>\n
Consideration (including any Earn Out received by or payable to such Principal
\nShareholder) for which such Principal Shareholder is entitled hereunder (“CAP”)
\nand (v) other than Special Damages, no Shareholder shall have any obligation to
\nindemnify SportsLine or any other Indemnified Person unless and until the
\naggregate amount of all Damages for which SportsLine or any Indemnified Person
\nis otherwise entitled to receive exceeds $100,000 (“Basket Amount”).<\/p>\n
12.3 Special Damages. As used herein, “Special Damages” means Damages
\n(as defined in Section 12.2) that are directly or indirectly suffered or
\nincurred by SportsLine and\/or any other Indemnified Person and result from or
\narise out of: (i) any fraudulent conduct, fraudulent misrepresentation or other
\nintentional misconduct on the part of DWWC, any officer, director, employee,
\nconsultant, or agent of DWWC or on the part of any Shareholder, that occurs on
\nor before <\/p>\n
40<\/p>\n
the Effective Time (“Fraud Special Damages”); (ii) any failure of any
\nShareholder to have (A) good, valid and marketable title to the DWWC Common
\nStock he purports to own immediately prior to the Effective Time, free and clear
\nof all Liens, or (B) the full right, capacity and authority to vote such shares
\nof DWWC Common Stock in favor of this Agreement, the Merger and\/or any other
\ntransaction or agreement contemplated by this Agreement (“Title Special
\nDamages”); (iii) any Taxes of DWWC or any Shareholder arising out of DWWC’s
\nfailure to withhold Taxes from, or properly report, compensation paid to any
\nemployee of DWWC (“Tax Special Damages”); and (iv) any claim by or on behalf of
\nScott Harger, whether in respect of his purported ownership of shares of DWWC
\nCommon Stock or otherwise (“Other Special Damages”). Notwithstanding anything to
\nthe contrary in Section 12.1, SportsLine and\/or any Indemnified Person will be
\nentitled to recover Special Damages at any time after the Effective Time and
\nprior to the expiration of the applicable statute of limitations on such claim
\nfor such Special Damages from: (x) the respective Shareholder, in the case of
\n(1) Fraud Special Damages arising from any fraudulent conduct, fraudulent
\nmisrepresentation or other intentional misconduct on the part of such
\nShareholder, (2) Tax Special Damages arising from failure to withhold Taxes
\nfrom, or properly report, compensation paid to such Shareholder; and\/or (3)
\nTitle Special Damages arising from such Shareholder failing to have (1) good,
\nvalid and marketable title to any DWWC Shares he purports to own immediately
\nprior to the Effective Time, free and clear of all Liens, or (2) the full right,
\ncapacity and authority to vote such DWWC Shares stock in favor of this
\nAgreement, the Merger and\/or any other transaction or agreement contemplated by
\nthis Agreement,; and\/or (y) any Principal Shareholder, in the case of (1) Fraud
\nSpecial Damages, (2) Title Special Damages, (3) Tax Special Damages, and\/or (4)
\nOther Special Damages.<\/p>\n
12.4 Escrow Period; Release of Escrow Fund.<\/p>\n
(a) The Escrow Shares and Escrow Cash shall be held in
\nescrow for the period commencing on the Effective Time and terminating on the
\nRelease Date (the “Escrow Period”), provided, that a portion of the Escrow Fund
\nthat, in the reasonable judgment of SportsLine, subject to the objection of the
\nShareholders’ Agent and the subsequent resolution of the matter in the manner
\nprovided in Section 12.7, is necessary to satisfy any unsatisfied claims
\nspecified in any Officer’s Certificate theretofore delivered to the Escrow Agent
\nand the Shareholders’ Agent prior to termination of the Escrow Period with
\nrespect to Damages incurred or claims made prior to expiration of the Escrow
\nPeriod, shall remain in the Escrow Fund until such claims have been finally
\nresolved.<\/p>\n
(b) Within three (3) business days after the Release Date, the Escrow
\nAgent shall release from escrow to each Shareholder his pro-rata portion of the
\nEscrow Fund including interest thereon, less with respect to each such
\nShareholder an aggregate amount of Escrow Cash and Escrow Shares with a value
\n(as determined pursuant to Section 12.5) equal to (i) such shareholder’s pro
\nrata portion of any disbursement from the Escrow Fund delivered to SportsLine in
\nsatisfaction of claims and (ii) such shareholder’s pro rata portion of any
\nliability subject to delivery to SportsLine in accordance with Section 12.3(a)
\nwith respect to any pending but unresolved claims. Any Escrow Cash or Escrow
\nShares held as a result of clause (ii) shall be released to the Shareholders or
\nreleased to SportsLine (as appropriate) promptly upon resolution of each
\nspecific claim involved, in proportion to their contribution of the foregoing to
\nthe Escrow Fund. No fractional shares shall be released and delivered from the
\nEscrow Fund to the Shareholders, and in lieu of any fraction of an Escrow Share
\nto which a Shareholder would otherwise be entitled, such holder will receive
\nfrom SportsLine an amount of cash determined in accordance with Section 3.6(b)
\nhereof.<\/p>\n
41<\/p>\n
(c) No Escrow Shares or any beneficial interest therein may be pledged,
\nsold, assigned or transferred, including by operation of law, by any Shareholder
\nor be taken or reached by any legal or equitable process in satisfaction of any
\ndebt or other liability of any such shareholder, prior to the delivery to such
\nshareholder of the portion of the Escrow Fund contributed on such shareholder’s
\nbehalf by the Escrow Agent as provided herein.<\/p>\n
(d) The Escrow Agent is hereby granted the power to effect any transfer
\nof Escrow Shares contemplated by this Agreement. SportsLine will cooperate with
\nthe Escrow Agent in promptly issuing stock certificates to effect such
\ntransfers.<\/p>\n
12.5 Claims Upon the Escrow Fund. Upon receipt by the Escrow Agent on
\nor before the last day of the Escrow Period of a certificate signed by an
\nexecutive officer of SportsLine (an “Officer’s Certificate”): (i) stating that
\nSportsLine or another Indemnified Person is entitled to Damages and (ii)
\nspecifying in reasonable detail the amount of such Damages (or an estimate
\nthereof, in each case to the extent known or determinable at such time), the
\nindividual items of such Damages included in the amount so stated, the date each
\nsuch item was paid or properly accrued or arose, and the nature of the
\nmisrepresentation, breach or claim to which such item is related, the Escrow
\nAgent shall, subject to the provisions of this Article XII, deliver to
\nSportsLine out of the Escrow Fund, as promptly as practicable, Escrow Shares
\nand\/or Escrow Cash (at SportsLine’s election) having a value equal to such
\nDamages. For the purpose of compensating SportsLine or an Indemnified Person for
\nits Damages pursuant to this Agreement, the Escrow Shares shall be valued at the
\nReference Price (in accordance with clause (i) of the definition thereof). To
\nthe extent the Escrow Fund is insufficient to satisfy any indemnification
\nclaims, the amount of the claim shall be deducted from any unpaid installment of
\nthe Earn Out to be paid to the Shareholders pursuant to Section 3.3 and shall be
\ndelivered to the Escrow Agent and held in escrow under the provisions of this
\nAgreement and the Escrow Agreement (or under a similar arrangement with another
\nescrow agent) and SportsLine shall have no obligation to pay such amount to the
\nShareholders as Merger Consideration pending resolution of such claim under the
\nprovisions hereof and the Escrow Agreement (or such other arrangement).<\/p>\n
12.6 Objections to Claims. At the time of delivery of any Officer’s
\nCertificate to the Escrow Agent, a duplicate copy of such Officer’s Certificate
\nshall be delivered to the Shareholders’ Agent and, except with respect to
\nDamages related to Excess Debt or Transaction Expenses, for a period of twenty
\n(20) days after such delivery, the Escrow Agent shall make no delivery of Escrow
\nShares and\/or Escrow Cash pursuant to Section 12.5 unless the Escrow Agent shall
\nhave received written authorization from the Shareholders’ Agent to make such
\ndelivery. Promptly after the receipt of an Officer’s Certificate with respect to
\nExcess Debt or Transaction Expenses, which shall be conspicuously noted on the
\nOfficers’ Certificate, and, in all other cases, immediately after the expiration
\nof such twenty (20) day period, the Escrow Agent shall make delivery of Escrow
\nShares and\/or Escrow Cash in accordance with Section 12.5; provided, that no
\nsuch delivery may be made if the Shareholders’ Agent has objected to the claim
\nmade in the Officer’s Certificate in a written statement delivered to the Escrow
\nAgent and to SportsLine prior to the expiration of such twenty (20) day period.<\/p>\n
12.7 Resolution of Conflicts.<\/p>\n
(a) If the Shareholders’ Agent timely objects in writing
\nto any claim or claims by SportsLine made in an Officer’s Certificate,
\nSportsLine shall have twenty (20) days to respond in a <\/p>\n
42<\/p>\n
written statement to the objection of the Shareholders’ Agent. If after such
\ntwenty (20) day period there remains a dispute as to any claims, the
\nShareholders’ Agent and SportsLine shall attempt in good faith for sixty (60)
\ndays to agree upon the rights of the respective parties with respect to each of
\nsuch claims (the “Negotiation Period”). If the Shareholders’ Agent and
\nSportsLine should so agree, a memorandum setting forth such agreement shall be
\nprepared and signed by both parties and shall be furnished to the Escrow Agent.
\nThe Escrow Agent shall be entitled to rely on any such memorandum and shall
\ndistribute the Escrow Shares and\/or Escrow Cash from the Escrow Fund in
\naccordance with the terms of the memorandum.<\/p>\n
(b) If after the Negotiation Period there remains a
\ndispute as to any claim, then either party may seek appropriate remedies in a
\ncourt of law. During such time, the Escrow Agent shall continue to hold the
\nEscrow Fund until one party produces a final nonappealable Order from a
\nGovernmental Authority of competent jurisdiction stating to whom the Escrow Fund
\nshould be released and delivered. The Order shall be binding and conclusive upon
\nthe parties to this Agreement, and the Escrow Agent shall be entitled to act in
\naccordance with such decision and make or withhold payments out of the Escrow
\nFund in accordance therewith.<\/p>\n
12.8 Shareholders’ Agent.<\/p>\n
(a) Mr. Peter Pezaris shall be constituted and appointed
\nas agent (the “Shareholders’ Agent”) for and on behalf of the Shareholders to
\ngive and receive notices and communications, to authorize delivery to SportsLine
\nof Escrow Shares, Escrow Cash or other property from the Escrow Fund in
\nsatisfaction of indemnification claims, to object to such deliveries, to agree
\nto, negotiate, enter into settlements and compromises of, and demand arbitration
\nand comply with orders of courts and awards of arbitrators with respect to such
\nclaims, and to take all actions necessary or appropriate in the judgment of the
\nShareholders’ Agent for the accomplishment of the foregoing. Such agency may be
\nchanged by the holders of a majority in the Escrow Shares upon not less than ten
\n(10) days’ prior written notice to SportsLine and the Escrow Agent. No bond
\nshall be required of the Shareholders’ Agent. Notices or communications to or
\nfrom the Shareholders’ Agent shall constitute notice to or from each of the
\nShareholders.<\/p>\n
(b) The Shareholders’ Agent shall not be liable for any
\nact done or omitted hereunder as Shareholders’ Agent while acting in good faith
\nand in the exercise of reasonable judgment, and any act done or omitted pursuant
\nto the advice of counsel shall be conclusive evidence of such good faith. The
\nShareholders shall severally indemnify the Shareholders’ Agent and hold him
\nharmless against any loss, liability or expense incurred without gross
\nnegligence or bad faith on the part of the Shareholders’ Agent and arising out
\nof or in connection with the acceptance or administration of his duties
\nhereunder.<\/p>\n
(c) The Shareholders’ Agent shall have reasonable access
\nto information about SportsLine and the reasonable assistance of SportsLine’s
\nand the Surviving Corporation’s officers and employees for purposes of
\nperforming his duties and exercising his rights hereunder; provided, that the
\nShareholders’ Agent shall treat confidentially and not disclose any nonpublic
\ninformation from or about SportsLine or the Surviving Corporation to anyone
\n(except in accordance with Section 15.11).<\/p>\n
(d) A decision, act, consent or instruction of the
\nShareholders’ Agent shall constitute a decision of all of the Shareholders for
\nwhom the Escrow Fund is held and shall be final, <\/p>\n
43<\/p>\n
binding and conclusive upon each such Shareholder, and the Escrow Agent,
\nSportsLine and the Surviving Corporation may rely upon any decision, act,
\nconsent or instruction of the Shareholders’ Agent as being the decision, act,
\nconsent or instruction of each and every such Shareholder. The Escrow Agent,
\nSportsLine and the Surviving Corporation are hereby relieved from any liability
\nto any person for any acts done by them in accordance with such decision, act,
\nconsent or instruction of the Shareholders’ Agent.<\/p>\n
(e) The Shareholders’ Agent shall receive no compensation for
\nhis services; provided, that all reasonable out-of-pocket expenses of the
\nShareholders’ Agent (“Agent Expenses”) shall be paid by the Shareholders.<\/p>\n
12.9 Third Party Claims.<\/p>\n
(a) In the event SportsLine or any of the Shareholders become
\naware of a third-party claim which it believes may result in a claim for
\nindemnification, such party shall then promptly notify the indemnifying party of
\nsuch claim, and the indemnifying party (acting through the Shareholders’ Agent
\nin the case of the Shareholders) shall notify the other party of such claim, and
\nthe indemnifying party shall have the right to assume control of the defense of,
\nsettle, or otherwise dispose of such third-party action on such terms as they
\ndeem appropriate; provided, however, that:<\/p>\n
(i) the respective Shareholder or the Indemnified
\n Person, as applicable, shall be entitled, at its own expense, to
\n participate in the defense of such third-party action;<\/p>\n
(ii) SportsLine or the indemnifying Shareholder(s),
\n as applicable, shall obtain the prior written approval of the other
\n party, not to be unreasonably withheld, before entering into or making
\n any settlement, compromise, admission, or acknowledgment of the
\n validity of such third-party action or any liability in respect thereof
\n if, pursuant to or as a result of such settlement, compromise,
\n admission, or acknowledgment, injunctive or other equitable relief
\n would be imposed against any Indemnified Person or the indemnifying
\n Shareholder(s), as applicable;<\/p>\n
(iii) SportsLine or the indemnifying Shareholder(s),
\n as applicable, shall not consent to the entry of any judgment or enter
\n into any settlement that does not include as an unconditional term
\n thereof the giving by each claimant or plaintiff to each Indemnified
\n Person or each indemnified Shareholder(s), as applicable, of a release
\n from all liability in respect of such third-party action; and<\/p>\n
(iv) SportsLine or the indemnifying Shareholder(s),
\n as applicable, shall not be entitled to control (but shall be entitled
\n to participate at its own expense in the defense of), and the
\n respective indemnified party shall be entitled to have sole control
\n over, the defense or settlement, compromise, admission, or
\n acknowledgment of any third-party action (vv) as to which the
\n indemnifying party fails to assume the defense within a reasonable
\n length of time or (vivi) to the extent the third-party action seeks an
\n Order against an indemnified party which, if successful, could provide
\n for injunctive or other equitable judgments against such indemnified
\n party; provided, however, that no indemnified person shall make a
\n settlement, compromise, admission, or acknowledgment which would give
\n rise to liability on <\/p>\n
44<\/p>\n
the part of any indemnifying party without the prior written consent
\n of such indemnifying party, not to be unreasonable withheld.<\/p>\n
(b) SportsLine or the indemnifying Shareholder(s), as
\napplicable, shall make payments of all amounts required to be made pursuant to
\nthe foregoing provisions of this Section to or for the account of the
\nindemnified party from time to time promptly upon receipt of bills or invoices
\nrelating thereto or when otherwise due and payable, provided that the
\nindemnified party has agreed in writing to reimburse the indemnifying party for
\nthe full amount of payments if such indemnified party is ultimately determined
\nnot to be entitled to indemnification.<\/p>\n
(c) The parties hereto shall extend reasonable
\ncooperation in connection with the defense of any third-party action pursuant to
\nthis Article and, in connection therewith, shall furnish such records,
\ninformation, and testimony and attend such conferences, discovery proceedings,
\nhearings, trials, and appeals as may be reasonably requested.<\/p>\n
(d) In the event that the Shareholders have consented to
\nany settlement, the Shareholders shall not have the right to object to the
\namount of any claim by SportsLine against the Escrow Fund for indemnity with
\nrespect to such settlement, unless such claim is in an amount in excess of any
\namount consented to by the Shareholders.<\/p>\n
(e) If at any time subsequent to the receipt by an
\nindemnified party of an indemnity payment hereunder, such indemnified party (or
\nan Affiliate thereof) receives any recovery, settlement or other similar payment
\nwith respect to the Damages for which it received such indemnity payment (the
\n“Recovery”), such indemnified party shall promptly pay to the indemnifying party
\n(or its Affiliates) in connection with such Recovery, but in no event shall any
\nsuch payment exceed the amount of such indemnity payment and the indemnifying
\nparty shall not be entitled to receive any amount paid to the Indemnified Person
\nas payment for the Basket Amount or losses above the Cap.<\/p>\n
(f) The rights and remedies of SportsLine and the
\nShareholders under this Section 12.2 are exclusive and in lieu of any and all
\nother rights and remedies which SportsLine or the Shareholders, as the case may
\nbe, may have against the other under this Agreement or otherwise, (i) with
\nrespect to (x) the inaccuracy of any representation, warranty, certification or
\nother statement made (or deemed made) by SportsLine or DWWC and the Principal
\nShareholders in or pursuant to this Agreement or the Disclosure Letter or (y)
\nany breach of or failure to perform or comply with, any covenant or agreement
\nset forth in this Agreement or (ii) otherwise with respect to the transaction
\ncontemplated by this Agreement. All claims for indemnification must be asserted,
\nif at all, in good faith and in accordance with the provisions of this Section
\n12.2.<\/p>\n
(g) Notwithstanding the foregoing, with respect to any
\nthird-party claim for Tax, the Shareholders shall have the sole right to control
\nthe defense of, settle, or otherwise dispose of such third-party action on such
\nterms as they deem appropriate; provided, however, that if such claim involves
\nTaxes the determination of which could reasonably be expected to affect the
\nIndemnified Persons’ liability for non-indemnified Taxes, the Indemnified
\nPersons shall be entitled, at their expense, to participate in the defense of
\nsuch third-party action.<\/p>\n
45<\/p>\n
ARTICLE XIII
\n DEFINITIONS
\n ———–<\/p>\n
13.1 Defined Terms. As used herein, the following terms shall have the
\nfollowing meanings:<\/p>\n
“Affiliate” shall have the meaning ascribed to it in Rule 12b-2 of the
\n General Rules and Regulations under the Exchange Act, as in effect on
\n the Agreement Date.<\/p>\n
“Associate” shall have the meaning ascribed to it in Rule 12b-2 of the
\n General Rules and Regulations under the Exchange Act, as in effect on
\n the Agreement Date.<\/p>\n
“Code” shall mean the Internal Revenue Code of 1986, as amended, and
\n the regulations thereunder.<\/p>\n
“Contract” means any contract, agreement, lease, note, mortgage, bond,
\n indenture, loan or credit agreement, deed, franchise, covenant,
\n license, commitment, undertaking, obligation or understanding, whether
\n written or oral, express or implied. The term Contract shall not
\n include a Plan or Benefit Program or any Agreement with SportsLine or
\n its Affiliates.<\/p>\n
“Disclosure Letter” means the letter dated the Agreement Date from DWWC
\n and the Principal Shareholders to SportsLine setting forth, among other
\n things, items the disclosure of which is necessary or appropriate
\n either in response to an express disclosure requirement contained in
\n this Agreement or as an exception to one or more of DWWC’s or the
\n Principal Shareholders’ representations, warranties or covenants
\n contained in this Agreement.<\/p>\n
“DWWC Websites” means all websites or other sites accessed via the
\n Internet or any other electronic network, including without limitation
\n any cable-based network or private network, that are owned or operated
\n by DWWC (either alone or jointly with others), either as of the
\n Agreement Date or in the past, including without limitation the
\n website(s) currently accessible at the following URL addresses:
\n http:\/\/www.commissioner.com; comissioner.com; commisioner.com;
\n basketballstats.com; footballstats.com; nbastats.com;
\n rotisseriebaseball.com; vsports.com; 4dining.com; commissioner.net;
\n daedalusww.com; decanter.com (pending transfer to new owner); dwwc.com;
\n mycommissioner.com; mycommisioner; mycomissioner; myfantasyleagues.com;
\n and officepoolmanager.com.<\/p>\n
“Environmental Law” shall mean any Law, Order, consent decree,
\n settlement agreement or governmental requirement, which relates to or
\n otherwise imposes liability or standards of conduct concerning mining
\n or reclamation of mined land, discharges, emissions, releases or
\n threatened releases of noises, odors or any pollutants, contaminants or
\n hazardous or toxic wastes, substances or materials, whether as matter
\n or energy, into ambient air, water, or land, or otherwise relating to
\n the manufacture, processing, generation, distribution, use, treatment,
\n storage, disposal, cleanup, transport or handling of pollutants,
\n contaminants, or hazardous wastes, substances or materials, including
\n (but not limited to) the Comprehensive Environmental Response,
\n Compensation and Liability Act of 1980, the Superfund Amendments and
\n Reauthorization Act of 1986, as amended, the Resource Conservation and<\/p>\n
46<\/p>\n
Recovery Act of 1976, as amended, the Toxic Substances Control Act of
\n 1976, as amended, the Federal Water Pollution Control Act Amendments of
\n 1972, the Clean Water Act of 1977, as amended, any so called
\n “Superlien” law, and any other similar Federal, state or local
\n statutes.<\/p>\n
“ERISA” shall mean the Employee Retirement Income Security Act of 1974,
\n as amended.<\/p>\n
“Exchange Act” means the Securities Exchange Act of 1934, as amended.<\/p>\n
“GAAP” means generally accepted accounting principles in effect in the
\n United States of America from time to time.<\/p>\n
“Governmental Authority” means any governmental, regulatory or
\n administrative body, agency, commission, board, arbitrator or
\n authority, any court or judicial authority, any public, private or
\n industry regulatory authority, whether international, national,
\n federal, state or local, and any entity or official exercising
\n executive, legislative, judicial, regulatory or administrative
\n functions of or pertaining to any Laws.<\/p>\n
“Knowledge” means the actual knowledge of a person or its executive
\n officers and directors.<\/p>\n
“Law” means and includes (i) any statute, decree, constitution, rule,
\n regulation, ordinance, code, requirement, announcement, order,
\n judgment, directive or other binding action of or by a any Governmental
\n Authority; (ii) any treaty, pact, compact or other agreement to which
\n any Governmental Authority is a signatory or party; (iii) any judicial
\n or administrative interpretation of application of any Law described in
\n (i) or (ii) above; and (iv) any amendment or revision of any Law
\n described in (i), (ii) or (iii) above.<\/p>\n
“Legal Proceeding” means any action, claim, lawsuit, litigation,
\n demand, suit, inquiry, hearing, investigation, indictment, information,
\n notice of a violation, arbitration, appeal or other dispute or legal
\n proceeding, whether civil, criminal, administrative or otherwise.<\/p>\n
“Lien” means any mortgage, pledge, security interest, encumbrance, lien
\n or charge of any kind (including, but not limited to, any conditional
\n sale or other title retention agreement, any lease in the nature
\n thereof, and the filing of or agreement to give any financing statement
\n under the Uniform Commercial Code or comparable Law of any jurisdiction
\n in connection with such mortgage, pledge, security interest,
\n encumbrance, lien or charge).<\/p>\n
“Marketing Materials” means all catalogs, brochures, specifications
\n sheets, sales literature, and other sales and promotional materials,
\n including any advertisements in any media.<\/p>\n
“Material Adverse Effect”, when used with reference to any entity or
\n group of entities, means any event, change or effect that is (or will
\n with the passage of time be), individually or in the aggregate, with
\n other events, changes or effects, materially adverse to the financial
\n condition, operations or business of such entity and its subsidiaries,
\n taken as a whole, other than: (a) a change arising or resulting,
\n directly or indirectly, from conditions affecting the Internet or
\n electronic commerce industry as a whole or the U.S. economy as a whole;
\n or (b) a change that is proximately caused by the public announcement
\n of, and the response or reaction of customers, vendors, licensors,
\n investors or employees of such entity or group of entities to, this
\n Agreement, the Merger or any of the transactions contemplated by this
\n Agreement to the extent so attributable, or (c) a change arising from
\n an act or omission of <\/p>\n
47<\/p>\n
another party to this Agreement (or an affiliate of such party) and not
\n from an act or omission of such entity or group of entities undergoing
\n the change; provided, that with respect to SportsLine, neither (x) a
\n reduction in the market price or trading volume of the SportsLine
\n Common Stock, (y) a failure by SportsLine to meet the revenue or
\n earnings predictions of analysts, any other revenue or earnings
\n predictions or expectations, for any period ending (or for which
\n earnings are released) on or after the Agreement Date and prior to the
\n Closing Date, nor (z) any seasonal reduction in SportsLine’s revenues
\n or earnings that is consistent with SportsLine’s past operating history
\n shall, in and of itself, or taken together, constitute a Material
\n Adverse Effect with respect to SportsLine.<\/p>\n
“Material Adverse Change” when used with reference to any entity or
\n group of entities, a material adverse change in or to the financial
\n condition, operations or business of such entity and its subsidiaries,
\n taken as a whole, other than: (a) a change arising or resulting,
\n directly or indirectly, from conditions affecting the Internet or
\n electronic commerce industry as a whole or the U.S. economy as a whole;
\n or (b) a change that is proximately caused by the public announcement
\n of, and the response or reaction of customers, vendors, licensors,
\n investors or employees of such entity or group of entities to, this
\n Agreement, the Merger or any of the transactions contemplated by this
\n Agreement to the extent so attributable, or (c) a change arising from
\n an act or omission of another party to this Agreement (or an affiliate
\n of such party) and not from an act or omission of such entity or group
\n of entities undergoing the change; provided, that with respect to
\n SportsLine, neither (x) a reduction in the market price or trading
\n volume of the SportsLine Common Stock, (y) a failure by SportsLine to
\n meet the revenue or earnings predictions of analysts, any other revenue
\n or earnings predictions or expectations, for any period ending (or for
\n which earnings are released) on or after the Agreement Date and prior
\n to the Closing Date, nor (z) any seasonal reduction in SportsLine’s
\n revenues or earnings that is consistent with SportsLine’s past
\n operating history shall, in and of itself, or taken together,
\n constitute a Material Adverse Change with respect to SportsLine.<\/p>\n
“Order” means any order, writ, judgment, injunction, decree or ruling
\n of or by a Governmental Authority.<\/p>\n
“Permit” means any permit, license, registration, authorization,
\n certificate, order or approval of or from any Governmental Authority or
\n other Person (including without limitation those relating to the
\n occupancy or use of owned or leased real property).<\/p>\n
“Person” means an individual, partnership, corporation, business trust,
\n joint stock company, estate, trust, unincorporated association, joint
\n venture, Governmental Authority or other entity, of whatever nature.<\/p>\n
“SEC” means the Securities and Exchange Commission.<\/p>\n
“Securities Act” means the Securities Act of 1933, as amended.<\/p>\n
“Taxes” means all taxes, fees or other assessments, including, but not
\n limited to, income, excise, property, sales, franchise, intangible,
\n withholding, social security and unemployment taxes imposed by any
\n federal, state, local or foreign governmental agency, and any interest
\n or penalties related thereto.<\/p>\n
48<\/p>\n
“Tax Returns” means federal, state, foreign and local tax reports,
\n returns, information returns and other Tax filings.<\/p>\n
“Transaction Documents” means all documents, certificates and
\n agreements required to be delivered by any party under this Agreement,
\n including the Merger Filing, the Escrow Agreement and the Severance
\n Letterss.<\/p>\n
13.2 Other Definitional Provisions.<\/p>\n
(a) All terms defined in this Agreement shall have the
\ndefined meanings when used in any certificates, reports or other documents made
\nor delivered pursuant hereto or thereto, unless the context otherwise requires.<\/p>\n
(b) Terms defined in the singular shall have a comparable
\nmeaning when used in the plural, and vice versa.<\/p>\n
(c) Unless otherwise expressly indicated herein and
\nexcept with respect to DWWC Financial Statements, all matters of an accounting
\nnature in connection with this Agreement and the transactions contemplated
\nhereby shall be determined in accordance with GAAP applied on a basis consistent
\nwith prior periods, where applicable.<\/p>\n
(d) As used herein, the neuter gender shall also denote the
\nmasculine and feminine, and the masculine gender shall also denote the neuter
\nand feminine, where the context so permits.<\/p>\n
ARTICLE XIV
\n TERMINATION
\n ———–<\/p>\n
14.1 Termination. This Agreement may be terminated at any time prior to
\nthe Effective Time:<\/p>\n
(a) by mutual written consent of SportsLine and DWWC at any
\ntime prior to the Closing; or<\/p>\n
(b) by either SportsLine or DWWC, if the Closing does not
\noccur by December 31, 1999; or<\/p>\n
(c) by either SportsLine or DWWC, in the event of (i) a
\nmaterial breach by the other party of any representation or warranty contained
\nthis Agreement, which breach cannot be or has not been cured within five (5)
\ndays after the giving of written notice to the breaching party of such breach
\nand which breach or breaches would result in a failure to satisfy any condition
\nto SportsLine’s or DWWC’s obligations set forth in Article VIII or IX,
\nrespectively; or (ii) a material breach by the other party of any of the
\ncovenants or agreements contained in this Agreement, which breach cannot be or
\nhas not been cured within five (5) days after the giving of written notice to
\nthe breaching party of such breach; provided that the non-breaching party
\nprovides the breaching party with a written notice of termination within five
\n(5) days after the earlier of the expiration of such 5-<\/p>\n
49<\/p>\n
day period or the date it receives a written notice from the breaching party
\nstating that it is unable or unwilling to cure such breach;<\/p>\n
(d) by either SportsLine or DWWC, if (i) there shall be a
\nfinal nonappealable Order of a federal or state court restraining or prohibiting
\nthe consummation of the Merger, or (ii) there shall be any action taken, or any
\nstatute, rule regulation or order enacted, promulgated or issued or deemed
\napplicable to the Merger by any governmental authority, which would make the
\nconsummation of the Merger illegal; or<\/p>\n
(e) by SportsLine immediately following a breach by DWWC of
\nthe provisions of Section 7.5.<\/p>\n
14.2 Effect of Termination. In the event of termination of this
\nAgreement pursuant to Section 14.1, written notice thereof shall promptly be
\ngiven to the other party hereto, and upon such notice this Agreement shall
\nterminate. Except as provided below or elsewhere in this Agreement, in the event
\nof the termination of this Agreement pursuant to Section 14.1, this Agreement
\nshall forthwith become void and of no further force and effect, there shall be
\nno liability on the part of the SportsLine Companies or DWWC or any of their
\nrespective officers or directors to the other, all rights and obligations of any
\nparty hereto shall cease and the parties shall be released from any and all
\nobligations. Notwithstanding the foregoing, (i) if (A) SportsLine or DWWC
\nterminates this Agreement in accordance with Section 14.1(b) and at the time of
\nsuch termination DWWC has not satisfied all of the conditions precedent to
\nSportsLine’s obligations set forth in Article VIII hereof, or (B) SportsLine
\nterminates this Agreement in accordance with Section 14.1(c) or (e), then, in
\neither such case, DWWC shall pay to SportsLine an amount equal to SportsLine’s
\ndocumented costs and expenses incurred prior to or after the Agreement Date in
\nconnection with the execution, delivery and performance of this Agreement and
\nany investigation, negotiation and structuring of the transactions contemplated
\nhereby (including, without limitation, legal, accounting, consulting and
\nfinancial advisory fees; or (ii) if (A) SportsLine or DWWC terminates this
\nAgreement in accordance with Section 14.1(b) and at the time of such termination
\nSportsLine has not satisfied all of the conditions precedent to DWWC’s
\nobligations set forth in Article IX hereof, or (B) DWWC terminates this
\nAgreement in accordance with Section 14.1(c), then, in either such case,
\nSportsLine shall pay to DWWC an amount equal to the DWWC’s documented costs and
\nexpenses incurred prior to or after the Agreement Date in connection with the
\nexecution, delivery and performance of this Agreement and any investigation,
\nnegotiation and structuring of the transactions contemplated hereby (including,
\nwithout limitation, legal, accounting, consulting and financial advisory fees).
\nNothing herein shall relieve any party from liability for damages resulting from
\nthe breach of any of its representations, warranties, covenants or agreements
\nset forth in this Agreement.<\/p>\n
ARTICLE XV
\n GENERAL PROVISIONS
\n ——————<\/p>\n
15.1 Notices. All notices and other communications required or
\npermitted under this Agreement shall be in writing and will be either hand
\ndelivered in person, sent by telecopier, sent by certified or registered first
\nclass mail, postage pre-paid, or sent by nationally recognized express courier
\nservice. Such notices and other communications will be effective upon receipt if
\nhand delivered or sent by telecopier, five (5) days after mailing if sent by
\nmail, and one (l) day after <\/p>\n
50<\/p>\n
dispatch if sent by express courier, to the following addresses, or such other
\naddresses as any party may notify the other parties in accordance with this
\nSection:<\/p>\n
\n\n
\n (a) if to either of the SportsLine SportsLine.com, Inc.
\n Companies, to: 6340 N.W. 5th Way
\n Fort Lauderdale, Florida 33309
\n Attn: Michael Levy, President
\n Telecopy: (954) 351-9175<\/p>\n with a copy to: Greenberg Traurig, P.A.
\n 1221 Brickell Avenue
\n Miami, Florida 33131
\n Attn: Kenneth C. Hoffman, Esq.
\n Telecopy: (305) 579-0717<\/p>\n
(b) if to DWWC or the Principal Daedalus World Wide Corporation
\n Shareholders, to: 11 Broadway, Suite 457
\n New York, New York 10004
\n Attn: Peter Pezaris
\n Telecopy: (212) 344-8315<\/p>\n
with a copy to: Hughes Hubbard & Reed LLP
\n 1 Battery Place
\n 12th Floor
\n New York, New York 10004-1482
\n Attn: Kenneth A. Lefkowitz
\n Telecopy: (212) 422-4726
\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
15.2 Entire Agreement. This Agreement (including the Exhibits and
\nSchedules attached hereto and the Disclosure Letter) and other documents
\ndelivered at the Closing pursuant hereto, contains the entire understanding of
\nthe parties in respect of its subject matter and supersedes all prior agreements
\nand understandings (oral or written) between or among the parties with respect
\nto such subject matter. The Exhibits and Schedules attached hereto and the
\nDisclosure Letter constitute a part hereof as though set forth in full above.<\/p>\n
15.3 Expenses. Except as set forth in this Section 15.3 or as otherwise
\nprovided in this Agreement, the parties hereto shall pay their own fees and
\nexpenses, including their own legal, accounting, consulting and financial
\nadvisory fees, incurred in connection with this Agreement or any transaction
\ncontemplated hereby, whether or not the Merger is consummated. If the Merger is
\nconsummated, the aggregate amount of all legal, accounting, consulting,
\nfinancial advisory, investment banking, broker’s or finder’s fees, filing fees
\nand other fees and expenses incurred by DWWC in connection with the Merger
\n(“Transaction Expenses”) shall be deemed expenses of the Shareholders, shall be
\nborne by the Shareholders and will not become obligations of the Surviving
\nCorporation. If, on or prior to the Closing Date, DWWC has not made arrangements
\nacceptable to SportsLine for the payment by the Shareholders of the full amount
\nof Transaction Expenses, all such Transaction Expenses shall be deducted from
\nthe Merger Consideration; and any such Transaction Expenses that are not
\ndeducted in the calculation of the Merger Consideration in accordance with<\/p>\n
51<\/p>\n
Section 3.1 shall be recoverable by SportsLine from the Escrow Fund as Damages.
\nIf after recovery of any Transaction Expenses or Excess Debt by SportsLine from
\nthe Escrow Fund it is determined upon a final nonappealable Order from a
\nGovernmental Authority of competent jurisdiction that SportsLine was not
\nentitled to such recovery or a part of such recovery, then SportsLine shall
\nreturn such unrecoverable Transactions Expenses or Excess Debt to the Escrow
\nFund or, if after the Release Date, to the Shareholders in amounts to which they
\nare individually entitled.<\/p>\n
15.4 Amendment. This Agreement (including the Schedules and Exhibits
\nattached hereto and the Disclosure Letter) may not be modified, amended,
\nsupplemented, canceled or discharged, except by written instrument executed by
\nall parties. The Agreement may be amended by the parties hereto at any time
\nbefore or after approval of the shareholders of DWWC; but, after such approval,
\nno amendment will be made which by applicable Law requires the further approval
\nof the shareholders of DWWC without obtaining such further approval.<\/p>\n
15.5 Waiver. No failure to exercise, and no delay in exercising, any
\nright, power or privilege under this Agreement shall operate as a waiver, nor
\nshall any single or partial exercise of any right, power or privilege hereunder
\npreclude the exercise of any other right, power or privilege. No waiver of any
\nbreach of any provision shall be deemed to be a waiver of any preceding or
\nsucceeding breach of the same or any other provision, nor shall any waiver be
\nimplied from any course of dealing between the parties. No extension of time for
\nperformance of any obligations or other acts hereunder or under any other
\nagreement shall be deemed to be an extension of the time for performance of any
\nother obligations or any other acts. The rights and remedies of the parties
\nunder this Agreement are in addition to all other rights and remedies, at law or
\nequity, that they may have against each other.<\/p>\n
15.6 Binding Effect; Assignment. The rights and obligations of this
\nAgreement shall bind and inure to the benefit of the parties and their
\nrespective successors and assigns. Nothing expressed or implied herein shall be
\nconstrued to give any other person any legal or equitable rights hereunder.
\nExcept as expressly provided herein, the rights and obligations of this
\nAgreement may not be assigned by DWWC or the Shareholders. SportsLine may assign
\nall or any portion of its rights hereunder to any Affiliate thereof provided
\nthat SportsLine remains liable.<\/p>\n
15.7 Interpretation. When a reference is made in this Agreement to an
\narticle, section, paragraph, clause, schedule or exhibit, such reference shall
\nbe deemed to be to this Agreement unless otherwise indicated. The headings
\ncontained herein and on the schedules are for reference and convenience purposes
\nonly and shall not affect in any way the meaning or interpretation of this
\nAgreement or the schedules. Whenever the words “include,” “includes” or
\n“including” are used in this Agreement, they shall be deemed to be followed by
\nthe words “without limitation.” Time shall be of the essence in this Agreement.<\/p>\n
15.8 Severability. Any term or provision of this Agreement which is
\nprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
\nonly, be ineffective only to the extent of such prohibition or unenforceability,
\nand shall not invalidate the remaining provisions hereof or affect the validity
\nor enforceability of such provision in any other jurisdiction.<\/p>\n
15.9 Governing Law; Interpretation. This Agreement shall be construed
\nin accordance with and governed for all purposes by the laws of the State of
\nFlorida applicable to contracts <\/p>\n
52<\/p>\n
executed and to be wholly performed within such State except merger related
\nprovisions governed by NYBCL.<\/p>\n
15.10 Arm’s Length Negotiations. Each party herein expressly represents
\nand warrants to all other parties hereto that: (a) before executing this
\nAgreement, said party has fully informed itself of the terms, contents,
\nconditions and effects of this Agreement; (b) said party has relied solely and
\ncompletely upon its own judgment in executing this Agreement; (c) said party has
\nhad the opportunity to seek and has obtained the advice of counsel before
\nexecuting this Agreement; (d) said party has acted voluntarily and of its own
\nfree will in executing this Agreement; (e) said party is not acting under
\nduress, whether economic or physical, in executing this Agreement; and (f) this
\nAgreement is the result of arm’s length negotiations conducted by and among the
\nparties and their respective counsel.<\/p>\n
15.11 Confidentiality. SportsLine and DWWC each recognize that they
\nhave received and will receive confidential information concerning the other
\nduring the course of the Merger negotiations and preparations. Accordingly,
\nSportsLine and DWWC each agree (a) to use its respective commercially reasonable
\nefforts to prevent the unauthorized disclosure of any confidential information
\nconcerning the other that was or is disclosed during the course of such
\nnegotiations and preparations, and is clearly designated in writing as
\nconfidential at the time of disclosure, (b) to not make use of or permit to be
\nused any such confidential information other than for the purpose of
\neffectuating the Merger and related transactions, and (c) comply fully with the
\nterms of the Confidentiality Agreement. The obligations of this section will not
\napply to information that (i) is or becomes part of the public domain, (ii) is
\ndisclosed by the disclosing party to third parties without restrictions on
\ndisclosure, (iii) is received by the receiving party from a third party without
\nbreach of a nondisclosure obligation to the other party, (iv) is necessary or
\ndesirable in connection with a Legal Proceeding or to enforce one parties rights
\nunder this Agreement and the Transaction Documents or (v) is required to be
\ndisclosed by Law. If this Agreement is terminated, all copies of documents
\ncontaining confidential information shall be returned by the receiving party to
\nthe disclosing party.<\/p>\n
15.12 Counterparts. This Agreement may be executed in any number of
\ncounterparts, each of which shall be an original but all of which together shall
\nconstitute one and the same instrument.<\/p>\n
15.13 Access to Books and Records. (a) After the Closing, SportsLine
\nshall, upon the reasonable request of a Shareholder from time to time, and upon
\nreasonable notice, in connection with the preparation by such Shareholder or its
\nauthorized representatives of Tax Returns with respect to Tax periods ending on
\nor prior to the Effective Time or other reasonable request, (i)(A) provide to
\nsuch Shareholder and its authorized representatives timely access, during normal
\nbusiness hours, to the files, books, records, documents and other information of
\nthe Surviving Corporation and (B) cause the officers of the Surviving
\nCorporation to furnish to such Shareholder and its authorized representatives
\ncopies of all financial, technical and operating data and other information
\npertaining to the Surviving Corporation and (ii) make available for inspection
\nand copying by such Shareholder at such Shareholder’s expense true and complete
\ncopies of any documents relating to the foregoing; provided however, the
\nforegoing does not obligate SportsLine or the Surviving Corporation to provide
\naccess or make available to any Shareholder any files, books and records,
\ninformation or other documents relating to periods commencing on or after the
\nEffective Time. In exercising their rights under the foregoing provisions of
\nthis Section, no Shareholder or its representatives shall interfere with
\nSportsLine’s or the Surviving Corporation’s<\/p>\n
53<\/p>\n
normal operations, and as applicable, shall enter into any such confidentiality
\nagreement as the party providing the information shall reasonably require (which
\nshall permit such disclosure as allowed by Section 5.11).<\/p>\n
(Continued on Signature Page)<\/p>\n
54<\/p>\n
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
\nduly executed and delivered as of the day and year first above written.<\/p>\n
SPORTSLINE.COM, INC.<\/p>\n
By:\/s\/ Michael Levy
\n ——————-
\n Name: Michael Levy
\n Title: President<\/p>\n
COMMISSIONER.COM, INC.<\/p>\n
By:\/s\/ Michael Levy
\n ——————-
\n Name: Michael Levy
\n Title: President<\/p>\n
DAEDALUS WORLDWIDE
\n CORPORATION<\/p>\n
By:\/s\/ Michael Gersh
\n ——————–
\n Name: Michael Gersh
\n Title: President<\/p>\n
\/s\/ James Price
\n —————
\n James Price<\/p>\n
\/s\/ Michael Gersh
\n —————–
\n Michael Gersh<\/p>\n
\/s\/ Matthew Fortnow
\n ——————-
\n Matthew Fortnow<\/p>\n
\/s\/ Peter Pezaris
\n —————–
\n Peter Pezaris<\/p>\n
55<\/p>\n
The following signatures personally as set forth below are only to
\nevidence agreement to the terms and conditions set forth in Article XII.<\/p>\n
\/s\/ Khaled Matar
\n —————-
\n Khaled Matar<\/p>\n
\/s\/ David Hersh
\n —————
\n David Hersh<\/p>\n
56<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8900],"corporate_contracts_industries":[9510],"corporate_contracts_types":[9622,9626],"class_list":["post-43118","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-sportslinecom-inc","corporate_contracts_industries-technology__programming","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43118"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43118"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43118"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}