Agreement and Plan of Reorganization among Continuum Group B Inc., HW Acquisition Corporation, and HorizonLive.com, Inc. (June 14, 2004)

 AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF JUNE 14, 2004 AMONG CONTINUUM GROUP B INC. HW ACQUISITION CORPORATION AND HORIZONLIVE.COM, INC.  SCHEDULES 3.1(b) Company Warrants, Notes and Voting Agreements 3.1(e) Company Litigation 3.1(f) Liabilities of Company 3.2(f) Liabilities of Parent and Acquisition Sub 4.1(a) Affiliates of Parent 4.1(b) Stockholders of Parent Receiving Registration Rights EXHIBITS Exhibit A Form of Certificate of Merger Exhibit B Form of Stockholder Investment Representation Letter Exhibit C Form of Affiliate Agreement Exhibit D Form of Registration Rights Agreement  AGREEMENT AND PLAN OF REORGANIZATION, dated as of June 14, 2004, among CONTINUUM GROUP B INC., a Nevada corporation ("PARENT"), HW ACQUISITION CORPORATION, a Delaware corporation and wholly-owned subsidiary of Parent ("ACQUISITION SUB"), and HORIZONLIVE.COM, INC., a Delaware corporation (the "COMPANY"). The Boards of Directors of Acquisition Sub and the Company have each duly approved and adopted this Agreement and Plan of Reorganization (this "AGREEMENT"), the Certificate of Merger in substantially the form of EXHIBIT A, attached hereto (the "CERTIFICATE OF MERGER"), and the proposed merger of Acquisition Sub with and into the Company (the "MERGER") in accordance with this Agreement, the Certificate of Merger and Delaware General Corporation Law (the "DELAWARE STATUTE"), whereby, among other things, (x) the issued and outstanding shares, if any, of (i) Common Stock, $0.01 par value, of the Company (the "COMPANY COMMON STOCK"), (ii) Series A Convertible Preferred Stock, $0.01 par value, of the Company (the "SERIES A PREFERRED STOCK"), and (iii) Series B Redeemable Convertible Participating Preferred Stock (the "SERIES B PREFERRED STOCK") (in each instance, other than shares held by dissenting stockholders), will be exchanged and converted into shares of common stock, $0.001 par value, of Parent (the "PARENT COMMON STOCK"), and (y) the issued and outstanding shares, if any, of Series C Convertible Preferred Stock, $0.01 par value, of the Company (the "SERIES C PREFERRED STOCK", and, together with the Company Common Stock, the Series A Preferred Stock and the Series B Preferred Stock, the "COMPANY STOCK"), will be exchanged and converted into shares of Series A Convertible Preferred Stock, $0.001 par value, of Parent (the "PARENT PREFERRED STOCK"), in the manner set forth in Article 2 hereof and in the Certificate of Merger, upon the terms and subject to the conditions set forth in this Agreement and the Certificate of Merger. NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and the Certificate of Merger and the representations, warranties, covenants, agreements, conditions and promises contained herein and therein, the parties hereby agree as follows: ARTICLE 1 GENERAL 1.1 THE MERGER. In accordance with the provisions of this Agreement, the Certificate of Merger and the Delaware Statute, Acquisition Sub shall be merged with and into the Company, which at and after the Effective Time (as defined below) shall be, and is sometimes herein referred to as, the "SURVIVING CORPORATION". Acquisition Sub and the Company are sometimes referred to as the "CONSTITUENT CORPORATIONS". 1.2 THE EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this Agreement, the Certificate of Merger shall be executed by the Surviving Corporation and delivered to and filed with the Secretary of State of the State  of Delaware on the Closing Date (as defined below) in the manner provided under Section 251 of the Delaware Statute. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware (the "Effective Time"). 1.3 EFFECT OF MERGER. At the Effective Time, the separate existence of Acquisition Sub shall cease and Acquisition Sub shall be merged with and into the Surviving Corporation, and the Surviving Corporation shall succeed, without other transfer, to all rights and property of each of the Constituent Corporations and shall be subject to all the debts and liabilities of the Constituent Corporations in the same manner as if the Surviving Corporation had itself incurred them, and be subject to all the restrictions, disabilities and duties of each of the Constituent Corporations as provided in Section 251 of the Delaware Statute. 1.4 CHARTER AND BY-LAWS OF SURVIVING CORPORATION. From and after the Effective Time, (i) the Certificate of Incorporation (the "CHARTER") of the Company shall be amended so that Article Four shall read in its entirety as follows: "The total number of shares of all classes of stock which the corporation shall have authority to issue is one thousand (1,000), all of which shall consist of Common Stock, $0.01 par value per share", and, as so amended, shall be the Charter of the Surviving Corporation, unless and until altered, amended or repealed as provided in the Delaware Statute, (ii) the by-laws of the Company shall be the by-laws of the Surviving Corporation, unless and until altered, amended or repealed as provided in the Delaware Statute, the Charter or such by-laws, (iii) the directors of the Company shall be the directors of the Surviving Corporation, unless and until removed, or until their respective terms of office shall have expired, in accordance with the Delaware Statute, the Charter and the by-laws of the Surviving Corporation, as applicable and (iv) the officers of the Company shall be the officers of the Surviving Corporation, unless and until removed, or until their terms of office shall have expired, in accordance with the Delaware Statute, the Charter and the by-laws of the Surviving Corporation, as applicable. 1.5 TAKING OF NECESSARY ACTION. Prior to the Effective Time, the parties hereto shall do or cause to be done all such acts and things as may be necessary or appropriate in order to effectuate the Merger as expeditiously as reasonably practicable, in accordance with this Agreement, the Certificate of Merger and the Delaware Statute. 1.6 TAX-FREE REORGANIZATION. For federal income tax purposes, the parties intend that the Merger be treated as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"). The parties shall not take a position on any tax return or take any action inconsistent with this Section 1.6 unless otherwise required by a taxing authority. 1.7 CLOSING. Unless this Agreement shall have been terminated and the transactions contemplated by this Agreement abandoned pursuant to the provisions of Article 9, and subject to the provisions of Article 6, the closing of the Merger (the "CLOSING") will take place at 10:00 a.m. (New York time) on a date (the "CLOSING DATE") to be mutually agreed upon by the parties, which date shall be not later than the third Business Day after all the conditions set forth in Article 6 shall have been satisfied (or waived in accordance with Section 10.10, to the extent the same may be waived), unless another date is agreed to in writing by the parties. The Closing shall take place at the offices -2-  of Orrick, Herrington & Sutcliffe LLP ("OH&S"), 666 Fifth Avenue, New York, New York 10103, unless another place is agreed to in writing by the parties. As used herein, the term "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day on which banks are permitted to close in the City and State of New York. ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES 2.1 CONVERSION OF STOCK AND CONSIDERATION. (a) DEFINITIONS. (i) "COMPANY STOCK FRACTION" shall equal 1.00 (which reflects the effectiveness of the Company Reverse Stock Split (as defined in Section 5.9). (ii) "MERGER SHARES" shall mean, collectively, (x) the 16,833,471 shares of Parent Common Stock to be issued upon exchange and conversion of outstanding Company Common Stock, Series A Preferred Stock, if any, and Series B Preferred Stock, if any, in accordance with this Article 2 and (y) the 5,000,000 shares of Parent Preferred Stock to be issued upon exchange and conversion of Series C Preferred Stock, in accordance with this Article 2. (b) EFFECTIVE OF MERGER. At the Effective Time, by virtue of the Merger and without any action on the part of the parties, the following will occur: (i) CAPITAL STOCK OF THE COMPANY. All shares of (x) Company Common Stock, Series A Preferred Stock, if any, and Series B Preferred Stock, if any, outstanding immediately prior to the Effective Time (other than shares held by the Company as treasury stock) will be cancelled and converted into and become the right to receive, in the aggregate, 16,833,471 shares of Parent Common Stock, to be distributed to the stockholders of the Company in accordance with Section 2.1(b)(iv), and (y) Series C Preferred Stock, if any, outstanding immediately prior to the Effective Time (other than shares held by the Company as treasury stock) will be cancelled and converted into and become the right to receive, in the aggregate, 5,000,000 shares of Parent Preferred Stock, to be distributed to the stockholders of the Company in accordance with Section 2.1(b)(iv). (ii) CANCELLATION OF CERTAIN SHARES OF COMPANY STOCK. All shares of Company Stock that is held at the Effective Time by the Company as treasury stock or that is authorized but unissued will be cancelled and no payment will be made with respect to those shares; (iii) CAPITAL STOCK OF ACQUISITION SUB. Each share of capital stock of Acquisition Sub outstanding immediately prior to the Effective Time will be converted into and become one validly issued, fully-paid, and non-assessable share of Common Stock of the Surviving Corporation. -3-  (iv) EXCHANGE RATIO FOR COMPANY STOCK. Each share of Company Common Stock, Series A Preferred Stock, if any, and Series B Preferred Stock, if any, issued and outstanding at the Effective Time (other than shares held by dissenting stockholders, if any), including all accrued and unpaid dividends thereon, shall be exchanged and converted into the right to receive the Company Stock Fraction (the "EXCHANGE RATIO") of a share of Parent Common Stock in accordance with Section 2.2(a). Each share of Series C Preferred Stock, if any, issued and outstanding at the Effective Time (other than shares held by dissenting stockholders, if any), including all accrued and unpaid dividends thereon, shall be exchanged and converted into the right to receive the Exchange Ratio of a share of Parent Preferred Stock in accordance with Section 2.2(a). All calculations pursuant to this Agreement shall be rounded to the nearest one-billionth (.000000001). (v) SHARES OF DISSENTING STOCKHOLDERS. Each issued and outstanding share of Company Stock held by a dissenting stockholder, if any, shall not be exchanged and converted as described in Section 2.1(b)(iv) but shall become the right to receive such consideration as may be determined to be due to such dissenting stockholder pursuant to the Delaware Statute; provided, however, that each share of Company Stock issued and outstanding at the Effective Time and held by a dissenting stockholder who or which shall, after the Effective Time, withdraw his or its demand for appraisal or lose or fail to perfect his or its right of appraisal as provided in the Delaware Statute shall be deemed, as of the Effective Time, to be exchanged and converted into Parent Common Stock or Parent Preferred Stock, as applicable, as provided in Section 2.1(b)(iv), without interest. After the Effective Time, as provided in Section 262 of the Delaware Statute, no dissenting stockholder will be entitled to vote the shares of Company Stock subject to such dissenting stockholder's demand for appraisal for any purpose or be entitled to the payment of dividends or other distributions on such shares. The Company shall be entitled to make any payment with respect to, or settle or offer to settle, any such demands. (vi) ADJUSTMENTS FOR CAPITAL CHANGES. If, prior to the Effective Time, Parent or the Company recapitalizes through a subdivision of its outstanding shares into a greater number of shares, or a combination of its outstanding shares into a lesser number of shares, or reorganizes, reclassifies or otherwise changes its outstanding shares into the same or a different number of shares or other classes, or declares a dividend on its outstanding shares payable in shares of its capital stock or securities convertible into shares of its capital stock, then the Exchange Ratio will be adjusted appropriately so as to maintain the relative proportionate interests of the holders of shares of Company Stock and the holders of shares of Parent Common Stock. Notwithstanding the foregoing, no adjustment to the Exchange Ratio shall be made as a result of the Company Reverse Stock Split. 2.2 EXCHANGE OF CERTIFICATES. (a) PROCEDURE FOR EXCHANGE. Following the Effective Time, Parent shall deliver to each holder of record, other than the Company and Parent or any subsidiary of the Parent, of a certificate or certificates which immediately prior to the Effective Time represented issued and outstanding shares of Company Stock (each, a "COMPANY CERTIFICATE"), a certificate (a "PARENT CERTIFICATE") representing that number of Merger Shares that such holder has the right to receive pursuant to Section 2.1(b)(iv) with respect to such Company Certificate, against receipt by Parent of (i) such Company Certificate for cancellation, (ii) -4-  an executed letter of transmittal, (iii) an executed stockholder investment representation letter in the form attached hereto as EXHIBIT B (each, a "STOCKHOLDER INVESTMENT REPRESENTATION LETTER") and (iv) a duly executed stock power to be delivered to the transfer agent, and the Company Certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of shares of Company Stock that is not registered on the transfer records of the Company, a Parent Certificate representing the proper number of Merger Shares may be issued to a transferee if the Company Certificate representing such Company Stock is presented to Parent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock or other transfer taxes have been paid. Until surrendered as contemplated by this Section 2.2(a), each Company Certificate shall be deemed, on and after the Effective Time, to represent only the right to receive upon such surrender, Parent Certificates representing Merger Shares as contemplated by Section 2.1(b)(iv), without interest. (b) FRACTIONAL SHARES. No fractional shares of Parent Common Stock or Parent Preferred Stock shall be issued in connection with the Merger, but in lieu thereof each holder of (i) Company Common Stock, Series A Preferred Stock or Series B Preferred Stock who would otherwise be entitled to receive a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock to be received by such holder) will receive from Parent the nearest whole number of shares of Parent Common Stock and (ii) Series C Preferred Stock who would otherwise be entitled to receive a fraction of a share of Parent Preferred Stock (after aggregating all fractional shares of Parent Preferred Stock to be received by such holder) will receive from Parent the nearest whole number of shares of Parent Preferred Stock. (c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. All Merger Shares issued upon the surrender for exchange of shares of Company Stock in accordance with the terms of this Article 2 shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Stock. After the Effective Time, there will be no further registration of transfers of the shares of Company Stock on the stock transfer books of the Company. If, after the Effective Time, any Company Certificate is presented to the Surviving Corporation, such Company Certificate shall be canceled and exchanged as provided in this Article 2. (d) NO LIABILITY. Neither Parent, Acquisition Sub nor the Company shall be liable to any holder of shares of Company Stock or Parent Common Stock, as the case may be, for Merger Shares (or dividends or distributions with respect thereto) to be issued in exchange for Company Stock pursuant to this Section 2.2, if, on or after the expiration of twelve (12) months following the Effective Date, such shares are delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. (e) LOST, STOLEN OR DESTROYED COMPANY CERTIFICATES. In the event any Company Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit to that effect by the person claiming such Company Certificate to be lost, stolen or destroyed, Parent will issue in exchange for such lost, stolen or destroyed Company Certificate the Merger Shares in respect thereof pursuant to this Agreement. -5-  2.3 CONVERSION OF THE COMPANY OPTIONS AND ASSUMPTION OF COMPANY OPTION PLANS; OTHER SECURITIES. (a) At the Effective Time, each of the Company's then outstanding stock options (collectively, the "COMPANY OPTIONS") which have not been terminated, exercised or otherwise converted as of the Effective Time (including, without limitation, the incentive stock options and non-qualified stock options under the Horizon Live Distance Learning, Inc. 1998 Stock Option/Stock Issuance Plan, as amended, and the 2004 Horizon-Wimba Stock Option Plan (together, the "COMPANY OPTION PLANS") to purchase Company Common Stock), by virtue of the Merger and without any further action on the part of any holder thereof, shall be assumed by Parent and automatically converted into an option to purchase a number of shares of Parent Common Stock determined by multiplying the number of shares of Company Common Stock covered by such Company Option immediately prior to the Effective Time by the Exchange Ratio (rounded to the nearest whole number of shares), at an exercise price per share of Parent Common Stock equal to the exercise price in effect under such Company Option immediately prior to the Effective Time divided by the Exchange Ratio (rounded up to the nearest cent), which option to purchase Parent Common Stock shall contain the same term, status as an "incentive stock option" under Section 422 of the Code (if such Company Option was theretofore a Company incentive stock option), vesting schedule and otherwise be on substantially the same terms and conditions as set forth in the assumed Company Option (any such assumed Company Option being herein referred to as an "ASSUMED OPTION"). In addition, at the Effective Time, each of the Company Option Plans, by virtue of the Merger and without any further action on the part of the Company or Parent, shall be assumed by Parent. The parties intend that the assumption and conversion of Company Options under this Section 2.3 shall meet the requirements of Section 424(a) of the Code and this Section 2.3 shall be interpreted in a manner consistent with such interpretation. (b) Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of the Assumed Options in accordance with this Section 2.3. 2.4 AUTHORIZATION OF THE MERGER, THIS AGREEMENT, AND THE CERTIFICATE OF MERGER. In the event the Merger shall be approved by the stockholders of the Company, as required by the Delaware Statute and as contemplated by this Agreement, such approval shall constitute approval and ratification by the stockholders of the Company of the (i) Merger, as required by the Delaware Statute and (ii) provisions of this Agreement and the Certificate of Merger. ARTICLE 3 REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Parent and Acquisition Sub that, except as disclosed in the schedules attached hereto: (a) ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and (ii) has all requisite -6-  corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted, to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The Company has delivered to Parent true and complete copies of the Charter and by-laws of the Company. (b) CAPITALIZATION. (i) As of the date of this Agreement (and prior to (v) the Company Reverse Stock Split, (w) the conversion of the Series A Preferred Stock and Series B Preferred Stock into Company Common Stock (which is contemplated to be effected prior to the Closing), (x) the issuance of shares in connection with contemplated combination with Wimba S.A., (y) the issuance of 1,000,000 shares of common stock in connection with amounts owed under that Agreement, dated as of December 10, 2003, among the Company and Argentum Management LLC, which agreement is expected to be terminated effective as of August 31, 2004, and (z) the issuance of shares of Series C Preferred Stock (which is contemplated to be effected prior to the Closing), the authorized capital stock of the Company consists of 27,830,307 shares designated as follows: 18,907,925 shares of Company Common Stock, of which 5,280,042 shares are outstanding; and 8,922,382 shares of preferred stock, $0.01 par value per share, of which (i) 204,360 shares are designated as Series A Preferred Stock, all of which shares are outstanding and (ii) 8,718,022 shares are designated as Series B Preferred Stock, all of which shares are outstanding. (ii) All of the issued and outstanding shares of Company Stock have been duly authorized and are validly issued, fully paid, non-assessable, and not subject to preemptive or similar rights of stockholders or others, and all shares of Company Stock that have been reserved for issuance will, upon issuance in compliance with the terms of the instruments pursuant to which they are to be issued, be duly authorized, validly issued, fully paid, non-assessable, and not subject to preemptive or similar rights of stockholders or others. (iii) Other than the Company Options or as set forth in Schedule 3.1(b), there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which the Company or any of its affiliates are a party or by which the Company is bound relating to the issued or unissued capital stock of the Company or obligating the Company to issue or sell any shares of capital stock of, or other equity interests in, the Company. There are no outstanding contractual obligations of the Company to provide funds to, or make investment (in the form of a loan, capital contribution or otherwise) in, any other person or entity. (c) AUTHORITY. The execution, delivery and performance by the Company of this Agreement and the Certificate of Merger and the consummation of the transactions contemplated hereby and thereby will, as of the Effective Time, have been duly authorized by all necessary corporate action on the part of the Company. This Agreement is, and the Certificate of Merger will be as of the -7-  Effective Time, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by principles of equity regardless of whether such enforceability is considered a proceeding in law or equity. Neither the execution, delivery and performance by the Company of this Agreement and the Certificate of Merger, nor the consummation of the transactions contemplated hereby or thereby, will in any respect (A) conflict with, (B) result in any violations of, (C) cause a default under (with or without due notice, lapse of time or both), (D) give rise to any right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any benefit under, (E) result in the creation of any Encumbrance on or against any assets, rights or property of the Company under any term, condition or provision of (x) any instrument or agreement to which the Company is a party, or by which the Company or any of its properties, assets or rights may be bound, (y) any law, statute, rule, regulation, order, writ, injunction, decree, permit, concession, license or franchise of any federal, state, municipal, foreign or other governmental court, department, commission, board, bureau, agency or instrumentality ("GOVERNMENTAL AUTHORITY") applicable to the Company or any of its properties, assets or rights or (z) the Company's Charter or by-laws, as amended through the date hereof, respectively, in each case, which conflict, breach, default or violation or other event would prevent the consummation of the transactions contemplated by this Agreement or the Certificate of Merger. Except as contemplated by this Agreement, no permit, authorization, consent or approval of or by, or any notification of or filing with, any Governmental Authority or other person is required in connection with the execution, delivery and performance by the Company of this Agreement or the Certificate of Merger or the consummation of the transactions contemplated hereby or thereby, other than (i) the filing with the SEC of such reports and information under the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and regulations promulgated by the SEC thereunder, as may be required in connection with this Agreement and the transactions contemplated hereby, (ii) the filing of such documents with, and the obtaining of such orders from, various state securities and blue-sky authorities as are required in connection with the transactions contemplated hereby, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and (iv) such other consents, waivers, authorizations, filings, approvals and registrations which if not obtained or made would materially impair the ability of the Company to consummate the transactions contemplated by this Agreement, including, without limitation, the Merger. As used herein, the term "Encumbrances" shall mean and include security interests, mortgages, liens, pledges, guarantees, charges, easements, reservations, restrictions, clouds, equities, rights of way, options, rights of first refusal and all other encumbrances, whether or not relating to the extension of credit or the borrowing of money. (d) FINANCIAL INFORMATION. (i) The Company has previously delivered to Parent the following financial statements (collectively, the "COMPANY FINANCIAL STATEMENTS): (1) the unaudited balance sheet of the Company as at March 31, 2004 (the "COMPANY INTERIM BALANCE SHEET") and the date thereof being  the "COMPANY INTERIM BALANCE SHEET DATE") and the related statement of income for the three-month period then ended, prepared by the Company (the "COMPANY INTERIM FINANCIAL STATEMENTS"); and (2) the audited balance sheet of the Company as at December 31, 2003 (the "COMPANY AUDITED BALANCE SHEET"); and the date thereof being the "COMPANY AUDITED BALANCE SHEET DATE"), and the related audited statement of income for the year then ended. (ii) The Company Financial Statements (A) are in accordance with the books and records of the Company, (B) fairly present the financial condition of the Company as at the respective dates indicated and the results of operations of the Company for the respective periods indicated and (C) have been prepared in accordance with U.S. generally accepted accounting principles consistently applied ("GAAP"), except as indicated therein and except for the absence of complete footnote disclosure as required by GAAP and subject, in the case of the Company Interim Financial Statements, to year-end audit adjustments. (e) LITIGATION, ETC. Except as disclosed on Schedule 3.1(e), there are no (i) actions, suits, claims, investigations or legal or administrative or arbitration proceedings (collectively, "ACTIONS") pending, or to the best knowledge of the Company, threatened against the Company, whether at law or in equity, or before or by any Governmental Authority, (ii) judgments, decrees, injunctions or orders of any Governmental Authority or arbitrator against the Company which, if adversely determined, could reasonably be expected to have a material adverse effect on the Company's operations or financial condition, taken together as a whole (a "COMPANY MATERIAL ADVERSE EFFECT"). (f) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 3.1(f) or as set forth or reserved against on the Company Interim Balance Sheet or the notes, if any, thereto, at the Company Interim Balance Sheet Date, the Company had no liability or obligation of any nature (whether known or unknown, matured or unmatured, fixed or contingent, secured or unsecured, accrued, absolute or otherwise ("LIABILITY")) that would be required to be reflected or reserved against on the Company Interim Balance Sheet in order for the Company Interim Balance Sheet to fairly present the financial condition of the Company at the Company Interim Balance Sheet Date in accordance with GAAP, except as disclosed or provided for thereon. Since the Company Interim Balance Sheet Date, the Company has incurred no Liabilities other than in the ordinary course of business. (g) BROKERS. Neither the Company nor any of its officers, directors or employees have employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated hereby. 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB. Parent and Acquisition Sub represent and warrant to the Company as follows: (a) ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Each of Parent and Acquisition Sub (i) is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and (ii) has all requisite corporate power and authority to own, lease and operate -9-  its properties and assets and to carry on its business as now being conducted, to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. Parent has delivered to the Company true and complete copies of the Charter and by-laws of each of Parent and Acquisition Sub. (b) CAPITALIZATION. (i) The authorized capital stock of Parent consists of Fifty Million (50,000,000) shares, of which Forty-Five Million (45,000,000) shares are Parent Common Stock, and Five Million (5,000,000) shares are Parent Preferred Stock. (ii) As of the date of this Agreement, (A) 4,822,074 shares of Parent Common Stock are issued and outstanding, (B) no shares of Parent Preferred Stock are issued and outstanding, and (C) no shares of capital stock are held in the treasury of Parent. Parent has provided a current and accurate stockholder list (identifying both record and beneficial ownership) to the Company, setting forth, among other things, the names and addresses of each record and beneficial owner of Parent Common Stock. (iii) All of the issued and outstanding shares of Parent Common Stock have been duly authorized and are validly issued, fully paid, non-assessable, and not subject to preemptive or similar rights of stockholders or others, and all shares of Parent Common Stock that have been reserved for issuance will, upon issuance in compliance with the terms of the instruments pursuant to which they are to be issued, be duly authorized, validly issued, fully paid, nonassessable, and not subject to preemptive or similar rights of stockholders or others. Parent complied in all respects with all federal securities and applicable state "blue sky" laws in connection with the offering, issuance, sale and delivery of all of the issued and outstanding shares of Parent Common Stock, and no such offering, issuance, sale or delivery was in violation thereof. (iv) There are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Parent or any of its affiliates are a party or by which Parent is bound relating to the issued or unissued capital stock of Parent or obligating Parent to issue or sell any shares of capital stock of, or other equity interests in, Parent. There are no outstanding contractual obligations of Parent to provide funds to, or make investment (in the form of a loan, capital contribution or otherwise) in, any other person or entity. There are no voting agreements, voting trusts, proxies, rights of first refusal, rights of first offer, co-sale rights, options, transfer restrictions or other agreements, instruments or undertakings (whether written or oral, formal or informal), with respect to the voting, transfer or disposition of Parent Common Stock or any other security of Parent to which Parent is a party or is bound or, to the best knowledge of Parent, between or among any persons other than Parent. (v) Parent has duly authorized and reserved for issuance the Merger Shares, and, when issued in accordance with the terms of Article 2, the Merger Shares will be duly authorized, validly issued, fully paid, nonassessable and not subject to preemptive or similar rights of stockholders or others. (vi) There exists a sufficient number of authorized but unissued shares of Parent Common Stock to allow for (i) the exercise in full of the Assumed Options and (ii) the conversion in full of the Parent Preferred -10-  Stock, and Parent has duly reserved for issuance a sufficient number of shares of Parent Common Stock to accommodate such exercise of the Assumed Options and conversion of the Parent Preferred Stock, and when such shares are issued by Parent, such shares will be duly authorized, validly issued, fully paid, nonassessable and not subject to preemptive or similar rights of stockholders or others. (vii) The authorized capital stock of Acquisition Sub consists of 1,000 shares of common stock, $0.001 par value per share. Parent owns all the outstanding shares of capital stock of Acquisition Sub, and all of such shares are validly issued, fully paid, nonassessable and not subject to preemptive or similar rights of stockholders or others. Other than Acquisition Sub, Parent does not own or control, directly or indirectly, any interest in any other corporation, association, or other business entity. Parent is not a participant in any joint venture, partnership, or similar arrangement. There are no voting agreements, voting trusts, proxies, rights of first refusal, rights of first offer, co-sale rights, options, transfer restrictions or other agreements, instruments or undertakings (whether written or oral, formal or informal), with respect to the voting, transfer or disposition of any equity security of Acquisition Sub to which Acquisition Sub is a party or is bound or, to the best knowledge of Parent and Acquisition Sub, between or among any persons other than Acquisition. (c) AUTHORITY. The execution, delivery and performance by Parent of this Agreement and each of the Affiliate Agreements and the execution, delivery and performance of this Agreement and the Certificate of Merger by Acquisition Sub and the consummation of the transactions contemplated hereby and thereby will, as of the Effective Time, have been duly authorized by all necessary corporate action on the part of Parent and Acquisition Sub, respectively. This Agreement will be valid and binding obligations of Parent as of the Effective Time, enforceable against Parent in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by principles of equity regardless of whether such enforceability is considered a proceeding in law or equity; and this Agreement and the Certificate of Merger are the valid and binding obligations of Acquisition Sub, enforceable against Acquisition Sub in accordance with their respective terms. At the Effective Time, neither the execution, delivery and performance by Parent of this Agreement, the execution, delivery and performance of this Agreement and the Certificate of Merger by Acquisition Sub, nor the consummation of the transactions contemplated hereby or thereby, will in any respect (A) conflict with, (B) result in any violations of, (C) cause a default under (with or without due notice, lapse of time or both), (D) give rise to any right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any benefit under, (E) result in the creation of any Encumbrance on or against any assets, rights or property of Parent or Acquisition Sub, as the case may be, under any term, condition or provision of (x) any instrument or agreement to which Parent or Acquisition Sub is a party, or by which Parent or Acquisition Sub or any of their respective properties, assets or rights may be bound, (y) any law, statute, rule, regulation, order, writ, injunction, decree, permit, concession, license or franchise of any Governmental Authority applicable to Parent or Acquisition Sub or any of their respective properties, assets or rights or (z) Parent's or Acquisition Sub's Charter or by-laws, as amended through the date hereof, respectively, in each case, which conflict, breach, default or violation or other event would prevent the consummation of the transactions contemplated by this Agreement or the Certificate of Merger. Except as contemplated by this -11-  Agreement, no permit, authorization, consent or approval of or by, or any notification of or filing with, any Governmental Authority or other person is required in connection with the execution, delivery and performance by Parent or Acquisition Sub of this Agreement or the Certificate of Merger (in the case of Acquisition Sub) or the consummation of the transactions contemplated hereby or thereby, other than (i) the filing with the SEC of such reports and information under the Exchange Act, and the rules and regulations promulgated by the SEC thereunder, as may be required in connection with this Agreement and the transactions contemplated hereby, (ii) the filing of such documents with, and the obtaining of such orders from, various state securities and blue-sky authorities as are required in connection with the transactions contemplated hereby, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and (iv) such other consents, waivers, authorizations, filings, approvals and registrations which if not obtained or made would materially impair the ability of Parent or Acquisition Sub to consummate the transactions contemplated by this Agreement, including, without limitation, the Merger (each of the actions reflected in clauses (i), (ii) and (iii) to be taken by Parent). (d) SEC DOCUMENTS. (i) Except as set forth in SCHEDULE 3.2(d), Parent has timely filed all forms, reports, statements and documents required to be filed by it with the SEC since its inception required to be filed by it pursuant to the federal securities laws and the SEC rules and regulations promulgated thereunder (collectively, the "PARENT SEC DOCUMENTS"). Except as set forth in SCHEDULE 3.2(d), each of the Parent SEC Documents was prepared in accordance, and complied as of their respective filing dates in all material respects, with the requirements of the Exchange Act or the Securities Act, as applicable, and the rules and regulations promulgated thereunder, and, at the time of filing (or if amended or superceded by a subsequent filing, then on the date of such subsequent filing), none of the Parent SEC Documents (including all exhibits and schedules thereto and documents incorporated by reference therein) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (ii) The financial statements (including the notes thereto) of Parent included in the Parent SEC Documents complied as to form in all material respects with the then applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, were prepared in accordance with Parent's books and records and in accordance with GAAP applied on a consistent basis during the periods involved (except as may have been indicated in the notes thereto) and fairly present the financial position of Parent as at the dates thereof and the results of their operations, stockholders' equity and cash flows for the period then ended. (e) LITIGATION, ETC. There are no (i) Actions pending, or to the best knowledge of Parent or Acquisition Sub, as applicable, threatened against Parent or Acquisition Sub nor, to the best knowledge of Parent or Acquisition Sub, as applicable, any basis therefor, whether at law or in equity, or before or by any Governmental Authority, (ii) judgments, decrees, injunctions or orders of any Governmental Authority or arbitrator against Parent or Acquisition Sub. -12-  (f) ABSENCE OF UNDISCLOSED LIABILITIES. Neither Parent nor Acquisition Sub has any Liability, except for those Liabilities specifically disclosed in the Parent SEC Documents, which Liabilities do not, in the aggregate, exceed $60,000. Each Liability of Parent and Acquisition Sub is specifically identified and set forth on SCHEDULE 3.2(f). (g) NO BUSINESS ACTIVITIES. Since inception, neither Parent nor Acquisition Sub has engaged in any business or operations other than organizational activities and has not, other than issuing shares to stockholders, commenced any business or operational activities. Except for the Share Contribution Agreement, dated as of June 2, 2004 (the "SHARE CONTRIBUTION AGREEMENT"), by and among Parent and the stockholders of Parent listed on Schedule A thereto, neither Parent nor Acquisition Sub is a party to or bound by, either directly or indirectly, any written or oral contract, commitment, agreement, arrangement or understanding relating to any matter. Neither Parent nor Acquisition Sub owns, leases or licenses any real or personal property or assets. (h) EMPLOYEE BENEFIT PLANS. Neither Parent nor Acquisition Sub employs any person on a full- or part-time basis, and neither Parent nor Acquisition Sub has any "Employee Benefit Plan" as defined in the Employee Retirement Income Security Act of 1974. (i) COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Neither Parent nor Acquisition Sub is in violation or default of any provision of its respective Charter or by-laws. Neither Parent nor Acquisition Sub is in default of any instrument, judgment, order, writ, decree, contract, agreement or understanding to which it is a party or by which it is bound, either directly or indirectly, or of any provision of any federal, state or local law, statute, rule or regulation applicable to Parent or Acquisition Sub, including, without limitation, the provisions of the Sarbanes-Oxley Act of 2002. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in (i) any violation or default of any provision of Parent's or Acquisition Sub's Charter or by-laws or (ii) any violation or conflict with any provision of any federal, state or local law, statute, rule or regulation applicable to Parent or Acquisition Sub. (j) BROKERS. Neither Parent, Acquisition Sub, nor any of their respective officers, directors or employees have employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated hereby. ARTICLE 4 RELATED AGREEMENTS 4.1 RELATED AGREEMENTS. Simultaneously with the execution and delivery of this Agreement or on or prior to the Closing Date, the following agreements (collectively referred to herein as the "RELATED AGREEMENTS") are being executed and delivered by the respective parties thereto: (a) AFFILIATE AGREEMENTS. Simultaneously with the execution and delivery of this Agreement, each of the persons listed on SCHEDULE 4.1(a), -13-  attached hereto (each, a "PARENT AFFILIATE"), is entering into the Affiliate Agreement in the form of EXHIBIT C (the "AFFILIATE AGREEMENT"), providing, among other things, that each Parent Affiliate shall not transfer shares of Parent Common Stock held (of record or beneficially) by such Parent Affiliate except as permitted therein. (b) REGISTRATION RIGHTS AGREEMENT. Parent and the stockholders of Parent listed on SCHEDULE 4.1(b), attached hereto, are entering into a Registration Rights Agreement, substantially in the form attached hereto as EXHIBIT D (the "REGISTRATION RIGHTS AGREEMENT"), providing for, among other things, the granting of piggy-back registration rights to such stockholders of Parent. ARTICLE 5 CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME; ADDITIONAL AGREEMENTS 5.1 OPERATION OF BUSINESS OF THE COMPANY AND PARENT. From and after the date hereof until the Effective Time or the earlier termination of this Agreement pursuant to Section 9.1 hereof (the "EXECUTORY PERIOD"), (a) the Company shall operate its business as now operated and only in the normal and ordinary course and, consistent with such operation, will use its commercially reasonable efforts to preserve intact its business and assets, to keep available the services of its officers and employees and to maintain satisfactory relationships with persons having business dealings with it and (b) Parent and Acquisition Sub shall not conduct or commence any operational activities of any kind, other than activities which are, in the reasonable judgment and with the prior written approval of the Company, necessary to consummate the transactions contemplated hereby. 5.2 PREPARATION OF FILINGS. As promptly as practicable after the date of this Agreement, Parent shall properly prepare, file and mail, if applicable, and the Company shall fully cooperate in the preparation of, any filings required under the Exchange Act (including, but not limited to, the information required by Rule 14f-1 to be filed and mailed to the stockholders of Parent), the Securities Act of 1933, as amended (the "SECURITIES ACT"), or any other federal or state laws and Parent shall properly prepare and file any filings required under state securities or "blue sky" laws, in each case relating to the Merger and the transactions contemplated by this Agreement (collectively, the "FILINGS"). Each party will notify the other party promptly of the receipt of any comments from any government officials for amendments or supplements to any Filing or for additional information and will supply the other party with copies of all correspondence between such party or any of its representatives, on the one hand, and any government officials, on the other hand, with respect to the Merger or any Filing. Each party shall promptly provide the other party (or its counsel) with copies of all filings made by such party with any Governmental Authority in connection with this Agreement and the transactions contemplated hereby and thereby. The Filings shall comply in all material respects with all applicable requirements of law. Whenever any event occurs which should be set forth in an amendment or supplement to any Filing, Parent or the Company, as the case may be, shall promptly inform the other party of such occurrence and cooperate in filing with any government officials, and/or mailing to the stockholders of the Company, such amendment or supplement. -14-  5.3 LEGAL CONDITIONS TO MERGER. Each party hereto shall take all reasonable actions necessary to comply promptly with all legal requirements that may be imposed on such party with respect to the Merger and will take all reasonable action necessary to cooperate with and furnish information to the other party in connection with any such requirements imposed upon such other party in connection with the Merger. Each party hereto shall take all reasonable actions necessary (a) to obtain (and will take all reasonable actions necessary to promptly cooperate with the other party in obtaining) any consent, authorization, order or approval of, or any exemption by, any Governmental Authority, or other third party, required to be obtained or made by such party (or by the other parties) in connection with the Merger or the taking of any action contemplated by this Agreement, (b) to defend, lift, rescind or mitigate the effect of any lawsuit, order, injunction or other action adversely affecting the ability of such party to consummate the transactions contemplated hereby and (c) to fulfill all conditions precedent applicable to such party pursuant to this Agreement. 5.4 CONSENTS. Each party hereto shall use its best efforts, and the other parties shall cooperate with such efforts, to obtain any consents and approvals of, or effect the notification of or filing with, each person or authority, whether private or governmental, whose consent or approval is required in order to permit the consummation of the Merger and the transactions contemplated hereby and to enable the Surviving Corporation to conduct and operate the business of the Company substantially as presently conducted and as proposed to be conducted. 5.5 EFFORTS TO CONSUMMATE. Subject to the terms and conditions herein provided, the parties hereto shall use their best efforts to do or cause to be done all such acts and things as may be necessary, proper or advisable, consistent with all applicable laws and regulations, to consummate and make effective the transactions contemplated hereby and to satisfy or cause to be satisfied all conditions precedent that are set forth in Article 6 as soon as reasonably practicable. 5.6 NOTICE OF PROSPECTIVE BREACH. Each party hereto shall immediately notify the other parties in writing upon the occurrence of any act, event, circumstance or thing that is reasonably likely to cause or result in a representation or warranty hereunder to be untrue at the Closing, the failure of a closing condition to be achieved at the Closing, or any other breach or violation hereof or default hereunder. 5.7 PUBLIC ANNOUNCEMENTS. The parties hereto agree that, to the maximum extent feasible, but subject to the public disclosure and other legal obligations of Parent and regulatory obligations to which each may be subject, they shall advise and confer prior to the issuance (and provide copies to the other party prior to issuance) of any public announcement or reports or statements with respect to the Merger. 5.8 SUPPORT OF MERGER BY OFFICERS AND DIRECTORS. Each party hereto shall use its or his best efforts to cause all of its officers and directors to support the Merger and to take all actions and execute all documents reasonably requested by the other parties hereto to carry out the intent of the parties with respect to the transactions contemplated hereby. 5.9 COMPANY REVERSE STOCK SPLIT. The Company currently intends to effect a 1:5 ###-###-#### reverse stock split (the "COMPANY REVERSE STOCK SPLIT") of the Company Common Stock prior to the Effective Time; PROVIDED, however, that -15-  the occurrence or non-occurrence for any reason of the Company Reverse Stock Split prior to the Effective Time shall not be deemed to be a breach by the Company of any representation, warranty, covenant or agreement under this Agreement, and in the event the Company Reverse Stock Split does not occur prior to the Effective Time, the parties agree that the Exchange Ratio shall be re-calculated in such a manner as to put the parties in the same relative economic position as if the Company Reverse Stock Split had been completed prior to the Effective Time. 5.10 ACCESS TO RECORDS. From the date hereof until the Effective Time, Parent shall cooperate in all respects with the preparation of the historical and pro forma financials of the Surviving Corporation and Parent and shall, at the Company's request, afford to the officers, independent certified public accounts, counsel and other representatives of the Company, free and full access at all reasonable times to all properties, books and records (including tax returns filed and those in preparation) of Parent and Acquisition Sub and to the work papers of the independent certified public accountants of Parent and Acquisition Sub. Additionally, Parent and Acquisition Sub will cause its officers to furnish to the Company and its accountants and other representatives such additional financial and operating data, if any, and other information as to the business and properties of Parent and Acquisition Sub as the Company or such other representatives shall from time to time reasonably request. ARTICLE 6 CONDITIONS PRECEDENT 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations of each party to perform this Agreement and to effect the Merger are subject to the satisfaction of the following conditions unless waived (to the extent such conditions can be waived) by all parties hereto: (a) APPROVALS. All authorizations, consents, orders or approvals of, or declarations or filings with or expiration of waiting periods imposed by any Governmental Authority necessary for the consummation of the transactions contemplated hereby shall have been obtained or made or shall have occurred. (b) LEGAL ACTION. No temporary restraining order, preliminary injunction or permanent injunction or other order preventing the consummation of the Merger shall have been issued by any federal or state court or other Governmental Authority and remain in effect. No litigation or proceeding shall be pending which will have the probably effect of enjoining or preventing the consummation of any of the transactions provided for in this Agreement. (c) LEGISLATION. No federal, state, local or foreign statute, rule or regulation shall have been enacted which prohibits, restricts or delays the consummation of the transactions contemplated by this Agreement or any of the conditions to the consummation of such transactions. (d) WIMBA TRANSACTION. The closing of the transactions contemplated by the Share Exchange Agreement, dated as of the date hereof, among the Company, Wimba S.A. and the other parties thereto, shall have occurred in accordance therewith. -16-  (e) RULE 14F-1 INFORMATION. Parent shall have filed with the SEC and mailed to its stockholders, not less than 10 days prior to the Closing Date, the information required by Rule 14f-1 of the Exchange Act. 6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND ACQUISITION SUB. The obligations of Parent to perform this Agreement and of Acquisition Sub to perform this Agreement and the Certificate of Merger are subject to the satisfaction of the following conditions unless waived (to the extent such conditions can be waived) by Parent and Acquisition Sub: (a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Parent and Acquisition Sub shall have received a certificate signed by the Chief Executive Officer of the Company on behalf of the Company to the effect that the representations and warranties of the Company set forth in Section 3.1 shall be true and correct in all material respects (except for any representation or warranty that by its terms is qualified by materiality, in which case it shall be true and correct in all respects) as of the date of this Agreement and as of the Closing Date as though made at and as of such dates, respectively; PROVIDED, however, that the parties agree that the Company's representations and warranties and the certificate contemplated hereby do not extend to Wimba S.A., which the Company expects to acquire prior to the Closing Date. (b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have performed in all material respects the obligations required to be performed by it under this Agreement prior to or as of the Closing Date, and Parent and Acquisition Sub shall have received a certificate signed by the Acting Chief Executive Officer of the Company to that effect. 6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the Company to perform this Agreement and the Certificate of Merger are subject to the satisfaction of the following conditions unless waived (to the extent such conditions can be waived) by the Company: (a) REPRESENTATIONS AND WARRANTIES OF PARENT. The representations and warranties of Parent and Acquisition Sub set forth in Section 3.2 hereof shall be true and correct in all material respects (except for any representation or warranty that by its terms is qualified by materiality, in which case it shall be true and correct in all respects) as of the date of this Agreement, and as of the effective date of the Stockholder Action and as of the Closing Date as though made at and as of such dates, respectively, and the Company shall have received a certificate signed by the President of Parent and the President of Acquisition Sub to that effect. (b) STOCKHOLDER APPROVAL; CERTIFICATE OF MERGER. This Agreement and the Merger shall have been duly and validly approved and adopted by the stockholders of the Company in accordance with the Delaware Statute and the Company's Charter and By-laws, and the Certificate of Merger shall have been executed and delivered by Acquisition Sub and the Company and filed with and accepted by the Secretary of State of the State of Delaware. (c) PERFORMANCE OF OBLIGATIONS OF PARENT AND ACQUISITION SUB. Parent and Acquisition Sub shall have performed in all material respects their respective obligations required to be performed by them under this Agreement and -17-  the Certificate of Merger prior to or as of the Closing Date and the Company shall have received a certificate signed by the President of Parent and the President of Acquisition Sub to that effect. (d) RELATED AGREEMENTS. Each of the Related Agreements and the Share Contribution Agreement shall each be in full force and effect and the actions required to be taken thereunder by the parties thereto prior to the Effective Time shall have been taken. (e) PARENT PREFERRED STOCK CERTIFICATE OF DESIGNATIONS. The Company shall have received evidence that the Certificate of Designations designating the rights and preferences of the Parent Preferred Stock has been properly filed with the Secretary of State of the State of Nevada and is effective, and such Certificate of Designations shall be substantially similar to the Certificate of Designations designating the rights and preferences of the Company's Series C Preferred Stock. (f) BOARD REPRESENTATION. Each person who is an officer and/or director of Parent and/or Acquisition Sub, respectively, immediately prior to the Effective Time shall have resigned his or her position, effective immediately upon the Effective Time, and Parent shall have caused each person listed on Schedule 6.3(f), hereto, to be duly appointed as a member of the board of directors of Parent and/or to the office set forth opposite such person's name. (g) STOCK CERTIFICATES. Parent shall have delivered a letter to the transfer agent directing the transfer agent to deliver the Merger Shares. (h) BOARD APPROVAL. This Agreement and the Merger Agreement shall have been approved by the Board of Directors of Parent. (i) SUPPORTING DOCUMENTS. The Company shall have received copies of such supporting documents and other information with respect to the operations and affairs of Parent and Acquisition Sub as the Company may reasonably request. (j) FORM 8-K FINANCIALS. The consolidated historical and pro forma financials of the Company, Acquisition Sub and Parent shall have been prepared in accordance with the requirements of Form 8-K promulgated under the Exchange Act and shall, in the Company's reasonable judgment, be in form suitable for filing with the SEC. (k) LIABILITIES OF PARENT AND ACQUISITION SUB. The Company shall have received evidence satisfactory to the Company (in its sole discretion) that Parent and Acquisition Sub have satisfied in full all Liabilities of Parent and Acquisition Sub. (l) CAPITALIZATION OF PARENT. The Company shall have received evidence satisfactory to the Company (in its sole discretion), which evidence may include, among other things, a certificate from Parent's transfer agent and an opinion of Parent's legal counsel, that the outstanding capital stock of Parent immediately prior to Closing consists solely of 1,500,000 shares of Parent Common Stock. -18-  ARTICLE 7 ADDITIONAL AGREEMENTS 7.1 RESTRICTION ON TRANSFER. (a) The shares of Parent Common Stock to be issued to each stockholder of the Company pursuant to the Merger and any shares of capital stock or other securities received with respect thereto (collectively, the "RESTRICTED SECURITIES") shall not be sold, transferred, assigned, pledged, encumbered or otherwise disposed of (each, a "TRANSFER") except upon the conditions specified in this Section 7.1, which conditions are intended to insure compliance with the provisions of the Securities Act. Each stockholder of the Company shall observe and comply with the Securities Act and the rules and regulations promulgated by the SEC thereunder as now in effect or hereafter enacted or promulgated, and as from time to time amended, in connection with any Transfer of Restricted Securities beneficially owned by the Stockholder. (b) (i) Each certificate representing Restricted Securities issued to a stockholder of the Company that is a "U.S. person" (as defined by the Securities Act) and each certificate for such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions of Sections 7.1(c) and 7.1(d) hereof) be stamped or otherwise imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES OR "BLUE-SKY" LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION 7.1 OF THE AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF JUNE 14, 2004, AMONG CONTINUUM GROUP B INC., HW ACQUISITION CORPORATION AND HORIZONLIVE.COM, INC., AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT OF CERTAIN OF SUCH CONDITIONS, CONTINUUM GROUP B INC. HAS AGREED TO DELIVER TO THE HOLDER HEREOF A CONTINUUM GROUP B INC. CERTIFICATE, NOT BEARING THIS LEGEND, FOR THE SECURITIES REPRESENTED HEREBY REGISTERED IN THE NAME OF THE HOLDER HEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF CONTINUUM GROUP B INC." (ii) Each certificate representing Restricted Securities issued to a stockholder of the Company that is not a "U.S. person" (as defined by the Securities Act) and each certificate for such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the -19-  provisions of Sections 7.1(c) and 7.1(d) hereof) be stamped or otherwise imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE TRANSFERRED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING SECURITIES SOLD PURSUANT TO REGULATION S MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED." (c) Upon approval of the Merger by the stockholders of the Company as contemplated hereby, each stockholder of the Company is deemed to agree (and by execution and delivery of the Stockholder Investment Representation Letter each stockholder of the Company confirms its or his agreement) that, prior to any Transfer of Restricted Securities to give written notice to Parent of such stockholder's intention to effect such Transfer and to comply in all other respects with the provisions of this Section 7.1. Each such notice shall describe the manner and circumstances of the proposed Transfer and, if requested by Parent, shall be accompanied by the written opinion, addressed to Parent, of counsel for the holder of such Restricted Securities, stating that in the opinion of such counsel (which opinion and counsel shall be reasonably satisfactory to Parent) such proposed transfer does not involve a transaction requiring registration or qualification of such Restricted Securities under the Securities Act or the securities or "blue-sky" laws of any relevant state of the United States. The holder thereof shall thereupon be entitled to Transfer such Restricted Securities in accordance with the terms of the notice delivered by it to Parent. Each certificate or other instrument evidencing the securities issued upon the Transfer of any such Restricted Securities (and each certificate or other instrument evidencing any untransferred balance of such Restricted Securities) shall bear the applicable legend set forth in Section 7.1(b) unless (x) in the opinion of Parent's counsel, registration of any future Transfer is not required by the applicable provisions of the Securities Act or (y) Parent shall have waived the requirement of such legends. No stockholder of the Company shall Transfer any Restricted Securities until such opinion of counsel has been given (unless waived by Parent or unless such opinion is not required in accordance with the provisions of this Section 7.1(c)). (d) Notwithstanding the foregoing provisions of this Section 7.1, the restrictions imposed by this Section 7.1 upon the transferability of Restricted Securities shall cease and terminate when (i) any such shares are sold or otherwise disposed of pursuant to an effective registration statement under the Securities Act or as otherwise contemplated by Section 7.1(c) and, pursuant to Section 7.1(c), the securities so transferred are not required to bear the applicable legend set forth in Section 7.1(b) or (ii) the holder of such Restricted Securities has met the requirements for Transfer of such Restricted Securities pursuant to subparagraph (k) of Rule 144. Whenever the restrictions imposed by this Section 7.1 shall terminate, as herein provided, the holder of Restricted Securities as to which such restrictions have -20-  terminated shall be entitled to receive from Parent, without expense, a new certificate not bearing the restrictive legend set forth in Section 7.1(b) and not containing any other reference to the restrictions imposed by this Section 7.1. 7.2 CONFIDENTIALITY. Parent and the Acquisition Sub acknowledge and recognize that the Subject Business has been conducted by the Company or is currently planned to be conducted by the Surviving Corporation throughout the world, and further acknowledge and recognize the highly competitive nature of the industry in which the Subject Business is involved and that, accordingly, in consideration of the premises contained herein, the consideration to be received hereunder and the direct and indirect benefits to the Parent of the transactions contemplated hereby, and in consideration of and as an inducement to the Company to enter into this Agreement and to consummate the transactions contemplated hereby, from and after the date hereof, Parent and the Acquisition Sub each shall not use or disclose to any Person, any Confidential Information or the terms and conditions of this Agreement, for any reason or purpose whatsoever, nor shall Parent and the Acquisition Sub make use of any of the Confidential Information or the terms and conditions of this Agreement for its or their own purposes or for the benefit of any Person except (i) in order to facilitate the fulfillment of such party's obligations hereunder, (ii) to the Company and the Surviving Corporation, (iii) as required by law or judicial process, (iv) as required to fulfill legal and regulatory obligations, if any or (v) to such party's attorneys, accountants, other advisors, officers, employees, directors and equityholders, as applicable, provided that such third party agrees to be bound by the confidentiality provisions hereof. For purposes of this Agreement, "CONFIDENTIAL INFORMATION" shall mean Intellectual Property Rights of the Company or its affiliates and all information of a proprietary nature relating to the Company or its affiliates or the Subject Business (other than information that is in the public domain at the time of receipt thereof by Parent or the Acquisition Sub or otherwise becomes public other than as a result of the breach by Parent or the Acquisition Sub of its agreement hereunder or is rightfully received from a third party without any obligation of confidentiality to the Company or is independently developed by Parent or the Acquisition Sub). As used herein, the term "SUBJECT BUSINESS" shall mean the business of the Company or such business as is reasonably related to the business of the Company or is reasonably based on its technology. 7.3 ASSUMPTION OF REGISTRATION RIGHTS AGREEMENT AND PREEMPTIVE RIGHTS AGREEMENT. At the Effective Time, each of (i) the Registration Rights Agreement to be entered into prior to the Effective Time among the Company and the investors of the Series C Preferred Stock (the "COMPANY REGISTRATION RIGHTS AGREEMENT"), and (ii) the Preemptive Rights Agreement to be entered into prior to the Effective Time among the Company and the stockholders of the Company a party thereto (the "COMPANY PREEMPTIVE RIGHTS AGREEMENT"), by virtue of the Merger and without any further action on the part of Parent or any party to the Company Registration Rights Agreement or the Preemptive Rights Agreement, shall be assumed by Parent. -21-  ARTICLE 8 SURVIVAL; INDEMNIFICATION 8.1 INDEMNIFICATION: SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SPECIFIC PERFORMANCE. (a) Each of the Company, on the one hand, and Parent and Acquisition Sub, on the other hand, shall indemnify, defend and hold the other party (and its officers, directors, partners, employees, agents and affiliates) harmless from and against all liability, loss or damage, together with all reasonable costs and expenses related thereto (including legal and accounting fees and expenses), arising from, relating to, or connected with any untruth, inaccuracy or breach of any representations, warranties, covenants or agreements contained herein prior to the Effective Time. Notwithstanding the foregoing, the representations and warranties of the Company, Parent and Acquisition Sub shall be deemed to be a condition to the Merger and, in the event the Closing hereunder shall occur, all representations and warranties shall not in any event survive beyond, and shall terminate and be of no further force or effect, at and after the Effective Time. (b) NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY CONTAINED HEREIN, NO PARTY HERETO SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM THE TERMINATION OR IMPLEMENTATION OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. (c) The transactions contemplated hereby are unique and the parties hereto acknowledge that the breach or threatened breach of the binding provisions of this Agreement may cause irreparable harm to the non-breaching party or parties, as the case may be, for which an award of monetary damages may be inadequate. Accordingly, in addition to and not in limitation of any other remedies available for a breach or threatened breach by any party of any provisions of this Agreement, the Company shall be entitled to an injunction restraining Parent and/or Acquisition Sub from continuing such breach or threatened breach and Parent shall be entitled to an injunction restraining the Company from continuing such breach or threatened breach. ARTICLE 9 TERMINATION; AMENDMENT, MODIFICATION AND WAIVER 9.1 TERMINATION. This Agreement may be terminated, and the Merger abandoned, notwithstanding the approval by Parent, Acquisition Sub and the Company of this Agreement, at any time prior to the Effective Time, by: (a) the mutual consent of Parent, Acquisition Sub and the Company; or (b) either party, if the conditions set forth in Section 6.1 hereof shall not have been met by September 30, 2004, except if such conditions have not been met solely as a result of the action or inaction of the party seeking to terminate; or (c) Parent, Acquisition Sub or the Company, if such party shall have determined in its sole discretion, exercised in good faith, that the Merger contemplated by this Agreement has become impracticable by reason of the institution of any litigation, proceeding or investigation to restrain or prohibit the consummation of the Merger, or which questions the validity or legality of the transactions contemplated by this Agreement; or -22-  (d) Parent, Acquisition Sub or the Company, if any statute, rule, regulation or other legislation shall have been enacted which, in the reasonable judgment of such party, exercised reasonably and in good faith, materially adversely impairs the conduct or operation of another party. Any termination pursuant to this Section 9.1 (other than a termination pursuant to Section 9.1(a) hereof) shall be effected by written notice from the party or parties so terminating to the other parties hereto. 9.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement as provided in Section 9.1, this Agreement shall be of no further force or effect, except for this Section 9.2, and Article 10, each of which shall survive the termination of this Agreement. ARTICLE 10 MISCELLANEOUS 10.1 EXPENSES. As used in this Agreement, "TRANSACTION COSTS" shall mean, with respect to any party, all actual, out-of-pocket expenses incurred by such party and paid to third parties in connection with this Agreement, the Merger and all other transactions provided for herein and therein; but shall not in any event include (a) general overhead, (b) the time spent by employees of such party internally, (c) postage, telephone, telecopy, photocopy and delivery expenses, (d) permit and filing fees, and (e) other non-material expenses that are incidental to the ordinary course of business. Each party hereto shall bear its own fees and expenses in connection with the transactions contemplated hereby; provided, however, that in the event the Merger shall be consummated, (x) except as set forth in clause (y), Parent and Acquisition Sub shall bear all Transaction Costs and Liabilities of Parent and Acquisition Sub, whether or not such Transaction Costs and Liabilities have been paid by Parent and Acquisition Sub on or before the Closing Date and (y) the Company shall bear up to an aggregate of $60,000 of properly documented Transaction Costs and Liabilities of Parent. 10.2 DEFINITION OF BEST KNOWLEDGE. As used in this Agreement, the term "BEST KNOWLEDGE and like phrases shall mean and include (i) actual knowledge and (ii) that knowledge which a prudent business person (including the officers, directors, and key employees of the party in question) could have obtained in the management of his or her business affairs after making due inquiry and exercising due diligence with respect thereto. In connection therewith, the knowledge (both actual and constructive) of any officer, director, or key employee of any party hereto shall be imputed to be the knowledge of such party. 10.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and the Exhibits attached hereto) and the other writings referred to herein contain the entire agreement among the parties hereto with respect to the transactions contemplated hereby and supersede all prior agreements or understandings, written or oral, among the parties with respect thereto. 10.4 DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement. -23-  10.5 NOTICES. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally or sent by nationally-recognized overnight courier or by registered or certified mail, postage prepaid, return receipt requested or by telecopier, with confirmation as provided above addressed as follows: (a) if to Parent or Acquisition Sub, to: Continuum Group B Inc. c/o Olshan Gundman Frome Rosenzweig & Wolosky LLP Park Avenue Tower 65 Each 55th Street New York, NY 10022 Attention: Robert L. Frome Telecopier: (212) 541-2222 (b) if to the Company, to: HorizonLive.com, Inc. 520 Eighth Avenue, 23rd Floor New York, New York 10018 Attention: Walter Barandiaran, Chairman Telecopier: (212) 533-6041; with a copy to: Orrick, Herrington & Sutcliffe, LLP 666 Fifth Avenue New York, New York 10103 Attention: Elaine F. Stein, Esq. Telecopier: (212) 506-5151; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. All such notices or communications shall be deemed to be received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of nationally-recognized overnight courier, on the next business day after the date when sent (c) in the case of facsimile transmission or telecopier, upon confirmed receipt, and (d) in the case of mailing, on the fifth business day following the date on which the piece of mail containing such communication was posted. 10.6 COUNTERPARTS. This Agreement may be executed in any number of counterparts by original or facsimile signature, each such counterpart shall be an original instrument, and all such counterparts together shall constitute one and the same agreement. 10.7 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly therein. 10.8 BENEFITS OF AGREEMENT. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall not -24-  be assignable by any party hereto without the consent of the other parties hereto. 10.9 PRONOUNS. As used herein, all pronouns shall include the masculine, feminine, neuter, singular and plural thereof whenever the context and facts require such construction. 10.10 AMENDMENT, MODIFICATION AND WAIVER. This Agreement shall not be altered or otherwise amended except pursuant to an instrument in writing signed by Parent and the Company; provided, however, that after the approval and adoption of this Agreement and the Merger by the stockholders of the Company, no amendment of this Agreement shall be made which pursuant to the Delaware Statute or other law requires the further approval of the stockholders of the Company; provided further, however, that any party to this Agreement may waive in writing any obligation owed to it by any other party under this Agreement. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 10.11 SEVERABILITY. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 10.12 NO THIRD PARTY BENEFICIARIES. Nothing express or implied in this Agreement is intended to confer, nor shall anything herein confer, upon any person other than the parties and the respective successors or assigns of the parties, any rights, remedies, obligations or liabilities whatsoever. 10.13 INTERPRETATION. This Agreement has been negotiated between the parties and will not be deemed to be drafted by, or the product of, any party. As such, this Agreement will not be interpreted in favor of, or against, any party. 10.14 NO JOINT VENTURE. No party hereto shall make any warranties or representations, or assume or create any obligations, on the other party's behalf except as may be expressly permitted hereunder or in writing by such other party. Each party hereto shall be solely responsible for the actions of all its respective employees, agents and representatives. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -25-  IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement and Plan of Reorganization to be executed on its behalf as of the day and year first above written. CONTINUUM GROUP B INC. By: /s/ Michael Wainstein ----------------------------------- Name: Michael Wainstein Title: Co-Executive Vice President HW ACQUISITION CORPORATION By: /s/ Michael Wainstein ---------------------------------- Name: Michael Wainstein Title: Executive Vice President HORIZONLIVE.COM, INC. By: /s/ Walter Barandiaran ----------------------------------- Name: Walter Barandiaran Title: Chief Executive Officer