Exhibit 10.01

 

EXECUTION VERSION

 

ASSET PURCHASE AGREEMENT

 

by and between

 

MGT SPORTS, INC.

 

and

 

RANDOM OUTCOME USA INC.

 

June 11, 2015

 

 

 

 

Table of Contents

 

      Page         1. DEFINITIONS; INTERPRETATION 1           1.1 Definitions 1
  1.2 Interpretation 5         2. PRE-CLOSING AGREEMENTS 5           2.1 Conduct
of the Business 5   2.2 Offers of Employment 5   2.3 Additional Listing
Application 6         3. PURCHASE AND SALE OF ASSETS 6           3.1 Purchase
and Sale of Purchased Assets 6   3.2 Liabilities Assumed and Not Assumed 7   3.3
Cash Payment; Issuance of Common Stock 7   3.4 Purchase Price; Allocation of the
Purchase Price 7         4. CLOSING 8           4.1 Closing 8   4.2 Conditions
to Closing 7   4.3 Closing Deliverables and Actions 9   4.4 Effect of Closing 10
  4.5 Termination 10   4.6 Effect of Termination 10         5. REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER 11           5.1 Incorporation; Authority 11  
5.2 Execution; Validity of Agreement; Due Authorization 11   5.3 Consents and
Approvals; No Violations 11   5.4 RO Shares and Escrow Shares 11   5.5 Broker’s
Fee 11         6. REPRESENTATIONS AND WARRANTIES REGARDING SELLER AND THE
PURCHASED ASSETS 11           6.1 Incorporation; Authority 12   6.2 Execution;
Validity of Agreement; Due Authorization 12   6.3 Consents and Approvals; No
Violations 12   6.4 Investment Representations 12   6.5 Purchased Assets 13  
6.6 Litigation 13

 

 

 

 

  6.7 Employees 13   6.8 Contracts 14   6.9 Bankruptcy 14   6.10 Compliance with
Laws; Permits 14   6.11 Intentionally Omitted 15   6.12 Financial Statements 15
  6.13 Books and Records 15   6.14 Consents and Approvals 15   6.15 Broker’s Fee
16         7. ADDITIONAL AGREEMENTS 16           7.1 Seller Noncompete and
Non-Solicit 16   7.2 Public Announcements 16   7.3 Confidentiality 16   7.4
Further Assurances 17   7.5 Legend Removal 17   7.6 Transition Services 17      
  8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION 17  
        8.1 Survival of Representations, Warranties and Covenants 17   8.2
Indemnification Obligations of Seller 18   8.3 Indemnification Obligations of RO
18   8.4 Notification of Claims 18   8.5 Objections to Claims for
Indemnification 18   8.6 Resolution of Conflicts. 18   8.7 Investigation 19  
8.8 Third-Party Claims 19   8.9 Limitations On Indemnification 20   8.10 Release
of Escrow Funds 20         9. MISCELLANEOUS 20           9.1 Costs and
Attorneys’ Fees 20   9.2 Notices 20   9.3 Entire Agreement 21   9.4 Governing
law; Consent to Jurisdiction 21   9.5 Binding effect 21   9.6 Waivers and
Amendments 22   9.7 Recitals, Exhibits and Schedules 22   9.8 Headings 22   9.9
Severability 22   9.10 Specific Performance 22   9.11 Fees and Expenses 22  
9.12 Legal Representation of the Parties 22   9.13 Payment of Transfer Costs and
Expenses 23   9.14 No Third Party Beneficiaries 23   9.15 Counterparts;
Signatures 23

 

 

 

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of June 11, 2015
(the “Agreement Date”), by and between MGT Sports, Inc., a Delaware corporation
(“MGT” or “Seller”), and Random Outcome USA Inc., a Delaware corporation (“RO”
or “Purchaser”, and together with Seller, the “Parties”).

 

RECITALS

 

WHEREAS, Seller is the owner of a daily fantasy sports website called
draftday.com (the “Website”) that offers daily fantasy sports tournaments and
provides a daily fantasy sports white label platform for partners (collectively,
the “Business”); and

 

WHEREAS, Seller desires to sell to the Purchaser, and the Purchaser desires to
purchase from Seller, the Purchased Assets (as defined below), in exchange for
(i) cash; (ii) shares of Common Stock of Purchaser (the “Common Stock”); and
(iii) warrants to purchase shares of Common Stock (the “Warrants”), on the terms
and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the promises, covenants and other agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:

 

1.          DEFINITIONS; INTERPRETATION.

 

1.1           Definitions. For purposes of this Agreement, the following terms
are defined as follows:

 

“Action” means any action (including declaratory judgment actions), suit,
litigation, controversy, mediation, hearing, claim, charge, complaint,
arbitration, reexamination, interference, reissue, investigation, pending
inquiry, audit or other proceeding at law or in equity or of, in, by or before
any Governmental Authority, mediator or arbitrator.

 

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

 

“Applicable Law” means, with respect to any Person, any federal, state, local,
municipal, foreign or other Law, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect, in each case as of
the date of this Agreement, by any Governmental Authority that applies to such
Person, its business and its properties.

 

“Consents” means the consents of any third parties or any Governmental
Authorities necessary to transfer the Purchased Assets to the Purchaser or to
otherwise consummate the transactions contemplated by this Agreement.

 

 

 

 

“Employee Plan” means each employee benefit plan that has been maintained by
Seller which constitutes an “employee pension benefit plan” under Section 3(2)
of ERISA that is intended to qualify under Section 401 or 501 of the Internal
Revenue Code.

 

“Escrow Agent” (to be appointed by the Parties prior to the Closing Date).

 

“Escrow Agreement” means the Escrow Agreement dated the Closing Date among
Purchaser, Seller and the Escrow Agent.

 

“Escrow Release Date” means twelve (12) months from the Closing Date.

 

“Governmental Authority” means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or similar governing entity.

 

“Intellectual Property” means any and all ideas, inventions, designs,
expressions and works of authorship, copyrights, copyrightable works (including,
without limitation, all software, middleware and firmware), semiconductor
topography, source code of any software or program, trademarks, trade names,
moral rights, database rights, mask works, applications therefor, registrations
thereof and licenses thereof, royalty rights, any and all goodwill associated
with the Purchased Assets, proprietary and/or confidential information
(including technical information relating to development, design, manufacture,
scheduling, installation, assembly or testing, Trade Secrets, secret processes
and procedures, know how, business and financial information, and all
confidential information of any nature, and any other similar property, whether
or not embodied in tangible form (including technical drawings and
specifications, shop drawings, manuals, forms, working notes and memos, market
studies, consultants’ reports, technical and laboratory data, notebooks, samples
and prototypes)).

 

“Knowledge” or words of similar import (e.g. “knowledge,” “known,” or “aware”)
with respect to: (i) any individual, shall mean the actual knowledge of such
individual; (ii) any corporate entity, shall mean the knowledge of all
directors, officers and managers of such corporate entity

 

“Laws” means all laws, statutes, rules, regulations, ordinances and orders of
any Governmental Authority.

 

“Lien” means any mortgage, lien, claim, pledge, charge, security interest,
preemptive right, right of first refusal, option, judgment, restriction or
encumbrance of any kind, or any exceptions, reservations, restrictions,
rights-of-way, easements or other matters affecting title, whether arising by
contract, law or otherwise.

 

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“Material Adverse Effect” means any change, event, violation, inaccuracy,
circumstance or effect that, individually or taken together with all other
effects, is, or is reasonably likely to, be or become materially adverse in
relation to the value, validity, effectiveness or enjoyment of the Purchased
Assets; provided, however, that none of the following shall be deemed in itself,
or in any combination, to constitute, and none of the following shall be taken
into account in determining whether there has been or will be, a Material
Adverse Effect: (a) any adverse change, effect, event, occurrence, state of
facts or development attributable to the announcement or pendency of the
transactions contemplated by this Agreement; (b) any adverse change, effect,
event, occurrence, state of facts, act of God, natural disaster or development
attributable to conditions affecting the industry in which Seller participates,
the United States economy as a whole or the capital markets in general or the
markets in which Seller operates, which such adverse change, effect, event,
occurrence, state of facts or development does not and would not reasonably be
expected to have a materially disproportionate effect on Seller; (c) any adverse
change, event, development, or effect arising from or relating to changes in
law, rules, regulations, orders, or other binding directives issued by any
Governmental Authority, which such adverse change, event, development or effect
does not and would not reasonably be expected to have a materially
disproportionate effect on Seller; (d) any adverse change, effect, event,
occurrence, state of facts or development resulting from or relating to
compliance with the terms of, or the taking of any action required by, this
Agreement; or (e) any adverse change, effect, event, occurrence, state of facts
or development arising from or relating to the commencement, continuation or
escalation of a war, material armed hostilities or other material international
or national calamity or act of terrorism directly or indirectly involving the
United States of America.

 

“Permit” means any permit, application, notice, waiver, qualification, license,
import licenses, export license, franchise, consent, certificate, certificate of
occupancy, order, exemption, registration, filing, authorization, approval or
registration.

 

“Person” means and includes any individual, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated organization or any Governmental Authority or any department,
agency or political subdivision thereof.

 

“Player Deposits” means the aggregate of the Seller’s obligations to the players
in respect of the player accounts as of the Closing Date, and referred to on the
financial statements of the Seller as “player trust fund liability.”

 

“Software” means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code form, (ii) databases, compilations, and any other
electronic data files, including any and all collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts, technical and
functional specifications, and other work product used to design, plan,
organize, develop, test, troubleshoot and maintain any of the foregoing, (iv)
without limitation to the foregoing, the software technology supporting any
functionality contained on all Internet website(s), owned and operated by the
Seller in the Business, (v) all computer-aided design software, including the
underlying data, and (vi) all documentation, including technical, end-user,
training and troubleshooting manuals and materials, relating to any of the
foregoing.

 

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“Trade Secrets” means all product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, research and development, manufacturing or
distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including both source code and object code), databases,
interfaces, computer software and database technologies, systems, structures and
architectures (and related processes, formulae, composition, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information), and any other information, however documented, that is a trade
secret within the meaning of the applicable trade-secret protection law.

 

“Transaction Agreements” shall mean and include this Agreement, the Escrow
Agreement and all consents, releases, assignment and assumption agreements,
bills of sale and other instruments (each in form and substance satisfactory to
Purchaser) which are necessary in order to duly and properly transfer the
Purchased Assets to the Purchaser.

 

The following terms are defined in the following sections of this Agreement:

 

Term   Section Agreement   Preamble Agreement Date   Preamble Asset Purchase  
3.1 Assumed Liabilities   3.2(b) Business   Recitals Cash Payment   3.3 Closing
  4.1 Closing Date   4.1 Common Stock   Recitals Employees   6.7(a) Escrow Fund
  4.3(h) Escrow Shares   3.3 Exchange Act   5.6 Indemnification Notice   8.4
Indemnifying Party   8.4 Indemnitees   8.3 Losses   8.2 RO   Preamble RO
Indemnitees   8.2 RO Shares   3.3 Parties   Preamble Purchased Assets   3.1
Purchase Price   3.4 Purchaser   Preamble Retained Liabilities   3.2(a) SEC  
5.6 Securities Act   3.3 Seller   Preamble Seller Indemnitees   8.3 Termination
Date   4.5(b) Third Party Claim   8.8 Threshold Amount   8.9 Transferred
Contracts   3.1(c) Transferred Employees   2.2 Warrants     Recitals Website  
Recitals

  

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1.2           Interpretation. Unless the context otherwise requires, the terms
defined in Section 1.1 shall have the meanings herein specified for all purposes
of this Agreement, applicable to both the singular and plural forms of any of
the terms defined herein. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation.” The use of the neuter gender herein shall be
deemed to include the masculine and feminine genders wherever necessary or
appropriate, the use of the masculine gender herein shall be deemed to include
the neuter and feminine gender wherever necessary or appropriate and the use of
the feminine gender herein shall be deemed to include the neuter and masculine
genders wherever necessary or appropriate.

 

2.          PRE-CLOSING AGREEMENTS.

 

2.1          Conduct of the Business. During the period from the Agreement Date
and continuing until the earlier of (x) the termination of this Agreement and
(y) the Closing, without the prior written consent of Purchaser:

 

(a)           Seller will conduct the Business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and in
material compliance with all Applicable Law (except to the extent expressly
provided otherwise in this Agreement).

 

(b)          Seller will (i) pay or perform all of its Business related
obligations when due, and (ii) continue to develop the Business consistent with
past practice.

 

(c)          Seller will not engage in any practice, take any action, fail to
take any action, or enter into any transaction as a result of which a Material
Adverse Effect is likely to occur; provided, however, that the failure to make
additional capital investments or hire additional employees will not in any case
result in a Material Adverse Effect.

 

(d)          Seller will confer with the Purchaser concerning matters of a
material nature to the Business, but subject to reasonable restrictions
necessary to preserve confidential information from being disclosed to Purchaser
or to prevent Seller from relinquishing the attorney-client privilege.

 

(e)          Seller shall cause the Employees to be available to Purchaser to
discuss the Business during regular business hours.

 

(f)          Any expenses relating to the Business outside the ordinary course
of business in excess of $5,000 shall be approved in advance by RO.

 

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2.2          Offers of Employment. At any time prior to or on the Closing Date,
the Purchaser may offer at-will employment to any of the Employees. The
Purchaser is hereby permitted to hire and offer to hire such Employees effective
on the Closing Date on such terms and conditions as the Purchaser shall in its
sole discretion deem appropriate. The Employees who accept and commence
employment with the Purchaser are hereinafter collectively referred to as the
“Transferred Employees.” Seller will not take, and will cause each of its
Affiliates not to take, any action which would impede, hinder, interfere or
otherwise compete with the Purchaser’s effort to hire any Transferred Employees.
The Purchaser shall assume no liability for any obligations of Seller or any
other Person to any Employee unless and until such Employee becomes a
Transferred Employee, and in that case, only to the extent agreed in writing by
the Purchaser. For purposes of clarity, any such offer of employment shall be
contingent on the Closing occurring and shall terminate and be of no force and
effect if this Agreement is terminated pursuant to Section 4.5.

 

3.          PURCHASE AND SALE OF ASSETS.

 

3.1          Purchase and Sale of Purchased Assets. Upon the terms and subject
to the conditions set forth herein, effective as of the Closing, Seller hereby
irrevocably sells, assigns, grants, transfers and delivers to the Purchaser and
its successors and assigns, and the Purchaser hereby accepts, free and clear of
all Liens whatsoever (other than Liens imposed by commercially available
off-the-shelf software), the Purchased Assets (the “Asset Purchase”). The
“Purchased Assets” shall mean the following:

 

(a)          All of Seller’s right, title and interest in and to the Business,
including all Intellectual Property related to the website www.draftday.com, and
including the Intellectual Property described on Schedule 3.1(a) hereto, the
user mailing list (including current and former users), player data and source
code;

 

(b)          All of Seller’s rights in property, tangible or intangible, used
solely in the Business, including all leasehold improvements, supplies,
furnishings, office equipment, IT equipment and other tangible personal property
located at Suite 204, 500 Mamaroneck Avenue, Harrison, New York 10528, and
located at 620 W Coliseum Blvd, Fort Wayne, IN 46808, including the property
listed or described on Schedule 3.1(b)(i);

 

(c)          All of Seller’s rights under the following contracts: (i) License
Agreement, between MGT and STATS LLC, dated May 1, 2014, as amended; (ii)
RotoWire Fantasy Service Agreement, between MGT and Roto Sports, Inc., dated
February 1, 2015; and (iii) Colocation Service Order Agreement, between MGT and
Indiana Data Center, LLC, dated May 30, 2014 (collectively, the “Transferred
Contracts”);

 

(d)          Cash in an amount equal to the Player Deposits; and

 

(e)          All books and records, tangible or intangible, relating solely to
the Purchased Assets.

 

The Purchased Assets shall not include any assets or property other than as set
forth in Section 3.1.

 

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3.2         Liabilities Assumed and Not Assumed.

 

(a)          Other than the Assumed Liabilities, the Purchaser shall assume no
debts, obligations, contracts, leases or liabilities of Seller, and will not be
obligated to pay, perform or discharge, any debts, obligations, contracts,
leases or liabilities of Seller, whether arising out of occurrences prior to, at
or after the Closing Date (the “Retained Liabilities”). For the avoidance of
doubt, (i) Seller shall pay all amounts owing under the Transferred Contracts
through the Closing Date, (ii) Seller shall retain all obligations to fund or
otherwise provide benefits accrued before and through the Closing Date by
Employees under the Employee Plans, and (iii) Seller shall retain any
liabilities or obligations relating to: (i) current or former Employees accrued
as of the Closing Date, and (ii) former Employees (that are not Transferred
Employees) following the Closing Date.

 

(b)          “Assumed Liabilities” means (i) Seller’s obligations under the
Transferred Contracts arising on and after the Closing Date, (ii) all
obligations of the Seller related to Player Deposits and non-cash items such as
bonus funds existing as of the Closing Date, and (iii) Seller’s obligations
related to the Purchased Assets that arise on or after the Closing Date.

 

3.3         Cash Payment; Issuance of Common Stock and Warrants. At the Closing,
in connection with the Asset Purchase described in Section 3.1 above, the
Purchaser shall (i) pay to Seller in cash an amount equal to Four Million USD
($4,000,000) (the “Cash Payment”), (ii) issue to Seller shares of Common Stock
representing Seven Percent (7%) of the fully diluted equity value of Purchaser,
post issuance (the “RO Shares”), (iii) deliver to the Escrow Agent shares of
Common Stock representing Three Percent (3%) of the fully diluted equity value
of Purchaser, post issuance (the “Escrow Shares”), issued in the name of Seller,
and (iv) issue to Seller One Million (1,000,000) Warrants to purchase Common
Stock of Purchaser. Each Warrant entitles the holder of the Warrant the right,
but not the obligation, to purchase one (1) share of Common Stock for one (1)
dollar, and each Warrant shall expire on the date that is twelve (12) months
from the Closing Date. The stock certificates representing the RO Shares and the
Escrow Shares shall bear a legend stating that they have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), and such
other restrictions described in Section 6.4(b) hereof. The RO Shares and the
Escrow Shares shall be governed by a Purchaser stockholder agreement that
includes customary minority shareholder protections, including rights of first
offer and refusal, tag-along rights and information rights.

 

3.4         Purchase Price; Allocation of the Purchase Price. The purchase price
for the Purchased Assets shall be the sum of the Cash Payment and the value of
the RO Shares and the Escrow Shares issued pursuant to Section 3.3
(collectively, the “Purchase Price”). The Purchase Price shall be allocated in
accordance with Schedule 3.4 to be provided by Purchaser to Seller no later than
30 days after the Closing Date. Each of Seller and the Purchaser shall report
the purchase and sale of the Purchased Assets for all tax purposes in a manner
consistent with such allocation, and neither of them shall take a position
inconsistent with such allocation on any tax return, before any taxing authority
or in any judicial proceeding that is, in any manner, inconsistent with such
allocation without the consent of the other unless specifically required
pursuant to a determination by an applicable taxing authority.

 

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4.          CLOSING.

 

4.1         Closing. Unless this Agreement is earlier terminated in accordance
with Section 4.5, the closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place on June 30, 2015, or on such earlier or later
date when each of the conditions set forth in this Article 4 have been satisfied
or waived (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the fulfillment or waiver of those conditions),
or at such other time as the Parties may agree (the “Closing Date”). The Closing
shall take place remotely by the electronic exchange of documents and
signatures, or at such location as the Parties hereto agree.

 

4.2         Conditions to Closing.

 

(a)          Conditions to Obligations Common to Both Parties. The respective
obligations of each Party hereto to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions:

 

(i)          No temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the Asset
Purchase shall be in effect, nor shall any action have been taken by any
Governmental Authority seeking any of the foregoing, and no statute, rule,
regulation or order shall have been enacted, entered, enforced or deemed
applicable to the Asset Purchase, which makes the consummation of the Asset
Purchase illegal; and

 

(ii)         RO and Seller shall have timely obtained from each Governmental
Authority all approvals, waivers and consents, if any, necessary for
consummation of, or in connection with, the Asset Purchase and the other
transactions contemplated hereby.

 

(b)          Additional Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated hereby shall be subject to
the satisfaction at or prior to the Closing of each of the following conditions
(it being understood that each such condition is solely for the benefit of
Seller and may be waived by Seller in writing in its sole discretion without
notice, liability or obligation to any Person):

 

(i)          The representations and warranties of RO in this Agreement shall be
true and correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to materiality,
which representations and warranties as so qualified shall be true and correct
in all respects) on and as of the Agreement Date and on and as of the Closing
Date as though such representations and warranties were made on and as of such
date (except for representations and warranties which address matters only as to
a specified date, which representations and warranties shall be true and correct
with respect to such specified date). RO shall have performed and complied in
all material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by it at or prior to the
Closing.

 

(ii)         Seller shall have received each of the deliveries required to be
made by RO to Seller pursuant to Section 4.3.

 

(c)          Additional Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions (it being understood that each such condition is solely for
the benefit of the Purchaser and may be waived by the Purchaser in writing in
its sole discretion without notice, liability or obligation to any Person):

 

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(i)          The representations and warranties of Seller in this Agreement
shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality, which representations and warranties as so qualified shall be
true and correct in all respects) on and as of the Agreement Date and on and as
of the Closing Date as though such representations and warranties were made on
and as of such date (except for representations and warranties which address
matters only as to a specified date, which representations and warranties shall
be true and correct with respect to such specified date). Seller shall have
performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement required to be performed and complied with by
it at or prior to the Closing.

 

(ii)         RO shall have received each of the deliveries required to be made
by Seller to RO pursuant to Section 4.3.

 

(iii)        There shall not have occurred a Material Adverse Effect with
respect to the Purchased Assets since the Agreement Date.

 

4.3         Closing Deliverables and Actions. At the Closing:

 

(a)          Seller shall execute and deliver to RO a certificate dated as of
the Closing Date, executed on behalf of Seller by its President, to the effect
that (i) the condition set forth in Section 4.2(c)(i) has been satisfied, and
(ii) there shall not have occurred a Material Adverse Effect with respect to the
Purchased Assets since the Agreement Date;

 

(b)          RO shall execute and deliver to Seller a certificate dated as of
the Closing Date, executed on behalf of RO by its CEO, to the effect that the
condition set forth in Section 4.2(b)(i) has been satisfied;

 

(c)          Each Party shall execute and deliver to the other Party a signature
page to each of the Transaction Agreements to which such Party is a party;

 

(d)          Seller shall deliver to RO evidence that all required Consents, if
any, have been obtained;

 

(e)          Purchaser shall pay the Cash Payment to Seller;

 

(f)           Seller shall pay to Purchaser cash in an amount equal to the
Player Deposits, together with written evidence of the amount of the Player
Deposits and non-cash items such as bonus funds existing as of the Closing Date;

 

(g)          RO shall issue to Seller a certificate of Common Stock representing
the RO Shares;

 

(h)          RO shall issue and deliver a certificate of Common Stock
representing the Escrow Shares to the Escrow Agent to form the escrow fund (the
“ Escrow Fund”);

 

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(i)          RO shall issue and deliver an executed warrant agreement
representing the Warrants;

 

(j)          Seller shall deliver, cause to be delivered, or make available in a
manner satisfactory to the Purchaser, the source code underpinning the Website,
player data and user mailing lists;

 

(k)         Seller shall deliver, cause to be delivered, or make available in a
manner satisfactory to the Purchaser, the book and records solely related to the
Purchased Assets; and

 

(l)          All other previously undelivered items required to be delivered at
or prior to the Closing pursuant to this Agreement or otherwise required in
connection herewith shall have been delivered, unless delivery has been waived
in writing by the intended recipient thereof.

 

4.4         Effect of Closing. All transactions contemplated herein and by the
other Transaction Agreements to occur on and as of the Closing Date shall be
deemed to have occurred simultaneously and to be effective as of the close of
business on the Closing Date; provided, however, that none of such transactions
shall be deemed to have occurred unless and until all of the conditions to
closing described in Section 4.2 and each of the deliverables and actions
referenced in Section 4.3 shall have been delivered and taken in accordance
therewith.

 

4.5         Termination. At any time prior to the Closing, this Agreement may be
terminated and the transactions contemplated hereby abandoned by authorized
action taken by the terminating Party:

 

(a)          by mutual written consent duly authorized by RO and Seller;

 

(b)          by either RO or Seller, if the Closing shall not have occurred on
or before July 15, 2015 or such other date that Purchaser and Seller may agree
upon in writing (the “Termination Date”); provided, however, that the right to
terminate this Agreement under this Section 4.5(b) shall not be available to any
Party whose breach of this Agreement has resulted in the failure of the Closing
to occur on or before the Termination Date;

 

(c)          by either RO or Seller, if any permanent injunction or other order
of a Governmental Authority preventing the consummation of the transactions
contemplated hereby shall have become final and nonappealable;

 

(d)          by RO, if Seller shall have breached any representation, warranty,
covenant or agreement contained herein and such breach shall not have been cured
within five business days after receipt by Seller of written notice of such
breach (provided, however, that no such cure period shall be available or
applicable to any such breach which by its nature cannot be cured) and if not
cured within the timeframe above and at or prior to the Closing, such breach
would result in the failure of any of the conditions set forth in Section 4.2(c)
to be satisfied; or

 

(e)          by Seller, if RO shall have breached any representation, warranty,
covenant or agreement contained herein and such breach shall not have been cured
within five business days after receipt by RO of written notice of such breach
(provided, however, that no such cure period shall be available or applicable to
any such breach which by its nature cannot be cured) and if not cured within the
timeframe above and at or prior to the Closing, such breach would result in the
failure of any of the conditions set forth in Section 4.2(b) to be satisfied.

 

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4.6           Effect of Termination. In the event of termination of this
Agreement as provided in Section 4.5, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of the Purchaser,
Seller, or their respective officers, directors, stockholders or Affiliates;
provided, however, that the provisions of this Section 4.6 (Effect of
Termination), Section 7.2 (Public Announcements), Section 7.3 (Confidentiality),
and Article 9 (Miscellaneous) shall remain in full force and effect and survive
any termination of this Agreement.

 

5.             REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to Seller as follows:

 

5.1           Incorporation; Authority. The Purchaser (i) is a duly incorporated
and validly existing corporation in good standing under the laws of the State of
Delaware and is duly qualified as a foreign corporation in any other
jurisdiction in which it does business; and (ii) has all requisite power and
authority to own, lease and operate the Purchased Assets and to carry on its
business as presently conducted and to execute, deliver and perform its
obligations under this Agreement and each other Transaction Agreement to which
the Purchaser is a party.

 

5.2           Execution; Validity of Agreement; Due Authorization. This
Agreement and each other Transaction Agreement to which the Purchaser is a party
has been duly executed and delivered by the Purchaser and this Agreement and
each other Transaction Agreement to which the Purchaser is a party constitutes a
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its respective terms. The execution and delivery of
this Agreement by the Purchaser and the performance by the Purchaser of its
obligations hereunder have been duly authorized by all necessary corporate
action on the part of the Purchaser.

 

5.3           Consents and Approvals; No Violations. None of the execution,
delivery or performance of this Agreement or any other Transaction Agreement by
the Purchaser, the consummation by the Purchaser of the transactions
contemplated hereby or thereby, or the compliance by the Purchaser with any of
the provisions hereof or thereof will (a) require (i) any filing with or notice
to any Governmental Authority or other Person, (ii) the obtaining of any Permit
or (iii) the expiration or termination of any statutory or regulatory waiting
period, (b) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or require any payment)
under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which the Purchaser is a party or by which the Purchaser or any of
the Purchaser’s properties or assets is bound, (c) violate any Applicable Laws,
or (d) result in the creation of any Lien upon any of the Purchased Assets.

 

5.4           RO Shares and Escrow Shares. The RO Shares and the Escrow Shares,
when issued and paid for in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable securities of the
Purchaser.

 

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5.5           Broker’s Fee. Except as set forth in Schedule 5.5, no agent,
broker, investment banker, firm, or other Person, acting on behalf of or under
the authority of the Purchaser or any of its Affiliates, is or will be entitled
to any broker’s or finder’s fee or any other commission or similar fee or
expense, directly or indirectly, in connection with any of the transactions
contemplated by this Agreement or any of the other Transaction Agreements.

 

6.            REPRESENTATIONS AND WARRANTIES REGARDING SELLER AND THE PURCHASED
ASSETS. Seller hereby represents and warrants to the Purchaser as follows, and
the Purchaser, in agreeing to consummate the transactions contemplated by this
Agreement, has relied upon such representations and warranties:

 

6.1           Incorporation; Authority. Seller (i) is a duly incorporated and
validly existing corporation in good standing under the laws of the State of
Delaware and is duly qualified as a foreign corporation in any other
jurisdiction in which it does business; and (ii) has all requisite power and
authority to own, lease and operate its property and to carry on its business as
presently conducted and to execute, deliver and perform its obligations under
this Agreement and each other Transaction Agreement to which Seller is a party.
A true and correct copy of the Certificate of Incorporation of Seller, as
amended to date, has been delivered to RO and is in full force and effect as of
the Agreement Date.

 

6.2           Execution; Validity of Agreement; Due Authorization. This
Agreement and each other Transaction Agreement to which Seller is a party has
been duly executed and delivered by Seller and this Agreement and each other
Transaction Agreement to which Seller is a party constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with
their respective terms. The execution and delivery of this Agreement by Seller
and the performance by Seller of its obligations hereunder have been duly
authorized by all necessary corporate action on the part of Seller.

 

6.3           Consents and Approvals; No Violations. Except as set forth on
Schedule 6.3, none of the execution, delivery or performance of this Agreement
or any other Transaction Agreement by Seller, the consummation by Seller of the
transactions contemplated hereby or thereby, or the compliance by Seller with
any of the provisions hereof or thereof will (a) require (i) any filing with or
notice to any Governmental Authority or other Person, (ii) the obtaining of any
Permit or (iii) the expiration or termination of any statutory or regulatory
waiting period, (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or require any
payment) under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which Seller is a party or by which Seller or any of Seller’s
properties or assets is bound, (c) violate any Applicable Laws, or (d) result in
the creation of any Lien upon any of the Purchased Assets.

 

6.4           Investment Representations.

 

(a)          Seller understands that the issuance of the Common Stock hereunder
is not being registered under the Securities Act or any state securities laws by
reason of specific exemptions under the provisions thereof;

 

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(b)          Seller understands that (i) the shares of Common Stock are
“restricted securities” under applicable securities laws which provide, in
substance, that the shares of Common Stock may only be disposed of pursuant to
an effective registration statement under the Securities Act and applicable
state securities laws or an exemption from such registration, (ii) the Purchaser
has no obligation or intention to effect any registration of the shares of
Common Stock, and (iii) the Purchaser may endorse any certificates representing
the shares of Common Stock with a legend describing the restrictions referenced
in clause (i) of this Section 6.4(b); and

 

6.5           Purchased Assets. Prior to giving effect to the transactions
contemplated herein:

 

(a)          Seller is the exclusive, true and lawful owner of all right, title,
and interest in and to the Purchased Assets and has good and valid title
thereto. The Purchased Assets are free and clear of any Liens, licenses or other
encumbrances (other than Liens, licenses or encumbrances imposed by commercially
available off-the-shelf software) and no rights, licenses, covenants not to sue
or similar rights have been granted with respect to the Purchased Assets. Other
than the Servers, the Purchased Assets are substantially all of the assets and
properties used in connection with the conduct of the Business and are
sufficient to operate the Business as presently operated.

 

(b)          The Purchased Assets have not been the subject of any Action and,
to Seller’s Knowledge, there is no Action pending, asserted or threatened by or
against Seller concerning the ownership, use of, misappropriation, or licensed
right to use, any of the Purchased Assets.

 

(c)          No inventor of the Purchased Assets is in default or breach of any
term of any employment agreement, non-disclosure agreement, assignment of
invention agreement or similar agreement relating to the protection, ownership,
development, use or transfer of the Purchased Assets. To the extent that any
Purchased Asset has been conceived, developed or created for Seller by any other
Person, Seller has executed valid and enforceable written agreements with such
Person with respect thereto transferring to Seller the entire right, title and
interest therein and thereto by operation of law or by valid written assignment.

 

(d)          Except as set forth in Schedule 6.5, there are no inventors of the
Purchased Assets other than the named inventors of the Purchased Assets. There
are no asserted or unasserted claims of ownership of the Purchased Assets by any
Person other than the named owners of the Purchased Assets.

 

(e)          All documents, agreements, prototypes, models, product samples,
books, notebooks, certificates, licenses, files and any other diligence
materials that Seller has provided to the Purchaser in connection with the
Purchaser’s evaluation of the Purchased Assets are true, correct and complete
originals (if originals were provided by Seller) or copies of such materials.

 

(f)          The Seller has provided to the Purchaser all information pertaining
to the player data (including, without limitation, player registrations,
deposits, active users, mailing lists) and such information is accurate and
correctly reflects the information as it relates to the Business.

 

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(g)          Seller owns or has the right to use all Software material to the
Business, including, but not limited to, the operation of draftday.com.

 

(h)          Seller has sufficient readily available cash-on-hand to consummate
the transactions contemplated by this Agreement and to pay to Purchaser cash in
an amount equal to the Player Deposits.

 

6.6           Litigation. There are no actions, lawsuits, judgments, claims,
investigations or legal or administrative proceedings, pending or threatened
against Seller. There is no judgment, order, injunction, decree or award
(whether rendered by a court, administrative agency or by arbitration) to which
Seller is a party.

 

6.7           Employees.

 

(a)          As of the date of this Agreement, Seller employs seven (7)
employees and one (1) consultant in operating the Business. The names, job
titles and rates of compensation (including wages, salaries and bonuses,
including anticipated or contingent bonuses (if any), and deferred compensation
(if any) of such employees and consultant are listed on Schedule 6.7
(collectively, the “Employees”).

 

(b)          There are no written employment agreements with any Employees that
are not terminable on the giving of reasonable notice in accordance with
Applicable Law. To Seller’s Knowledge, no Employee is in violation of any term
of any employment contract, confidentiality or other proprietary information
disclosure agreement or any other contract relating to the right of any such
Person to be employed by, or otherwise perform services for, Seller.

 

(c)          No Employee has any right or claim to any of the Purchased Assets.

 

(d)          Seller has never maintained any Employee Plan which has been
subject to title IV of ERISA or Code Section 412 or ERISA Section 302. No assets
or liabilities with respect to the Employees shall be transferred as a result of
this Agreement from any Employee Plan to any plan maintained by the Purchaser.

 

6.8           Contracts. The Transferred Contracts represent all of the
contracts, agreements and commitments, whether written or oral, of Seller used
in the Business. Seller has previously delivered to Purchaser a correct and
complete copy of each such written agreement and contract of Seller used in the
Business (as amended to date) and a written summary setting forth the material
terms and conditions of each oral agreement of Seller used in the Business. Each
such agreement is legal, valid, binding, enforceable, and in full force and
effect. Seller is not in breach or default under such agreements, and, to
Seller’s Knowledge, no event has occurred which with notice or lapse of time
would constitute a breach or default of such agreements, or permit termination,
modification, or acceleration, under such agreements. There is no agreement,
order, or other instrument binding upon the Seller or the Business which
restricts or prohibits the Business from competing with any other Person, from
engaging in any business or from conducting activities in any geographic area,
or which otherwise restricts or prohibits the conduct of the Business.

 

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6.9           Bankruptcy. Seller has not committed nor does it currently intend
to commit any act of bankruptcy, is not insolvent, has not proposed nor
currently intends to propose a compromise or arrangement to its creditors
generally, has not had nor currently intends to have any petition for a
receiving order in bankruptcy filed against it, has not made nor currently
intends to make a voluntary assignment in bankruptcy, has not initiated nor
intends to initiate any proceeding to have itself declared bankrupt or wound-up,
has not initiated nor intends to initiate any proceeding to have a receiver
appointed to any part of its assets, has not had any creditor take nor currently
anticipates that any creditor will take possession of any of its property, nor
has it had any of the foregoing become enforceable nor currently anticipates
that any of the foregoing will become enforceable upon any of its property or
the Purchased Assets.

 

6.10         Compliance with Laws; Permits.

 

(a)          The Seller has been and is in compliance in all material respects
with all Applicable Laws, Permits, judgments, decrees, and reporting
requirements applicable to the Business and the Purchased Assets.

 

(b)          The Seller has all Permits from Governmental Authorities required
for the operation of the Business and the ownership of the Purchased Assets,
each of which will be in full force and effect on the Closing Date. No
registrations, filings, applications, notices, transfers, consents, approvals,
orders, qualifications, waivers or other actions of any kind are required by
virtue of the assignment of such Permits to the Purchaser as contemplated
hereby.

 

6.11         Intentionally Omitted.

 

6.12         Financial Statements.

 

(a)          The following financial statements of the Business are set forth on
Schedule 6.12(a) hereto: (i) statement of profits and losses for the periods
ended December 31, 2014 and March 31, 2015, and (ii) player deposit information,
including related assets and liabilities, as of March 31, 2015. Such financial
statements of the Business fairly present in all material respects the financial
position and results of operations and cash flows of the Business as at the
dates and for the periods presented therein.

 

(b)          The Business has no liabilities, except (i) those liabilities
reflected, disclosed or reserved against on the financial statements of the
Business referenced in Section 6.12(a)(ii) above, (ii) liabilities resulting
from the obligations set forth in this Agreement and the other Transaction
Agreements, (iii) liabilities under the Transferred Contracts, and (iv)
liabilities incurred in the ordinary course of business since March 31, 2015.

 

(c)          Since March 31, 2015, no event or condition of any character has
had, or is reasonably likely to result in, a Material Adverse Effect on the
Business.

 

(d)          All existing Player Deposits represent valid deposits of customers
of the Business arising from bona fide transactions entered into in the ordinary
course of business.

 

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6.13         Books and Records. All books and records of the Seller solely
relating to the Business, including, but not limited to, records and lists of
past, present or prospective customers, suppliers, or personnel, marketing
plans, sales literature and promotional literature and other books, ledgers,
files, reports, operating records, records relating to the Player Deposits and
records relating to the Assumed Liabilities are accurate and have been
maintained in a manner consistent with customary industry practices and in
compliance with Applicable Law. All financial and accounting books, ledgers and
accounts of the Seller relating to the Business have been properly and
accurately kept and completed in all material respects, and do not contain any
material inaccuracies or discrepancies of any kind.

 

6.1           Data Room. To the best of the Seller’s Knowledge, all information
and documentation contained in the electronic data room prepared by the Seller,
to which the Purchaser has been provided access, is true and accurate and
correctly reflects the subject matter to which it relates, as well as the
Business.

 

6.2           Consents and Approvals. No Consents or notices to, or filings,
registrations, or qualifications with any Person or Governmental Authority and
no Consents or waivers from, or notices to, any other party are required for the
consummation by Seller of the transactions contemplated by this Agreement and
the other Transaction Agreements, except for Consents from Seller’s board of
directors.

 

6.3           Broker’s Fee. No agent, broker, investment banker, firm, or other
Person, acting on behalf of Seller or any of its Affiliates, or under the
authority of Seller or any of its Affiliates, is or will be entitled to any
broker’s or finder’s fee or any other commission or similar fee or expense,
directly or indirectly, in connection with any of the transactions contemplated
by this Agreement or any of the other Transaction Agreements.

 

7.            ADDITIONAL AGREEMENTS.

 

7.1           Seller Non-compete and Non-Solicit. From and for five (5) years
after the Closing Date, Seller will not, directly or indirectly: (a) own,
manage, operate, join, finance, provide advice or services to, control, or be
connected in any manner with any business or activity which is competitive with
the Business, as conducted by Seller immediately prior to the Closing, or (b)
cause or encourage any Transferred Employee to discontinue his or her
relationship with the Purchaser. Notwithstanding the preceding sentence, nothing
herein shall prevent Seller at any time from acquiring minority equity interests
of no more than five (5) per cent in any such business.

 

7.2           Public Announcements. Seller may issue a press release or other
public statement with respect to this Agreement or the transactions contemplated
hereby without the prior approval of RO.

 

7.3           Confidentiality. Except for any press release or public
announcement previously issued or issued in accordance with Section 7.2, all
terms of this Agreement, the other Transaction Agreements and the transactions
contemplated hereby and thereby shall remain confidential, except as disclosure
may be required by Law. No Party hereto shall disclose to anyone the
negotiations, any information concerning the contemplated transactions, or
anything contained herein, except to their accountants, employees, bankers and
attorneys in connection with the transactions contemplated by this Agreement,
without the prior written approval of the other Party. Seller agrees that from
and after the Closing Date, Seller will, and will cause its Affiliates to, keep
secret and retain in the strictest confidence, and will not use for the benefit
of itself or others, any proprietary information with respect to the Purchased
Assets; provided, however, proprietary information in intangible form and not
reduced to writing may be retained and used by Persons who have access to such
information.

 

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7.4           Further Assurances. The Purchaser and Seller shall, at any time
and from time to time after the Agreement Date, do or cause to be done all such
further acts, and to execute, acknowledge, deliver and file, or cause to be
executed, acknowledged, delivered or filed, all such deeds, transfers,
conveyances, assignments or assurances as may be reasonably requested by another
Party for: (i) transferring, conveying and assigning the Purchased Assets to the
Purchaser; and (ii) otherwise effectuating the transactions contemplated by this
Agreement. To the extent related to the Purchased Assets, the Purchaser and
Seller shall, at any time and from time to time after the Agreement Date,
provide such information or documentation as is reasonably requested by another
Party in connection with completing any tax returns or audits.

 

7.5           Transition Services.

 

(a)          After the Closing, Seller shall use commercially reasonable efforts
to assist Purchaser to (i) make such modifications to the home page of the
Website as Purchaser shall request in order to redirect all customers and
prospective customers to Purchaser’s website and (ii) maintain current program
of SEO, in each case at no additional cost to the Purchaser.

 

(b)          Seller shall cooperate with Purchaser to create proper messaging to
ensure maximum retention of players on the Website, including, but not limited
to, a posting on the RotoGrinders.com website.

 

(c)          From the Closing through July 31, 2015, Seller shall provide
Employees with office space currently occupied, at no charge to Purchaser.

 

8.             SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION.

 

8.1           Survival of Representations, Warranties and Covenants. All
representations and warranties set forth or made in this Agreement and any other
Transaction Agreement shall survive the Closing until the date that is eighteen
months after the Closing Date. All covenants and agreements of the Parties set
forth in this Agreement and the other Transaction Agreements to be performed
after the Closing shall survive the Closing in accordance with their respective
terms. Any claim pending on the expiration date of any applicable survival
period for which a notification of claim has been made pursuant to Section 8.4
below on or before such expiration date may continue to be asserted and
indemnified against until finally resolved.

 

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8.2           Indemnification Obligations of Seller. Seller agrees to indemnify,
defend and hold harmless RO and its shareholders, officers, directors, managers,
representatives, agents, employees and Affiliates (collectively, the “RO
Indemnitees”) from and against any claim, suit, action, liability, loss, damage,
deficiency, fee, cost or expense of any nature whatsoever (including, without
limitation, any interest, penalties, investigation expenses and fees through
trial and appeals, and disbursements of counsel and accountants, but excluding
incidental, consequential, special, or punitive and treble damages)
(collectively, “Losses”) arising out of, based upon or resulting from: (i) the
breach of any representation or warranty of Seller which is contained in this
Agreement, any other Transaction Agreement or any exhibits or schedules hereto
or thereto; (ii) any breach or failure to perform any of the covenants,
agreements or undertakings of Seller contained in this Agreement, any other
Transaction Agreement or any exhibit or schedule hereto or thereto; (iii) any
claims by Transferred Employees for compensation or benefits or other matters
under an Employee Plan accrued prior to the Closing Date and any claims of any
nature whatsoever (whether accruing before or after Closing) by any Employee who
is not hired by the Purchaser; (iv) any failure to comply with any “bulk sales,”
“bulk transfer” or similar laws of any State, if applicable; (v) any and all
obligations and liabilities that do not form part of the Assumed Liabilities;
and (vi) any and all costs and expenses (including reasonable legal and
accounting fees) incident to the enforcement of the indemnification rights of
the RO Indemnitees under this Section 8.2.

 

8.3           Indemnification Obligations of RO. RO agrees to indemnify, defend
and hold harmless Seller and its shareholders, officers, directors, managers,
representatives, agents, employees and Affiliates (collectively, the “Seller
Indemnitees”) from and against any Losses arising out of, based upon or
resulting from: (i) the breach of any representation or warranty of RO which is
contained in this Agreement, any other Transaction Agreement or any exhibits or
schedules hereto or thereto; (ii) any breach or failure to perform any of the
covenants, agreements or undertakings of RO contained in this Agreement, any
other Transaction Agreement or any exhibits or schedules hereto or thereto; and
(iii) any and all costs and expenses (including reasonable legal and accounting
fees) incident to the enforcement of the indemnification rights of the Seller
Indemnitees under this Section 8.3.

 

8.4           Notification of Claims. In the event that any Party asserts a
claim for indemnification hereunder, such Party shall (a) provide the
indemnifying Party (“Indemnifying Party”) with prompt written notice of the
nature of such claim (an “Indemnification Notice”), (b) make available to the
Indemnifying Party all relevant information which is material to the claim and
which is in the possession of the Seller Indemnitee or RO Indemnitee (as the
case may be) (“Indemnitee”) and (c) otherwise reasonably cooperate with the
Indemnifying Party with respect to such claim; provided, however, that the
failure of an Indemnitee to deliver an Indemnification Notice under this Section
8.4 shall not relieve the Indemnifying Party of its indemnification obligations
under this Article 8 unless and only to the extent that such Indemnifying Party
is materially prejudiced by such failure.

 

8.5           Objections to Claims for Indemnification. No payment shall be made
under Article 8 if (i) in the case of claims made by the RO Indemnitees, the
Seller shall object to the claim made pursuant to Section 8.4 within 30 days
after the Seller’s receipt of such notice, or (ii) in the case of claims made by
the Seller, RO shall object to the claim made pursuant to Section 8.4 within 30
days after RO’s receipt of such notice. If the Indemnifying Party does not
object in writing within such 30-day period, such failure to so object shall be
an irrevocable acknowledgment by the Indemnifying Party that the Indemnified
Party is entitled to the full amount of the claim for Losses set forth in the
notice, and payment in respect of such Losses shall thereafter be made in
accordance with this Article 8.

 

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8.6           Resolution of Conflicts.

 

(a)           In case the Indemnifying Party delivers an objection in accordance
with Section 8.5, the Seller and Purchaser shall attempt in good faith to agree
upon the rights of the respective parties with respect to each of such claims.
If the Seller and the Purchaser should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and, if such claim
involves a claim against the Escrow Fund, furnished to the Escrow Agent. The
Escrow Agent shall be entitled to rely on any such memorandum and make
distributions from the Escrow Fund in accordance with the terms thereof.

 

(b)          If the Purchaser and the Seller, notwithstanding such good faith
effort, fail to resolve such dispute within 30 days after the Seller advises the
Purchaser of its objections, then such dispute shall be resolved in accordance
with the provisions of Section 9.4.

 

8.7           Investigation. The right to indemnification, payment of Losses or
any other remedy based on the representations, warranties and the covenants
hereunder will not be affected by any investigation conducted with respect to,
or any knowledge acquired, or capable of being acquired at any time, whether
before or after the Closing Date, with respect to the accuracy or inaccuracy of,
or compliance with, any such representation, warranty or covenant. Furthermore,
no information or knowledge obtained in any investigation pursuant this
Agreement or any other Transaction Agreement shall affect or be deemed to modify
any representation, warranty or covenant contained herein or therein.

 

8.8           Third-Party Claims. The obligations and liabilities of an
Indemnifying Party under this Article 8, with respect to Losses resulting from a
claim brought by any third party (a “Third-Party Claim”) shall be subject to the
following terms and conditions:

 

(a)          Promptly after delivery of an Indemnification Notice in respect of
a Third-Party Claim, the Indemnifying Party may elect, by written notice to the
Indemnitee within ten (10) days of an Indemnification Notice, to undertake the
investigation and defense thereof with counsel reasonably satisfactory to the
Indemnitee, at the sole cost and expense of the Indemnifying Party. If the
Indemnifying Party chooses to defend any Third-Party Claim, the Indemnitee shall
cooperate with all reasonable requests of the Indemnifying Party and shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.

 

(b)          In the event that the Indemnifying Party, within ten (10) days
after receipt of an Indemnification Notice, does not so elect to defend such
Third-Party Claim, the Indemnitee will have the right to undertake the
investigation and defense of such Third-Party Claim for the account of the
Indemnifying Party. The Indemnitee shall not settle or compromise any
Third-Party Claim, or consent to the entry of a judgment, whether or not the
Indemnifying Party shall elect to defend such Third-Party Claim, without the
written consent of the Indemnifying Party.

 

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8.9           Payment and Limitations On Indemnification. From the Closing until
the Escrow Release Date, the Seller shall have the right, but not the
obligation, to satisfy claims for Losses made by the RO Indemnitees from the
Escrow Fund until there are no Escrow Shares remaining in the Escrow Fund. If
the Seller elects to use the Escrow Fund to satisfy such claims for Losses, it
shall be on the basis of $1 per Escrow Share.. Absent fraud or any breach of the
representations and warranties contained in Section 6.5 (Purchased Assets), (i)
Seller shall have no obligation to indemnify the RO Indemnitees under Section
8.2(i) unless and until the aggregate amount of all Losses incurred by the RO
Indemnitees in respect thereof exceeds $5,000 (the “Threshold Amount”),
whereupon Seller shall be obligated in respect of all Losses so identified
without regard to the Threshold Amount from the first dollar of such Losses, and
(ii) Seller shall have no obligation to indemnify the RO Indemnitees under this
Agreement for aggregate Losses exceeding the Purchase Price. Absent fraud, (x)
Purchaser shall have no obligation to indemnify the Seller Indemnitees under
Section 8.3(i) unless and until the aggregate amount of all Losses incurred by
the RO Indemnitees in respect thereof exceeds the Threshold Amount, whereupon RO
shall be obligated in respect of all Losses so identified without regard to the
Threshold Amount from the first dollar of such Losses, and (y) Purchaser shall
have no obligation to indemnify the Seller Indemnitees under this Agreement for
aggregate Losses exceeding $1,000,000.

 

8.10         Release of Escrow Funds. On the Escrow Release Date the Escrow
Shares held under the Escrow Agreement shall be released to the Seller;
provided, however, that the Escrow Agent shall not deliver any Escrow Shares
that the Escrow Agent deems necessary to satisfy any claims made pursuant to
Section 8.4 that are not resolved as of the Escrow Release Date. As soon as the
Escrow Agent receives written notice from the Purchaser and the Seller that such
claims have been resolved in accordance with Section 9.4, the Escrow Agent shall
deliver to the Seller the remaining portion of the Escrow Fund not required to
satisfy such claim.

 

9.             MISCELLANEOUS.

 

9.1           Costs and Attorneys’ Fees. The Parties agree that in the event it
becomes necessary for any Party to institute litigation or obtain the services
of an attorney in order to enforce its rights under the provisions of this
Agreement, then, in that event, the prevailing Party as determined by a court of
competent jurisdiction, may be awarded reasonable attorneys’ fees and costs
expended in pursuit of such litigation, including appellate litigation.

 

9.2           Notices. All notices, requests, claims, demands, waivers,
instructions, documents and other communications to be given pursuant to this
Agreement shall be in writing and shall be delivered personally, faxed, or sent
by nationally-recognized overnight courier to a Party at the address set forth
below for such Party or to such other address as the Party to whom notice is to
be given may have furnished to the other Party hereto in writing in accordance
herewith. Any such notice or communication shall be deemed to have been
delivered and received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of faxing, on the date sent (or on the first business
day following the date sent if the date sent is not a business day) if
confirmation of successful transmission is received, and (c) in the case of a
nationally-recognized overnight courier, on the first business day after the
date when sent for overnight delivery:

 

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If to Purchaser, to:

 

Random Outcome USA Inc.

c/o Random Outcome Limited.

333 BAY STREET

Suite # 2400

ONTARIO

CANADA M5H 2T6

 

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

 

Dickinson Wright LLP

199 Bay Street, Suite 2200

Toronto, ON M5L 1G4

Attention: Andrae J. Marrocco

 

If to Seller, to:

 

MGT Sports, Inc.

500 Mamaroneck Avenue – Suite 204

Harrison, NY 10528

Attention: Robert B. Ladd, President and CEO

Fax: (914) 630-7532

 

9.3           Entire Agreement. This Agreement (including the exhibits and
schedules hereto), and the other Transaction Agreements constitute the entire
agreement among the Parties with respect to the subject matter hereto and
supersede all prior agreements and understandings, both oral and written, among
the Parties with respect to the subject matter of this Agreement.

 

9.4           Governing law; Consent to Jurisdiction.

 

(a)          This Agreement shall be governed and construed in accordance with
the laws of the State of Delaware, without regard to the conflict of laws rules
thereof.

 

(b)          The Parties hereto irrevocably: (i) agree that any suit, action or
other legal proceeding arising out of this Agreement shall be brought within the
State of Delaware, (ii) consent to the jurisdiction of each such court in any
suit, action or proceeding, (iii) waive any objection which they, or any of
them, may have to the laying of venue of any such suit, action or proceeding in
any of such courts, and (iv) agree that service of process by overnight courier
or registered or certified mail, at the addresses listed in Section 9.2 shall be
good and sufficient service of process. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

9.5           Binding effect. This Agreement shall be binding upon and shall
inure to the benefit of the Parties hereto and their respective heirs, personal
representatives, successors and permitted assigns. This Agreement may not be
assigned by any Party hereto without the prior written consent of the other
Party, which consent may be withheld at the discretion of each Party whose
consent is requested and any purported assignment, unless so consented to, shall
be void and without effect.

 

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9.6           Waivers and Amendments. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the Parties hereto or, in the case of a waiver, by
the Party waiving compliance. Any Party may waive any misrepresentation by any
other Party, or any breach of warranty by, or failure to perform any covenant,
obligation or agreement by any other Party, provided that mere inaction or
failure to exercise any right, remedy or option under this Agreement, or any
delay in exercising the same, will not operate as nor shall be construed as a
waiver, and no waiver will be effective unless set forth in writing and only to
the extent specifically stated therein, and no single or partial exercise of any
such right, power or privilege will preclude any further exercise thereof or the
exercise of any other such right, power or privilege.

 

9.7           Recitals, Exhibits and Schedules. The recitals to this Agreement
and all exhibits and schedules attached hereto are hereby incorporated by
reference into, and made a part of, this Agreement.

 

9.8           Headings. The descriptive headings in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.

 

9.9           Severability. If any provision of this Agreement is determined to
be illegal or unenforceable, such provision will be deemed amended to the extent
necessary to conform to Applicable Law, or, if it cannot be so amended without
materially altering the intention of the Parties, it will be deemed stricken and
the remainder of this Agreement will remain in full force and effect.

 

9.10         Specific Performance. Each of the Parties hereto acknowledges and
agrees that the other Party hereto would be irreparably damaged in the event any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached and that there would be no adequate
remedy at law or in monetary damages to compensate for any such breach.
Accordingly, each Party hereto agrees that, in addition to any remedy to which
such Party may be entitled at law or in equity, they each shall be entitled to
injunctive relief to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof, in each
case without being required to post a bond or other security.

 

9.11         Fees and Expenses. Subject to Section 9.1, Seller and RO shall each
pay their own expenses incidental to the preparation and negotiation of this
Agreement and the consummation of the transactions contemplated hereby.

 

9.12         Legal Representation of the Parties. Each of the Parties hereto has
had the opportunity to have its own legal counsel independently advise such
Party with respect to the transactions contemplated by this Agreement and the
other Transaction Agreements. The Parties expressly agree that the language used
in this Agreement shall be deemed to be the language chosen by the Parties
hereto to express their mutual intent, and no provision of this Agreement should
be construed against or interpreted to the advantage of any Party hereto by
reason of such Party or its legal counsel having drafted or participated in the
drafting thereof.

 

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9.13         Payment of Transfer Costs and Expenses. All stamp, transfer,
documentary, sales, use, bulk, registration and other such taxes and fees
(including penalties and interest) which may be imposed in any jurisdiction in
connection with, or arising from, any of the transactions set forth herein shall
be paid by the Purchaser.

 

9.14         No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Parties hereto and their successors and permitted assigns and,
except with respect to the rights of the RO Indemnitees and Seller Indemnitees
under Article 8, this Agreement shall not be deemed to confer upon any third
party any remedy, claim, reimbursement or other right in addition to those which
may exist without regard to this Agreement.

 

9.15         Counterparts; Signatures. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together will constitute one and the same instrument. This Agreement and any
amendments hereto, to the extent executed and delivered by means of a facsimile
machine or e-mail of a PDF file containing a copy of an executed agreement (or
signature page thereto), shall be treated in all respects and for all purposes
as an original agreement or instrument and shall have the same binding legal
effect as if it were the original signed version thereof.

 

[Remainder of Page Intentionally Blank–Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
year first above written.

 

  MGT SPORTS, INC.         By: /s/ Robert Ladd     Name: Robert Ladd    
Title:   President               RANDOM OUTCOME USA INC.         By: /s/ Curtiss
Wm. Krawetz     Name: Curtiss Wm. Krawetz     Title: CEO

 

[Signature Page to Asset Purchase Agreement (Draft Day)]