EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION
among GOODNOISE CORPORATION,
GNA CORPORATION,
NORDIC ENTERTAINMENT WORLDWIDE, INC. and
certain SHAREHOLDERS of NORDIC ENTERTAINMENT WORLDWIDE, INC.
October 8, 1998
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is entered into
this 8th day of October 1998, by and among GoodNoise Corporation, a Florida
corporation ("GoodNoise"), GNA Corporation, a Delaware corporation and wholly-
owned subsidiary of GoodNoise ("Sub"), Nordic Entertainment Worldwide, Inc., a
California corporation ("Nordic") and certain shareholders of Nordic (the
"Shareholders").
RECITALS
A. The parties intend that, subject to the terms and conditions
hereinafter set forth, Sub shall be merged with and into Nordic, with Nordic the
surviving corporation (the "Merger"), pursuant to Agreement of Merger
substantially in the form attached hereto as Exhibit A (the "Agreement of
---------
Merger") and the applicable provisions of the laws of the State of California
and Delaware. Upon the Merger, the Shareholders shall be entitled to receive
shares of GoodNoise common stock, par value $0.01 per share, at the exchange
ratio set forth herein.
B. For federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended.
AGREEMENT
NOW, THEREFORE, in reliance on the foregoing recitals and in and for the
consideration and mutual covenants set forth herein, the parties agree as
follows:
1. Definitions.
1.1 "Affiliate" shall have the meaning set forth in the rules and
regulations promulgated by the Commission pursuant to the Securities Act.
1.2 "Average Closing Stock Price" shall mean the closing or last trade
price for GoodNoise Common Stock for the seven consecutive trading days
immediately preceding, but not including, the date immediately prior to the date
of the Closing.
1.3 "California Law" shall mean the California General Corporation
Law, as amended.
1.4 "Closing" and "Closing Date" shall have the meanings set forth in
Section 2.4.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.6 "Commission" shall mean the Securities and Exchange Commission.
1
1.7 "Confidential Information" shall mean that information of a party
("Disclosing Party") which is disclosed to another party ("Receiving Party")
pursuant to this Agreement. Confidential Information shall include, but not be
limited to, trade secrets, know-how, inventions, techniques, processes,
algorithms, software programs, schematics, designs, contracts, customer lists,
financial information, sales and marketing plans and business information.
Confidential Information shall not include any information which a recipient can
document: (a) was in the public domain at or subsequent to the time such
information was communicated to such recipient by the other party through no
fault of such recipient, (b) was rightfully in such recipient's possession free
of any obligation of confidence at or subsequent to the time such information
was communicated to such recipient by the other party, (c) was developed by
employees or agents of such recipient independently of and without reference to
any information communicated to such recipient by the other party, or (d) was
communicated by the other party to an unaffiliated third party free of any
obligation of confidence.
1.8 "Contaminant" shall mean, without limitation, any pollutants,
residues, infectious materials, flammable, dangerous, toxic or hazardous
substances, hazardous materials or waste of any description whatsoever, except
for non-hazardous waste of the kind generated in the normal course of
operations, including any of the foregoing as defined in or regulated under any
Environmental Law, including but not limited to polychlorinated biphenyls,
asbestos or asbestos containing materials, petroleum and petroleum containing
materials.
1.9 "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
1.10 "Dissenting Shares" shall mean any Nordic Shares held by persons
who have not voted such shares for approval of the Merger and with respect to
which such persons have become entitled to exercise dissenter's rights in
accordance with the California General Corporation Law.
1.11 "Effective Time" shall mean the time the Merger becomes effective
as defined in Section 2.5.
1.12 "Nordic Shares" shall mean the shares of Nordic common stock, no
par value, issued and outstanding at the Effective Time.
1.13 "Entity" shall mean corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
1.14 "Environmental Activity" shall mean, without limitation, any
activity, event or circumstance in respect of a Contaminant, including, without
limitation, its storage, use, holding, collection, purchase, accumulation,
assessment, generation, manufacture, construction, processing, treatment,
recycling, stabilization, disposition, handling or transportation or its
2
affirmative or accidental release into the natural environment including
movement through or in the air, soil, subsoil, surface water or groundwater or
any other activity, event or circumstance which is subject to any of the
Environmental Laws including but not limited to noise, vibration, odor or
similar nuisance.
1.15 "Exchange Ratio" shall mean that for each outstanding share of
Nordic common stock, such share will be converted into the right to receive that
number of shares of GoodNoise Common Stock and that amount of cash as is
determined in accordance with Section 2.2 hereof.
1.16 "Environmental Laws" shall mean laws relating to the environment
or any Environmental Activity.
1.17 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
1.18 "GoodNoise Shares" shall mean the aggregate number of shares of
GoodNoise common stock, par value $0.01 per share, issued in accordance with
Section 2.2.
1.19 "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body, or Entity and any court or
other tribunal).
1.20 "Indemnification Period" shall mean the period commencing on the
Closing Date and ending at the close of business on the first anniversary of the
Closing Date.
1.21 "Legal Proceeding" shall mean any action, suit, litigation,
arbitration proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving any court or other Governmental Body or any arbitrator or arbitration
panel.
1.22 "Material" when capitalized and used in reference to the
business, products or financial situation of Nordic shall be construed, except
as specifically provided, to qualify the matter referred to herein to matters
with a value in excess of $17,500. For example, a "Material adverse effect"
would be an adverse effect resulting in costs or expenses in excess of $17,500.
When the word "material" is not capitalized it shall mean material with respect
to the matter referenced. For example, a reference to a material breach of a
particular agreement would mean a breach that is material with respect to the
particular contract (and not necessarily with respect to the overall business of
Nordic or GoodNoise).
1.23 "Merger" shall mean the merger of Sub with and into Nordic, on
the terms and conditions described herein.
3
1.24 "Music Rights" shall mean any music recording masters, musical
arrangements, copyrights, lyrics, song titles, artwork, graphics, song rights or
other forms of music-related intellectual property rights or licenses thereto
whether on an exclusive or nonexclusive basis.
1.25 "Person" shall mean any individual, Entity or Governmental Body.
1.26 "Proprietary Asset" shall mean: (a) any patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; and (b) any right to use or exploit any of
the foregoing including rights granted by third parties under license
agreements.
1.27 "Representatives" shall mean officers, directors, employees,
agents, attorneys, accountants and advisors.
1.28 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
1.29 "Shareholder Representative" shall mean Xxxx Xxxxxx.
1.30 "Tax" or "Taxes" shall mean all U.S. federal, territorial, state,
municipal, local or other taxes, including without limitation income capital,
sales and use taxes, value added and goods and services taxes, excise taxes,
transfer and stamp taxes, custom duties and franchise taxes, real and personal
property taxes and payroll taxes (including tax withholdings, employer health
taxes, workers' compensation assessments and ERISA plans and unemployment
insurance premiums, contributions and remittances and the U.S. equivalents
thereof), and penalties, interest and surcharges in respect of any of the
foregoing and all words derived from or including the word "Tax," such as
"Taxing" and "Taxation" shall bear a corresponding meaning.
1.31 "Transaction Documents" shall mean all documents or agreements
required to be delivered by any party hereunder including the Agreement of
Merger.
1.32 "Valuation Stock Price" shall mean $7.61 per share.
4
2. Plan of Reorganization.
2.1 The Merger. Subject to the terms and conditions of this
Agreement, Sub shall be merged with and into Nordic in accordance with the
applicable provisions of the laws of the States of California and Delaware and
with the terms and conditions of this Agreement so that:
(a) At the Effective Time, Sub shall be merged with and into
Nordic. As a result of the Merger, the separate corporate existence of Sub shall
cease and Nordic shall continue as the surviving corporation (sometimes referred
to herein as the "Surviving Corporation") and shall succeed to and assume all of
the rights and obligations of Sub in accordance with the laws of the States of
California and Delaware.
(b) The Articles of Incorporation and the Bylaws of Nordic in
effect immediately prior to the Effective Time shall be the articles of
incorporation and bylaws, respectively, of the Surviving Corporation after the
Effective Time unless and until further amended as provided by law.
(c) The directors and officers of Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation
after the Effective Time. Such directors and officers shall hold their position
until the election and qualification of their respective successors or until
their tenure is otherwise terminated in accordance with the Bylaws of Surviving
Corporation.
2.2 Cancellation of Shares and Delivery of Consideration.
(a) At the Effective Time, each share of Nordic capital stock,
if any, that is owned directly or indirectly by Nordic shall be canceled and no
cash or other consideration shall be delivered in exchange therefor.
(b) At the Effective Time, each Nordic Share (other than shares
owned directly or indirectly by Nordic) shall, by virtue of the Merger, and
without further action on the part of any holder thereof, be converted and
exchanged for the right to receive
(i) that number of GoodNoise Shares as is equal to the
quotient of (i) (A) Four Million Two Hundred and Twenty-Five Thousand Dollars
($4,225,000) divided by (B) the number of Nordic Shares outstanding at the
Effective Time (on a fully diluted basis giving effect to any options, warrants
or other rights to acquire Nordic Shares issued and outstanding at the Effective
Date) divided by (ii) the Valuation Period Stock Price (the "Exchange Ratio");
provided, however, that in the event the Average Closing Stock Price is less
than $5.00, then the Exchange Ratio shall be recalculated to be the quotient of
(i) (A) Four Million Two Hundred and Twenty-Five Thousand Dollars ($4,225,000)
divided by (B) the number of Nordic Shares outstanding at the Effective Time (on
a fully diluted basis giving effect to any options, warrants or other rights to
acquire Nordic Shares issued and outstanding at the Effective Date) divided by
(ii) the Average Closing Stock Price; provided further, that in no
5
event shall the number of GoodNoise Shares issuable be less than 528,125 or more
than 845,000; plus
(ii) that number of GoodNoise Shares as is equal to 500,000
divided by (B) the number of Nordic Shares outstanding at the Effective Time (on
a fully diluted basis giving effect to any options, warrants or other rights to
acquire Nordic Shares issued and outstanding at the Effective Date); provided,
however, that the release of such additional shares shall be subject to the
conditions and provisions of Section 2.7 hereof; plus
(iii) an amount of cash (the "Cash Merger Consideration")
per Nordic Share equal to $275,000 divided by the number of Nordic Shares
outstanding at the Effective Time (on a fully diluted basis giving effect to any
options, warrants or other rights to acquire Nordic Shares issued and
outstanding at the Effective Date) (the "Cash Ratio").
(c) At the Effective Time, each share of capital stock of Sub
outstanding immediately prior to the Merger shall, by virtue of the Merger, and
without further action on the part of any holder thereof, continue to be issued
and shall be converted into one share of Nordic common stock outstanding after
the Merger.
(d) The Exchange Ratio and the Cash Ratio shall be adjusted to
reflect the effect of any stock split, reverse split, stock dividend (including
any dividend or distribution of securities convertible into GoodNoise Common
Stock or Nordic common stock), reorganization, recapitalization or other like
change with respect to GoodNoise Common Stock or Nordic common stock occurring
after the date hereof and prior to the Effective Time.
(e) No fraction of a share of GoodNoise Common Stock shall be
issued, but in lieu thereof each holder of Nordic Shares who would otherwise be
entitled to a fraction of a share of GoodNoise Common Stock (after aggregating
all fractional shares of GoodNoise Common Stock to be received by such holder)
shall receive from GoodNoise an amount of cash (rounded to the nearest whole
cent) equal to the product of (i) such fraction, multiplied by (ii) the average
last sale price of a share of GoodNoise Common Stock for the five most recent
days that GoodNoise Common Stock has traded ending on the trading day
immediately prior to the Effective Time.
(f) Any Dissenting Shares shall not be converted into GoodNoise
Common Stock but shall instead be converted into the right to Dissenting Shares
pursuant to the California Law. Nordic agrees that, except with the prior
written consent of GoodNoise, or as required under the California Law, it will
not voluntarily make any payment with respect to, or settle or offer to settle,
any such purchase demand. Each holder of Dissenting Shares (a "Dissenting
Shareholder") who, pursuant to the provisions of the California Law, becomes
entitled to payment for Nordic Shares shall receive payment therefor (but only
after the value therefor shall have been agreed upon or finally determined
pursuant to such provisions). If, after the Effective Time, any Dissenting
Shares shall lose their status as Dissenting Shares, GoodNoise shall issue and
deliver, upon surrender by such shareholder of certificate or certificates
representing Nordic Shares, the number of shares of GoodNoise Common Stock to
which such shareholder would otherwise be entitled under this Section 2.2 less
the number of
6
shares of GoodNoise Common Stock allocable to such shareholder that have been
deposited in the Indemnity Escrow.
2.3 Exchange Procedures.
(a) Subject to paragraph (e) hereof, following the Closing Date,
GoodNoise shall mail to each holder of record of certificate(s) or other
documents which represent Nordic Shares (the "Certificates"), to be exchanged
pursuant to Section 2.2 hereof (i) a letter of transmittal (which shall specify
that, with respect to the Certificates, delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to GoodNoise and shall be in such form and have such other
provisions as GoodNoise shall reasonably require) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for GoodNoise Shares
and the Cash Merger Consideration. Upon surrender of a Certificate for
cancellation to GoodNoise, together with such letter of transmittal, duly
executed, the holder of such Certificates shall be entitled to receive in
exchange therefor his pro rata allocation of the GoodNoise Shares and the Cash
Merger Consideration as to which such holder is entitled pursuant to Section 2.2
hereof. Certificates so surrendered pursuant to this Section 2.3 shall forthwith
be canceled (if not otherwise canceled or terminated in accordance with their
terms). In the event of a transfer of ownership of Nordic Shares which is not
registered on the transfer records of Nordic, the appropriate number of
GoodNoise Shares and the Cash Merger Consideration may be delivered to a
transferee if the Certificate representing such transferred security is
presented to GoodNoise and accompanied by all documents required to evidence and
effect such transfer and to evidence that any applicable stock transfer taxes
have been paid. Until surrendered as contemplated by this Section 2.3, each
Certificate shall be deemed at any time after the Effective Time to represent
solely the right to receive upon such surrender that number of GoodNoise Shares
and the Cash Merger Consideration (without interest and subject to applicable
withholding, escheat and other laws) to which such holder is entitled.
(b) Notwithstanding anything to the contrary in this Section
2.3, none of GoodNoise, the Surviving Corporation or any party hereto shall be
liable to a holder of Nordic Shares for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law .
(c) The GoodNoise Shares and the Cash Merger Consideration paid
in accordance with the terms hereof shall be deemed to be in full satisfaction
of all rights pertaining to such Nordic Shares, and there shall be no further
registration of transfers on the records of the Surviving Corporation of Nordic
Shares. If, after the Effective Time, Certificates are presented to the
surviving Corporation for any reason, they shall be canceled and exchanged as
provided in Section 2.2.
(d) In the event any Certificates evidencing Nordic Shares shall
have been lost, stolen or destroyed, GoodNoise shall issue in exchange for such
lost, stolen or destroyed Certificates, upon the making of an affidavit of that
fact by the holder thereof, such holders pro rata allocation of GoodNoise Shares
and the Cash Merger Consideration as may be required pursuant to Section 2.2;
provided, however, that GoodNoise may, in its discretion and
7
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
GoodNoise with respect to the Certificates alleged to have been lost, stolen or
destroyed.
(e) Notwithstanding anything to the contrary set forth herein,
the GoodNoise Shares shall be deposited into escrow pursuant to the terms of the
Indemnity Escrow Agreement and remain in escrow until such time as the
conditions subsequent described in Section 12 are satisfied. In the event
GoodNoise satisfies those conditions subsequent, eighty percent (80%) of the
GoodNoise Shares shall be removed from escrow and distributed to the
Shareholders in accordance with the terms set forth in Section 2.2. Should
GoodNoise fail to satisfy any or all of the conditions subsequent and the
Shareholders elect to cancel the transactions contemplated herein, all of the
GoodNoise Shares shall be removed from escrow and delivered to GoodNoise in
accordance with the terms of the Indemnity Escrow Agreement.
2.4 The Closing. Subject to termination of this Agreement as
provided in Section 13 below, the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxx Xxxx Xxxx
& Freidenrich LLP at 10:00 a.m. local time on the date three (3) days following
the satisfaction of all conditions to closing set forth herein, or such other
place, time and date as GoodNoise and Nordic may mutually select (the "Closing
Date").
2.5 Effective Time. Simultaneously with the Closing, the Agreement
of Merger shall be filed in the offices of the Secretaries of State of the
States of California and Delaware. The Merger shall become effective immediately
upon the filing of the Agreement of Merger with such office (the "Effective
Time").
2.6 Cash Merger Consideration. The Cash Merger Consideration shall
be paid within five days of the earlier of (i) the closing by GoodNoise of
additional financing in an amount of $5,000,000 or more or (ii) six months from
the date of this Agreement; provided however, that if the $5,000,000 in
additional financing is received prior to the Closing, the Cash Merger
Consideration shall be paid within five days of the Effective Time. If GoodNoise
has not made such payment when due, the Nordic Shareholders shall have a right
to cancel the transactions contemplated herein in their entirety pursuant to
Section 12 hereof, or to convert the amount payable in cash to GoodNoise Shares
based upon eighty percent (80%) of the average last trade price for GoodNoise
Shares for the seven days prior to the Effective Date. Any election to cancel
the transactions must be made as to all Nordic Shareholders based upon the
approval of the holders of a majority of the Nordic Shares. The obligation to
pay the Cash Merger Consideration shall be evidenced by a promissory note (the
"Note") and security agreement (the "Security Agreement") in the form attached
as Exhibit B hereto.
2.7 Conditional Shares. Notwithstanding anything to the contrary set
forth herein, the 500,000 shares of GoodNoise common stock issuable pursuant to
Section 2.2(b)(ii) (the "Conditional Shares") shall be deposited into escrow
pursuant to the terms of the Indemnity
8
Escrow Agreement. Upon Nordic achieving the following milestones by January 31,
1999, the number of Conditional Shares specified below shall be released.
(a) 100,000 shares shall be released if Nordic achieves each of
the following milestones:
(i) written agreements signed for the download rights for
a total of 30,000 recordings (including those completed by Nordic as of the
Closing Date), one-half of which will be on an exclusive basis;
(ii) written agreements signed with a total of 25 radio
stations (including those currently completed by Nordic as of the Closing Date)
for inclusion in the Nordic radio station affiliates program;
(iii) written agreements signed with a total of 50 affiliate
web sites (including those currently completed by Nordic as of the Closing Date)
for inclusion in the Nordic web site affiliates program.
(b) an additional 100,000 shares shall be released if Nordic
achieves each of the following milestones:
(i) written agreements signed for the download rights for
a cumulative total of 50,000 recordings (including those completed by Nordic as
of the Closing Date), one-half of which will be on an exclusive basis;
(ii) written agreements signed with a cumulative total of
60 radio stations (including those currently completed by Nordic as of the
Closing Date) for inclusion in the Nordic radio station affiliates program;
(iii) written agreements signed with a cumulative total of
75 affiliate web sites (including those currently completed by Nordic as of the
Closing Date) for inclusion in the Nordic web site affiliates program.
(c) an additional 300,000 shares shall be released if Nordic
achieves each of the following milestones:
(i) written agreements signed for the download rights for
a cumulative total of 100,000 recordings (including those completed by Nordic as
of the Closing Date), one-half of which will be on an exclusive basis;
(ii) written agreements signed with a cumulative total of
75 radio stations (including those currently completed by Nordic as of the
Closing Date) for inclusion in the Nordic radio station affiliates program;
9
(iii) written agreements signed with a cumulative total of
100 affiliate web sites (including those currently completed by Nordic as of the
Closing Date) for inclusion in the Nordic web site affiliates program.
In the event that any of the above described milestones have not been met by
January 31, 1999, any Conditional Shares which remain in escrow shall be
returned to GoodNoise and cancelled; provided however, that for every day that
GoodNoise fails to make available to Nordic the $350,000.00 of funding as
committed pursuant to the employment letter to be entered into by and between
GoodNoise and Xxxx Xxxxxx, for every day that any portion of such sum is not
available to Nordic for closing such agreements, beginning October 14, 1998,
then an additional day will be added to the January 31, 1999 target date for
each of the above described milestones.
3. Representations and Warranties of Nordic. Except as otherwise set forth
in the "Nordic Disclosure Schedule," referencing the appropriate section and
paragraph numbers, to be provided to GoodNoise prior to the Closing and which
shall be subject to GoodNoise approval, which approval shall not be unreasonably
withheld (and which shall apply regardless of whether the particular subsection
of this Section 3 refers to such schedule), Nordic and the Shareholders
represent and warrant to GoodNoise as set forth below. No fact or circumstance
disclosed to GoodNoise by Nordic shall constitute an exception to these
representations and warranties unless such fact or circumstance is set forth in
the Nordic Disclosure Schedule.
3.1 Organization. Nordic is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has corporate power and authority to carry on its business as
it is now being conducted and as it is proposed to be conducted. Nordic is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or properties makes such
qualification or licensing necessary. The Nordic Disclosure Schedule contains a
true and complete listing of the locations of all sales offices, manufacturing
facilities, and any other offices or facilities of Nordic and a true and
complete list of all jurisdictions in which Nordic maintains any employees. The
Nordic Disclosure Schedule contains a true and complete list of all
jurisdictions in which Nordic is duly qualified to transact business as a
foreign corporation. True and complete copies of Nordic's charter documents as
in effect on the date hereof and as to be in effect immediately prior to the
Closing, have been provided to GoodNoise or its Representatives.
3.2 Capitalization.
(a) The authorized and issued capital stock of Nordic as of the
date of this Agreement and a list of all holders of record are as set forth and
identified in Section 3.2(a) of the Nordic Disclosure Schedule.
(b) Except as set forth in Section 3.2(b) of the Nordic
Disclosure Schedule, there are no outstanding options, warrants, rights,
commitments, conversion rights, rights of exchange, plans or other agreements of
any character providing for the purchase, issuance or sale of any shares of the
capital stock of Nordic other than as contemplated by this
10
Agreement. There are no voting trust, buy-sell or other similar agreements in
place among the Nordic Shareholders and Nordic.
(c) All of the outstanding securities of Nordic have been duly
authorized and are validly issued, fully paid and nonassessable. All securities
of Nordic were issued in compliance with applicable securities laws. None of
Nordic's outstanding securities were issued in consideration in whole or in part
for any contribution, transfer, assignment or any proprietary rights.
3.3 Power, Authority and Validity. Nordic has the corporate power and
authority to enter into this Agreement and the other Transaction Documents to
which it is a party and to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Transaction Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by the board of directors of Nordic, and
no other corporate proceedings are necessary to authorize this Agreement or the
other Transaction Documents. Nordic is not subject to or obligated under any
charter, bylaw or contract provision or any license, franchise or permit, or
subject to any order or decree, which would be breached or violated by or in
conflict with its executing and carrying out this Agreement and the transactions
contemplated hereunder and under the Transaction Documents. This Agreement is,
and each of the other Transaction Documents to which Nordic will be a party,
when executed and delivered by Nordic shall be, the valid and binding obligation
of Nordic enforceable in accordance with their respective terms, subject to (i)
laws of general application relating to bankruptcy, insolvency, and the relief
of debtors, and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies.
3.4 Financial Statements.
(a) Schedule 3.4(a) of the Nordic Disclosure Schedule sets forth the
balance sheet and statements of income for Nordic and its predecessors for the
fiscal years ended October 31, 1996 and 1997 and for the ten month period ended
August 30, 1998 (the "Nordic Financial Statements").
(b) The Nordic Financial Statements are complete and in accordance
with the books and records of Nordic and present fairly in all respects the
financial position of Nordic as of their historical dates. Except and to the
extent reflected or reserved against in the Nordic balance sheet as of June 30,
1998 (the "Nordic Balance Sheet"), Nordic does not have, as of the date of such
balance sheet, any liabilities or obligations (absolute or contingent) of a
nature required or customarily reflected in a balance sheet (or the notes
thereto). The aggregate reserves, if any, reflected on the Nordic Financial
Statements are adequate in light of the contingencies with respect to which they
are made.
(c) Nordic does not have any debt, liability, or obligation of any
nature, whether accrued, absolute or contingent that is not reflected or
reserved against in the Nordic Financial Statements. All debts, liabilities, and
obligations incurred after the date of the Nordic Financial Statements, whether
absolute or contingent, were incurred in the ordinary course of business and are
usual and normal in amount both individually and in the aggregate.
11
3.5 Tax Matters.
(a) Nordic has fully and timely, properly and accurately filed all
Tax returns and reports required to be filed by it (the "Nordic Returns"),
including all federal, foreign, state and local returns and reports for all
years and periods for which any such returns or reports were due. The Nordic
Returns and all other Tax returns and reports filed by Nordic were prepared in
the manner required by applicable law. Except for any Tax due upon the filing of
the Nordic Returns for current periods, all income, sales, use, occupation,
property or other Taxes or assessments due from Nordic have been paid, and there
are no pending assessments, asserted deficiencies or claims for additional Taxes
that have not been paid. The reserves for Taxes, if any, reflected on the Nordic
Financial Statements are adequate and there are no Tax liens on any property or
assets of Nordic. There have been no audits or examinations of any Tax returns
or reports by any applicable governmental agency. No state of facts exists or
has existed which would constitute grounds for the assessment of any penalty or
of any further Tax liability beyond that shown on the respective Tax reports or
returns. There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any federal, state or local income Tax return
or report for any period.
(b) All Taxes which Nordic has been required to collect or withhold
have been duly withheld or collected and, to the extent required, have been paid
to the proper taxing authority.
(c) Nordic is not a party to any tax-sharing agreement or similar
arrangement with any other party.
(d) At no time has Nordic been included in the federal consolidated
income Tax return of any affiliated group of corporations.
(e) No payment which Nordic is obliged to pay to any director,
officer, employee or independent contractor pursuant to the terms of an
employment agreement, severance agreement or otherwise will constitute an excess
parachute payment as defined in Section 280G of the Code.
(f) Nordic will not be required to include any adjustment in taxable
income for any Tax period (or portion thereof) ending after the Closing Date
pursuant to Section 481(c) of the Code or any provision of the Tax laws of any
jurisdiction requiring Tax adjustments as a result of a change in method of
accounting implemented by Nordic prior to the Closing Date for any Tax period
(or portion thereof) ending on or before the Closing Date or pursuant to the
provisions of any agreement entered into by Nordic prior to the Closing Date
with any taxing authority with regard to the Tax liability of Nordic for any Tax
period (or portion thereof) ending on or before the Closing Date.
(g) Nordic is not currently under any contractual obligation to pay
to any Governmental Body any Tax obligations of, or with respect to any
transaction relating to, any other person or to indemnify any other person with
respect to any Tax.
12
3.6 Absence of Certain Changes or Events. Except as set forth in Section
3.6 of the Nordic Disclosure Schedule, from June 30, 1998, Nordic has not:
(a) suffered any Material adverse change in its financial condition
or in the operations of its business, nor any Material Adverse Change in its
balance sheet, including but not limited to cash distributions or decreases in
the net assets of Nordic;
(b) suffered any physical damage, destruction or loss, whether or not
covered by insurance, in an aggregate amount in excess of Ten Thousand Dollars
($10,000);
(c) granted or agreed to make any increase in the compensation
payable or to become payable by Nordic to its officers or employees, except
those occurring in the ordinary course of business;
(d) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of the capital stock of Nordic or
declared any direct or indirect redemption, retirement, purchase or other
acquisition by Nordic of such shares;
(e) issued any shares of capital stock of Nordic or any warrants,
rights, options or entered into any commitment relating to the shares of Nordic;
(f) made any change in the accounting methods or practices it
followed, whether for general financial or Tax purposes, or any change in
depreciation or amortization policies or rates adopted therein;
(g) sold, leased, abandoned or otherwise disposed of any real
property or any machinery, equipment or other operating property other than in
the ordinary course of business;
(h) sold, assigned, transferred, licensed or otherwise disposed of
any patent, trademark, trade name, brand name, copyright (or pending application
for any patent, trademark or copyright), invention, work of authorship, process,
know-how, formula or trade secret or interest thereunder or other intangible
asset except for equipment sales in the ordinary course of their business;
(i) suffered any dispute involving any employee that could have a
Material adverse effect on Nordic;
(j) engaged in any activity or entered into any commitment or
transaction (including without limitation any borrowing or capital expenditure),
in either case, other than in the ordinary course of business;
(k) incurred any liabilities, absolute or contingent except for (i)
liabilities identified as such in the "liabilities" column of the Nordic
Financial Statements; (ii) accounts payable or accrued salaries that have been
incurred by Nordic since June 30, 1998,
13
in the ordinary course of business and consistent with Nordic's past practices;
and (iii) liabilities in Section 3.6(k) of the Nordic Disclosure Schedule;
(l) permitted or allowed any of its property or assets to be
subjected to any mortgage, deed of trust, pledge, lien, security interest or
other encumbrance of any kind, other than any purchase money security interests
incurred in the ordinary course of business;
(m) made any capital expenditure or commitment for additions to
property, plant or equipment, in the aggregate, in excess of Five Thousand
Dollars ($5,000);
(n) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets to, or entered into any agreement or arrangement
with any of its Affiliates, officers, directors or shareholders or any Affiliate
or associate of any of the foregoing;
(o) made any amendment to or terminated any agreement which, if not
so amended or terminated, would be required to be disclosed in the Nordic
Disclosure Schedule;
(p) agreed to take any action described in this Section 3.6 or
outside of its ordinary course of business or which would constitute a breach of
any of the representations contained in this Agreement.
3.7 Title and Related Matters. Nordic has good and marketable title to
all the properties, interests in properties and assets, real and personal,
reflected in the Nordic Financial Statements or acquired after the date of the
Nordic Financial Statements (except properties, interests in properties and
assets sold or otherwise disposed of since the date of the Nordic Financial
Statements in the ordinary course of business), free and clear of all mortgages,
liens, pledges, charges or encumbrances of any kind or character, except the
lien of current Taxes not yet due and payable and except for liens which in the
aggregate do not secure more than Ten Thousand Dollars ($10,000) in liabilities.
Except as noted in Section 3.7 of the Nordic Disclosure Schedule, the equipment
of Nordic used in the operation of its business is in good operating condition
and repair, normal wear and tear excepted. All real or personal property leases
to which Nordic is a party are valid, binding, enforceable and effective in
accordance with their respective terms, subject to (i) laws of general
application relating to bankruptcy, insolvency, and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. There is not under any of such leases any existing default
by Nordic or, any other event of default or event which, with notice or lapse of
time or both, would constitute a default by any other party to such leases.
Section 3.7 of the Nordic Disclosure Schedule contains a description of all real
and personal property leased or owned by Nordic, describing its interest in said
property and with respect to real property a description of each parcel and a
summary description of the buildings, structures and improvements thereon. True
and correct copies of Nordic's leases have been provided to GoodNoise or its
Representatives.
3.8 Music Rights
14
(a) Section 3.8(a)(i) of the Nordic Disclosure Schedule sets forth a
true and complete list of all Music Rights owned by Nordic. Section 3.8(a)(ii)
of the Nordic Disclosure Schedule sets forth a true and complete list of all
Music Rights licensed by or to Nordic. Except as provided in Section 3.8(a)(iii)
of the Nordic Disclosure Schedule, Nordic has written contracts (each of which
are listed in the Nordic Disclosure Schedule) for all Music Rights owned,
licensed, used, marketed, and sold by it, and those licensed to it, Nordic has
not received any notice from any party to such a contract challenging the
enforceability of such a contract, and all such contracts are enforceable in
accordance with their terms. Except as provided in Section 3.8(a)(iv) of the
Nordic Disclosure Schedule, the Merger will not constitute or be deemed to
constitute an assignment of any such Music Rights or otherwise require the
consent of any third party. Except as provided in Section 3.8(a)(v) of the
Nordic Disclosure Schedule, all Music Rights owned or licensed by Nordic were
recorded and otherwise prepared in all respects in accordance with the rules and
regulations of any unions, guilds and similar associations having jurisdiction.
Except as provided in Section 3.8(a)(vii) of the Nordic Disclosure Schedule,
each person or entity who has rendered any service or provided any materials in
connection with, or has contributed in any way, to the making of the Music
Rights has the right to grant such rights, render such services or furnish such
materials. Except as disclosed in the Nordic Disclosure Schedule, all fees and
other payments applicable to or resulting from the creation, recording,
manufacture, duplication, and distribution of the Music Rights, including, but
not limited to, payments to performers, producers, engineers and others, have
been fully and completely paid by Nordic.
(b) Except as set forth in Section 3.8 of the Nordic Disclosure
Schedule, there are no amounts owed or that will become owing to any holder of
rights for royalties arising as a result of the Music Rights, nor has the Nordic
paid an advance in respect of such royalties, except to the extent that such
advance has been depleted or to the extent that the balance of any such advance
is set forth in Section 3.8 of the Nordic Disclosure Schedule.
(c) Except as described in Section 3.8(c) of the Nordic Disclosure
Schedule, Nordic does not know of or have any reason to believe that any
customers of the Nordic, or any holder of Music Rights, (i) has any complaint or
objection with respect to the service or any business practices of the Nordic or
the transactions contemplated hereby which could reasonably be expected to have
a Material Adverse Effect, or (ii) will cease to do business, or significantly
reduce the business conducted, with Nordic as a result of the Merger which could
reasonably be expected to have a Material Adverse Effect.
3.9 Proprietary Rights and Warranty Claims.
(a) Section 3.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Proprietary Asset owned or used by Nordic (each a "Nordic
Proprietary Asset" and collectively, the "Nordic Proprietary Assets") registered
with any Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Nordic Proprietary Asset, and
(ii) the names of the jurisdictions covered by the applicable registration or
application. Section 3.9(a)(ii) of the Nordic Disclosure Schedule identifies and
provides a brief description of all other Nordic Proprietary Assets. Section
3.9(a)(iii) of the
15
Nordic Disclosure Schedule identifies and provides a brief description of each
Proprietary Asset licensed to Nordic by any Person (except for any Proprietary
Asset that is licensed to Nordic under any third party software license
generally available to the public at a cost of less than One Thousand Dollars
($1,000)), and identifies the license agreement under which such Proprietary
Asset is being licensed to Nordic. Except as set forth in Section 3.9(a)(iv) of
the Nordic Disclosure Schedule, Nordic has good, valid and marketable title to
all Nordic Proprietary Assets identified in Sections 3.9(a)(i) and 3.9(a)(ii) of
the Nordic Disclosure Schedule, free and clear of all liens and other
encumbrances and of all third party licensed technology, and has a valid right
to use all Proprietary Assets identified in Section 3.9(a)(iii) of the Nordic
Disclosure Schedule. Except as set forth in Section 3.9(a)(v) of the Nordic
Disclosure Schedule, Nordic is not obligated to make any payment to any Person
for the use of any Proprietary Asset. Except as set forth in Section 3.9(a)(vi)
of the Nordic Disclosure Schedule, Nordic has not developed jointly with any
other Person any Proprietary Asset with respect to which such other Person has
any rights.
(b) Except as set forth in Section 3.9(b) of the Nordic Disclosure
Schedule, Nordic has taken reasonable and customary measures and precautions
necessary to protect and maintain the confidentiality and secrecy of all Nordic
Proprietary Assets (except Nordic Proprietary Assets whose value would be
unimpaired by public disclosure) and otherwise to maintain and protect the value
of all Nordic Proprietary Assets. Except as set forth in the Nordic Disclosure
Schedule, Nordic has not disclosed or delivered to any Person, or permitted the
disclosure or delivery to any Person of any of the Nordic Proprietary Assets
used in or necessary for the conduct of business by Nordic as currently
conducted by Nordic.
(c) Except as provided in Section 3.9(c) of the Nordic Disclosure
Schedule, Nordic is not infringing, misappropriating or making any unlawful use
of, and Nordic has not at any time infringed, misappropriated or made any
unlawful use of, or received any notice or other communication (in writing or
otherwise) of any actual, alleged, possible or potential infringement,
misappropriation or unlawful use of, any Proprietary Asset owned or used by any
other person ("Third Party Proprietary Asset"). No other person is infringing,
misappropriating or making any unlawful use of, and no Third Party Proprietary
Asset owned or used by any other person infringes or conflicts with, any Nordic
Proprietary Asset.
(d) Except as set forth in Section 3.9(d) of the Nordic Disclosure
Schedule: (i) each Nordic Proprietary Asset conforms with any specification,
documentation, performance standard, representation or statement made or
provided with respect thereto by or on behalf of Nordic; and (ii) there has not
been any claim made against Nordic by any customer or other person alleging that
any Nordic Proprietary Asset (including each version thereof that has ever been
licensed or otherwise made available by Nordic to any person) does not conform
with any specification, documentation, performance standard, representation or
statement made or provided by or on behalf of Nordic, and there is no basis for
any such claim.
(e) Nordic's Proprietary Assets constitute all the proprietary assets
necessary to enable Nordic to conduct its business in the manner in which such
business has been and is being conducted. Except as set forth in Section 3.9(e)
of the Nordic Disclosure Schedule,
16
(i) Nordic has not exclusively licensed any of the Nordic Proprietary Assets to
any person and (ii) Nordic has not entered into any covenant not to compete or
contract limiting its ability to exploit fully any of the Nordic Proprietary
Assets or to transact business in any market or geographical area or with any
person.
3.10 Employee Benefit Plans. Nordic does not maintain, or is obligated to
contribute to, any defined benefit pension plan or any employee benefit plan
that is subject to either Title IV of the Employee Retirement Income Security
Act of 1974 ("ERISA") or the minimum funding standards of ERISA or the Code.
Each bonus, incentive, deferred compensation, pension, profit-sharing,
retirement, vacation, severance pay, stock purchase, stock option, group
insurance and other employee benefit or fringe benefit plans, whether formal or
informal (whether written or not), maintained by Nordic conforms to all
applicable requirements, if any, of ERISA. Section 3.10 of the Nordic
Disclosure Schedule lists and describes all such plans.
3.11 Bank Accounts and Receivables. Section 3.11 of the Nordic Disclosure
Schedule sets forth the names and locations of all banks, trusts, companies,
savings and loan associations, and other financial institutions at which Nordic
maintains accounts of any nature and the names of all persons authorized to draw
thereon or make withdrawals therefrom. Section 3.11 of the Nordic Disclosure
Schedule sets forth an accurate and complete breakdown and aging of all accounts
receivable, notes receivable, and other receivables of Nordic as of the date of
the Balance Sheet. Except as set forth on the Nordic Disclosure Schedule all
existing accounts receivable of Nordic (including those accounts receivable
reflected on the Nordic Financial Statements that have not yet been collected
and those accounts receivable that have arisen since June 30, 1998 and have not
yet been collected) (i) represent valid obligations of customers of Nordic
arising from bona fide transactions entered into in the ordinary course of
business, (ii) are current and will be collected in full when due, without any
counterclaim or setoff.
3.12 Contracts.
(a) Section 3.12(a) the Nordic Disclosure Schedule identifies each
document or instrument to which Nordic is a party and that relates to the
acquisition, transfer, use, development, sharing or licensing of any technology
or Nordic Proprietary Asset.
(b) Except as set forth in Section 3.12(b) the Nordic Disclosure
Schedule,
(i) Nordic has no agreements, contracts or commitments that
call for fixed and/or contingent payments or expenditures by or to Nordic of
more than Five Thousand Dollars ($5,000) over the life of any such agreement,
contract or commitment.
(ii) Nordic has no purchase agreement, contract or commitment
that calls for fixed and/or contingent payments by Nordic that are in excess of
the normal, ordinary and usual requirements of Nordic's business.
17
(iii) There is no outstanding sales contract, commitment or
proposal (including, without limitation, development projects) of Nordic that
Nordic currently expects (or reasonably should expect) to result in any loss to
Nordic upon completion or performance thereof.
(iv) Nordic has no outstanding agreements, contracts or
commitments with officers, employees, agents, consultants, advisors, salesmen,
sales representatives, distributors or dealers that are not cancelable by it on
notice of not longer than thirty (30) days and without liability, penalty or
premium.
(v) Nordic has no outstanding agreements, contracts or
commitments with sales representatives, OEM's, distributors or dealers.
(vi) Nordic is not restricted by agreement from competing with
any person or from carrying on its business anywhere in the world.
(vii) Nordic has not guaranteed any obligations of other
persons, including each other, or made any agreements to acquire or guarantee
any obligations of other persons, including each other.
(viii) Nordic does not have any outstanding loan or advance to
any person; nor is it party to any line of credit, standby financing, revolving
credit or other similar financing arrangement of any sort which would permit the
borrowing by Nordic of any sum not reflected in the Nordic Financial Statements.
(ix) All contracts, agreements and instruments listed in the
Nordic Disclosure Schedule pursuant to Section 3.11 (a) and (b) (the "Nordic
Material Contracts") are valid, binding, in full force and effect, and
enforceable by Nordic in accordance with their respective terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies. No party to any Nordic Material Contract intends
to cancel, withdraw, modify or amend such contract.
(c) Nordic has delivered to GoodNoise accurate and complete copies of
all written Nordic Material Contracts, including all amendments thereto and any
correspondence regarding any dispute with respect thereto. Nordic has not
entered into any Material oral contracts.
(d) Except as set forth in Section 3.12(d) of the Nordic Disclosure
Schedule:
(i) Nordic has not violated or breached, or committed any
default under, any Nordic Material Contract, and no other person has violated or
breached, or committed any default under, any Nordic Material Contract;
18
(ii) No event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or could reasonably
be expected to, (A) result in a violation or breach of any of the provisions of
any Nordic Material Contract, (B) give any person the right to declare default
or exercise any remedy under any Nordic Material Contract, (C) give any person
the right to accelerate the maturity or performance of any Nordic Material
Contract; or (D) give any person the right to cancel, terminate or modify any
Nordic Material Contract;
(iii) There are no unresolved claims between Nordic and any of
its principal licensors, vendors, suppliers, distributors, representatives or
customers and none of such persons has advised Nordic of its intention to cease
doing business with Nordic, or with GoodNoise following the Closing Date,
whether as a result of the transactions contemplated hereunder.
3.13 Compliance With Law. Except as provided in Section 3.13 of the Nordic
Disclosure Schedule, Nordic is in compliance in all material respects with all
applicable laws and regulations. All licenses, franchises, permits and other
governmental authorizations held by Nordic and which are required for its
business are valid and sufficient in all respects for the businesses presently
carried on by Nordic and as set forth in the Nordic Disclosure Schedule.
3.14 Labor Difficulties; No Discrimination.
(a) Nordic is not engaged in any unfair labor practice or in
violation of any applicable laws respecting employment and employment practices,
health and safety, human rights, terms and conditions of employment, and wages
and hours.
(b) There is no unfair labor practice complaint against Nordic
actually pending or threatened before a labor relations board.
(c) There is and has not been any claim made against Nordic based on
actual or alleged wrongful termination or on actual or alleged race, age, sex,
disability or other harassment or discrimination, or similar tortious conduct,
nor is there any basis for any such claim.
(d) Nordic is not aware of any Nordic employee who intends to
terminate his or her employment with Nordic as a result of the Merger or
otherwise.
3.15 Insider Transactions. No Affiliate of Nordic has any interest in (i)
any equipment or other property, real or personal, tangible or intangible,
including, without limitation, any Nordic Proprietary Asset, used in connection
with or pertaining to the businesses of Nordic, or (ii) any creditor, supplier,
customer, manufacturer, agent, representative, or distributor of products of
Nordic; provided, however, that no such Affiliate or other person shall be
deemed to have such an interest solely by virtue of the ownership of less than
one percent (1%) of the outstanding stock or debt securities of any publicly-
held company whose stock or debt securities are traded on a recognized U.S.
stock exchange or quoted on the National Association of Securities Dealers
Automated Quotation System.
19
3.16 Employees, Independent Contractors and Consultants. Section 3.16 of
the Nordic Disclosure Schedule lists and describes all currently effective
written and oral consulting, independent contractor and/or employment agreements
and other agreements concluded with individual employees, independent
contractors or consultants to which Nordic is a party. True and correct copies
of all such written agreements have been provided to GoodNoise or its
Representatives. All salaries and wages paid by Nordic are in compliance in all
respects with applicable federal, state and local laws. Section 3.16 of the
Nordic Disclosure Schedule lists the names of all persons currently employed by
Nordic as well as the salaries and other compensation arrangements (bonus,
deferred compensation, etc.) and the accrued vacation time for each such person.
3.17 Insurance. Section 3.17 of the Nordic Disclosure Schedule contains a
list of the policies of fire, liability and other forms of insurance held by
Nordic. Nordic has done nothing, either by way of action or inaction, that might
invalidate such insurance policies in whole or in part.
3.18 Litigation. Except as set forth in Section 3.18 of the Nordic
Disclosure Schedule, there is no suit, action or proceeding which has been
served upon or threatened against Nordic (nor is there any reasonable basis
therefor), in each case other than immaterial matters, or which questions or
challenges the validity of this Agreement or the Transaction Documents. Except
as set forth in Section 3.18 of the Nordic Disclosure Schedule, there is no
judgment, decree, injunction, or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against Nordic.
3.19 Subsidiaries. Nordic has no subsidiaries. Except as set forth in
Section 3.19 of the Nordic Disclosure Schedule, Nordic does not own or control
(directly or indirectly) any capital stock, bonds or other securities of, and
does not have any proprietary interest in, any other corporation, general or
limited partnership, joint venture, firm, association or business organization,
entity or enterprise, and Nordic does not control (directly or indirectly) the
management or policies of any other corporation, partnership, firm, association
or business organization, entity or enterprise.
3.20 Compliance with Environmental Requirements. Nordic has obtained all
permits, licenses and other authorizations which are required under federal,
state and local laws applicable to Nordic relating to pollution or protection of
the environment, including laws or provisions relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or hazardous or
toxic materials, substances, or wastes into air, surface water, groundwater, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants, contaminants
or hazardous or toxic materials, substances, or wastes. Except as set forth in
Section 3.20 of the Nordic Disclosure Schedule, Nordic is in compliance with all
terms and conditions of the required permits, licenses and authorizations.
Except as set forth in Section 3.20 of the Nordic Disclosure Schedule, Nordic is
not aware of, nor has Nordic received written notice of, any conditions,
circumstances, activities, practices, incidents, or actions which may form the
basis of any claim, action, suit, proceeding, hearing, or investigation of, by,
against or relating to Nordic, based on or
20
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant, or
hazardous or toxic substance, material or waste.
Except as disclosed in Section 3.20 of the Nordic Disclosure Schedule,
(a) No Environmental Activity has occurred in the business of
Nordic or on or in relation to any premises currently or formerly used by Nordic
which may cause Nordic to incur expenses or costs for the elimination,
neutralization or amelioration of the results of the Environmental Activity or
become liable for compensation to any third party.
(b) Nordic has held its assets, occupied its respective
premises, operated its respective businesses and conducted all other activities
in compliance with all Environmental Laws. Nordic has not received any notice of
non-compliance with Environmental Laws from any person or governmental authority
and Nordic does not know of any facts which could give rise to any such notice.
(c) There are no underground storage tanks or surface
impoundments at, on, or under premises formerly or currently used by Nordic.
(d) Nordic has maintained all environmental and operating
documents and records substantially in the manner and for the time periods
required by any Environmental Laws. Section 3.20 of the Nordic Disclosure
Schedule lists each environmental permit and each Environmental Audit conducted
with respect to Nordic or its premises while occupied by either of them. An
"Environmental Audit" shall mean any evaluation, inspection, assessment, study
or test performed at the request of or on behalf of a governmental authority,
including but not limited to, a public liaison committee, as well as a self-
evaluation, whether or not required by Environmental Law.
3.21 Corporate Documents. Nordic has furnished to GoodNoise for its
examination all documents requested by GoodNoise, including, but not limited to:
(i) copies of its charter documents; (ii) its minute book containing all records
required to be set forth of all proceedings, consents, actions, and meetings of
the shareholders, the board of directors and any committees thereof; (iii) all
permits, orders, and consents issued by any regulatory agency with respect to
Nordic, or any securities of Nordic, and all applications for such permits,
orders, and consents; and (iv) the stock transfer books of Nordic setting forth
all transfers of any capital stock. The corporate minute books, stock
certificate books, stock registers and other corporate records of Nordic are
complete and, and the signatures appearing on all documents contained therein
are the true signatures of the persons purporting to have signed the same. All
actions reflected in such books and records were duly and validly taken in
compliance with the laws of the applicable jurisdiction.
3.22 Accuracy of Information In Information or Proxy Statement. The
information furnished by Nordic to the Nordic Shareholders in connection with
the solicitation of shareholder consent or proxies for the approval and adoption
of this Agreement and the approval and adoption of the Merger shall not, on the
date the Information or Proxy Statement is first
21
mailed to the Nordic shareholders, on any date subsequent thereto and prior to
the Effective Time or at the Effective Time, contain any untrue statement of 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 are made, not
false or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
consent or proxies which has become false or misleading.
3.23 No Brokers. Neither Nordic nor any shareholder, officer or director
of Nordic is obligated for the payment of fees or expenses of any broker or
finder in connection with the origin, negotiation or execution of this Agreement
or in connection with any transaction contemplated hereby.
3.24 Accuracy of Documents and Information. The copies of all
instruments, agreements, other documents and written information set forth as,
or referenced in, the schedules or exhibits to this Agreement or specifically
required to be furnished pursuant to this Agreement to GoodNoise by Nordic are
complete and correct. No representations or warranties made by Nordic in this
Agreement, nor any document, written information, statement, financial
statement, certificate, schedule or exhibit furnished directly to GoodNoise
pursuant to this Agreement contains any untrue statement of a material fact, or
omits to state a material fact necessary to make the statements or facts
contained herein not misleading.
4. Representations and Warranties of GoodNoise and Sub. Except as otherwise
set forth in the "GoodNoise Disclosure Schedule," referencing the appropriate
section and paragraph numbers, to be provided to Nordic concurrent with the
execution of this Agreement, GoodNoise represents and warrants to Nordic as set
forth below. No fact or circumstance disclosed to Nordic by GoodNoise shall
constitute an exception to these representations and warranties unless such fact
or circumstance is set forth in the GoodNoise Disclosure Schedule.
4.1 Organization. GoodNoise and Sub are corporations duly organized,
validly existing and in good standing under the laws of their jurisdictions and
have corporate power and authority to carry on their businesses as they are now
being conducted and as they are proposed to be conducted. Each of GoodNoise and
Sub is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or properties makes such
qualification or licensing necessary.
4.2 Power, Authority and Validity. GoodNoise and Sub have the corporate
power and authority to enter into this Agreement and other Transaction Documents
to which they are a party and to carry out their obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Transaction
Documents to which they are a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the board of
directors of GoodNoise and Sub, and no other corporate proceedings are necessary
to authorize this Agreement or the other Transaction Documents. GoodNoise and
Sub are not subject to or obligated under any charter, bylaw or contract
provision or any license, franchise or permit or subject to any order or decree,
which would be breached or violated in a material manner by or in material
conflict with its executing and carrying out this Agreement and the
22
transactions contemplated hereunder and under the Transaction Documents. This
Agreement is, and each of the other Transaction Documents to which GoodNoise and
Sub are a party, when executed and delivered by GoodNoise and Sub shall be, the
valid and binding obligations of GoodNoise and Sub, enforceable in accordance
with their respective terms, subject to (i) laws of general application relating
to bankruptcy, insolvency, and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
4.3 Capitalization.
(a) The authorized capital stock of GoodNoise as of the date of this
Agreement consists of: (i) Two Hundred Million (200,000,000) shares of GoodNoise
Common Stock, of which 14,985,800 shares are issued and outstanding and (ii)
Five Hundred Thousand (500,000) shares of preferred stock, none of which are
issued or outstanding. GoodNoise has reserved 3,000,000 shares of GoodNoise
Common Stock for issuance to employees, directors and consultants, upon exercise
of stock options. Except as set forth in the GoodNoise Disclosure Schedule,
there are no outstanding options, warrants, rights, commitments, conversion
rights, rights of exchange, plans or other agreements of any character providing
for the purchase, issuance or sale of any shares of the capital stock of
GoodNoise from GoodNoise other than as contemplated by this Agreement.
(b) All of the outstanding securities of GoodNoise have been duly
authorized and are validly issued, fully paid and nonassessable. All securities
of GoodNoise were issued in compliance with all applicable federal and state
securities laws. Except as otherwise set forth in the GoodNoise Disclosure
Schedule or in the GoodNoise Commission Documents (as defined in Section 4.4
below), GoodNoise does not have any other shares of its capital stock issued or
outstanding and does not have any other outstanding subscriptions, options,
warrants, rights or other agreements or commitments obligating GoodNoise to
issue shares of its capital stock or other securities. GoodNoise is not a party
to or aware of any shareholders agreements among the shareholders of GoodNoise.
(c) The GoodNoise Shares have been duly authorized and, when issued
and delivered in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable and will be issued in compliance with all applicable
federal and state securities laws. There are no preemptive rights of any
stockholder of GoodNoise to acquire the GoodNoise Shares.
4.4 Litigation. There is no suit, action or proceeding which has been
served upon or, to the knowledge of GoodNoise, threatened against GoodNoise, in
each case other than immaterial matters, or which questions or challenges the
validity of this Agreement or the Transaction Documents. There is no judgment,
decree, injunction, or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against GoodNoise.
4.5 Compliance With Law. GoodNoise is in compliance in all material
respects with all applicable laws and regulations. All licenses, franchises,
permits and other
23
governmental authorizations held by GoodNoise and which are required for its
business are valid and sufficient in all respects for the businesses presently
carried on by GoodNoise.
4.6 Tax Matters. GoodNoise has fully and timely, properly and accurately
filed all Tax returns and reports required to be filed by it (the "GoodNoise
Returns"), including all federal, foreign, state and local returns and reports
for all years and periods for which any such returns or reports were due. The
GoodNoise Returns and all other Tax returns and reports filed by GoodNoise were
prepared in the manner required by applicable law. Except for any Tax due upon
the filing of the GoodNoise Returns for current periods, all income, sales, use,
occupation, property or other Taxes or assessments due from GoodNoise have been
paid, and there are no pending assessments, asserted deficiencies or claims for
additional Taxes that have not been paid. The reserves for Taxes, if any,
reflected on the GoodNoise Financial Statements are adequate and there are no
Tax liens on any property or assets of GoodNoise. There have been no audits or
examinations of any Tax returns or reports by any applicable governmental
agency. No state of facts exists or has existed which would constitute grounds
for the assessment of any penalty or of any further Tax liability beyond that
shown on the respective Tax reports or returns. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any federal, state or local income Tax return or report for any period.
4.7 Commission Documents; Financial Statements. GoodNoise has made
available to Nordic a true and complete copy of its Registration Statement or
Form 10-SB as filed with the Commission by GoodNoise; and, prior to the
Effective Time, GoodNoise will have made available to Nordic any additional
documents filed with the Commission by GoodNoise prior to the Effective Time
(collectively, the "GoodNoise Commission Documents"). To date, GoodNoise has not
been subject to the reporting obligations under either Section 13(a) or 15(d) of
the Exchange Act. As of their respective filing dates, the GoodNoise Commission
Documents complied in all material respects with the requirements of the
Exchange Act and the Securities Act, and none of the GoodNoise Commission
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed GoodNoise
Commission Document prior to the date hereof. The financial statements of
GoodNoise, including the notes thereto, included in the GoodNoise Commission
Documents (the "GoodNoise Financial Statements") were complete and correct in
all material respects as of their respective dates, complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto as of their
respective dates, and have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Qs Q, as permitted by Form 10-Q of the Commission). The
GoodNoise Financial statements fairly present the consolidated financial
condition and operating results of GoodNoise and its subsidiaries at the dates
and during the periods indicated therein (subject, in the case of unaudited
statements, to normal, recurring year-end adjustments).
24
4.8 Absence of Changes. There has been no change in GoodNoise
GoodNoise's accounting policies except as described in the notes to the
GoodNoise Financial Statements. Since June 30, 1998, except for losses in the
ordinary course of business or as otherwise disclosed in the GoodNoise
Commission Documents, there has been no material adverse change and no material
adverse development in the business, properties, operations, financial
condition, or results of operations of GoodNoise.
4.9 Private Offering. Subject to the accuracy of the Shareholders'
representations and warranties set forth in Section 5 hereof, the offer, sale
and issuance of the GoodNoise Shares as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act. GoodNoise
agrees that neither GoodNoise nor anyone acting on its behalf will offer any
GoodNoise common stock or any similar securities for issuance or sale, or
solicit any offer to acquire any of the same from anyone so as to render the
issuance and sale of the GoodNoise Shares subject to the registration
requirements of the Securities Act. The Company has not offered or sold the
GoodNoise Shares by any form of general solicitation or general advertising, as
such terms are used in Rule 502(c) under the Securities Act.
4.10 Accuracy of Documents and Information. The copies of al
instruments, agreements, other documents and written information set forth as,
or referenced in the schedules or exhibits to this Agreement or specifically
required to be furnish pursuant to this Agreement to Nordic by GoodNoise or Sub
are complete and correct. No representations or warranties made by GoodNoise or
Sub in this Agreement, nor any document, written information, statement,
financial statement, certificate, schedule or exhibit furnished directly to
Nordic pursuant to this Agreement, taken as a whole, contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements or facts contained herein not misleading.
4.11 No Brokers. GoodNoise is not obligated to pay fees or expenses
to any broker or finder in connection with the origin, negotiation or execution
of this Agreement or in connection with any transaction contemplated hereby.
5. Representations and Warranties of Shareholders.
Each Shareholder as to itself, himself or herself represents and
warrants to GoodNoise as follows:
5.1 No person or entity not a signatory of this Agreement has a
beneficial interest in or a right to acquire or vote the Nordic Shares held of
record by such Shareholder or any portion thereof (except, with respect to
shareholders which are partnerships, partners of such shareholders). The Nordic
Shares are and will be, at all times until the Closing, free and clear of any
liens, claims, options, charges or other encumbrances. Such Shareholder's
principal place of residence or place of business is set forth on the signature
page hereto.
5.2 Such Shareholder will not transfer (except as may be specifically
required by court order or by operation of law), sell, exchange, pledge or
otherwise dispose of or encumber the Nordic Shares or any New Securities (as
defined below), or make any offer or agreement relating thereto, at any time
prior to the Closing.
25
5.3 Such Shareholder agrees that any shares in the capital stock of
Nordic that Shareholder purchases or with respect to which such Shareholder
otherwise acquired beneficial ownership after the date of this Agreement and
prior to the Closing (the "New Securities") shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted Nordic
Shares.
5.4 Such Shareholder represents to GoodNoise, that the GoodNoise
Shares which he will receive will be acquired with his own property or funds or
property for investment for an indefinite period for his own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and that he has no present intention of selling, granting participation
in, or otherwise distributing the same.
5.5 Such Shareholder understands that the GoodNoise Shares will not
be registered under the Securities Act of 1933 (the "Securities Act") on the
ground that the sale provided for in this Agreement is exempt pursuant to
section 4(2) of the Securities Act, and that GoodNoise's reliance on such
exemption is predicated on his representations set forth herein.
5.6 Until such time as the GoodNoise Shares shall become registered
for resale under the Securities Act or no longer subject to restriction pursuant
to Rule 144(k), such Shareholder agrees that in no event will he make a
disposition of any of the GoodNoise Shares unless and until (a) he shall have
notified GoodNoise of the proposed disposition and shall have furnished
GoodNoise with a statement of the circumstances surrounding the proposed
disposition and (b) he shall have furnished GoodNoise with an opinion of counsel
satisfactory to GoodNoise to the effect that (i) such disposition will not
require registration of such Stock under the Securities Act or (ii) that
appropriate action necessary for compliance with the Securities Act has been
taken or (c) GoodNoise shall have waived, expressly and in writing, its rights
under clauses (a) and (b) of this Section.
5.7 In connection with the investment representations made herein,
Shareholder represents that he is able to fend for himself in the transactions
contemplated by this Agreement, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of his
investment, has the ability to bear the economic risks of his investment.
5.8 Such Shareholder understands that the acquisition of the
GoodNoise Shares involves a highly speculative and risky investment and that
GoodNoise may not be able to continue as a going concern unless it is able to
raise substantial funds from outside investors and that there is no assurance
that GoodNoise will be able to do so.
6. Covenants of Nordic and the Shareholders
6.1 Advice of Changes. Nordic will promptly advise GoodNoise in
writing (i) of any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of Nordic contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect and (ii) of any material adverse
change in Nordic's business, taken as a whole.
26
6.2 Conduct of Business. Until the Closing, Nordic will continue to
conduct its business and maintain its business relationships in the ordinary and
usual course and will not, except as set forth in Section 6.2 of the Nordic
Disclosure Schedule or without the prior written consent of GoodNoise:
(a) borrow any money which borrowings exceed in the aggregate
Five Thousand Dollars ($5,000) per month;
(b) incur any liability other than in the ordinary and usual
course of business or in connection with the performance or consummation of
this Agreement;
(c) encumber or permit to be encumbered any of its assets except
in the ordinary course of its business;
(d) dispose of any of its assets, except inventory in the
regular and ordinary course of business;
(e) except as provided in Section 6.2(h) hereof, enter into any
lease or contract for the purchase or sale of any property, real or personal
except for inventory and licenses purchased in the ordinary course of business
or other leases or contracts for less than $5,000;
(f) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has maintained up to
the date of this Agreement, subject only to ordinary wear and tear;
(g) pay or authorize any bonus, increased salary, or special
remuneration to any officer or employee, including any amounts for accrued but
unpaid salary or bonuses;
(h) enter into any agreement for the acquisition or license of
any Music Rights with advances or minimum future commitments in excess of
$30,000;
(i) adopt or change any accounting methods;
(j) declare, set aside or pay any cash or stock dividend or
other distribution in respect of capital, or redeem or otherwise acquire any of
its capital stock;
(k) amend or terminate any contract, agreement or license to
which it is a party except non-Material agreements in the ordinary course of
business or other agreements with an annual value of less than $17,500;
(l) enter into any Material contract outside of the ordinary
course of business or which grants an exclusive license of a substantial part of
its assets, catalogue or right for a period over ninety (90) days. Good Noise
shall be given a reasonable prior notice of any such agreement and a right of
consultation, provided that after forty-five days from the date of
27
this Agreement, Nordic may enter into Material contracts without consent
provided that such contracts are in the ordinary course of business consistent
with Nordic's past practices;
(m) loan any amount to any person or entity, or guaranty or act
as a surety for any obligation;
(n) waive or release any right or claim;
(o) issue or sell any shares of its capital stock of any class
or any other of its securities, or issue or create any warrants, obligations,
subscriptions, options, convertible securities, or other commitments to issue
shares of capital stock or amend the terms of any agreement regarding the
foregoing;
(p) split or combine the outstanding shares of its capital stock
of any class or enter into any recapitalization affecting the number of
outstanding shares of its capital stock of any class or affecting any other of
its securities;
(q) merge, consolidate or reorganize with any entity;
(r) grant any exclusive license to all or a significant portion
of its assets, including, but not limited to, any exclusive license of a
significant portion of the company's catalog of Music Rights for a period of
over ninety (90) days;
(s) amend its Articles of Incorporation or Bylaws;
(t) make or change any election, change any annual accounting
period, file any tax return or amended tax return, enter into any closing
agreement, settle any tax claim or assessment relating to Nordic, surrender any
right to claim refund of taxes, consent to any extension or waiver of the
limitation period applicable to any tax claim or assessment relating to Nordic,
or take any other action or omit to take any action, if any such election,
adoption, change, amendment, agreement, settlement, surrender, consent or other
action or omission would have the effect of increasing the tax liability of
Nordic or GoodNoise; or
(u) agree to do any of the things described in the preceding
clauses of this Section 6.2.
Notwithstanding the above, Nordic or Radiant Records may enter into new
agreements with recording artists that provide for recording funds of no more
than $15,000 per agreement and at an aggregate cost not in excess of $30,000,
exclusive of renewal options. Before entering into any such agreements, Nordic
shall provide GoodNoise with copies of any such agreements for prior review and
comment.
6.3 Risk of Loss. Until the Closing and subject to the
confidentiality and nonuse provisions hereof, all risk of loss, damage or
destruction to Nordic's assets shall be borne by Nordic, and the Merger terms
described in Section 2 shall, in case of any such loss, damage or
28
destruction, be revised as the parties may agree, or this Agreement shall be
terminated in accordance with Section 13.
6.4 Access to Information. Until the Closing and subject to the
confidentiality and nonuse provisions hereof, Nordic shall allow GoodNoise and
its Representatives free access upon reasonable notice and during normal working
hours to its files, books, records, and offices, including, without limitation,
any and all information relating to taxes, commitments, contracts, leases,
licenses, and personal property and financial condition. Until the Closing,
Nordic shall cause its accountants to cooperate with GoodNoise and its
Representatives in making available all financial information requested,
including without limitation the right to examine all working papers pertaining
to all financial statements prepared or audited by such accountants.
6.5 Regulatory Approvals. Prior to the Closing, Nordic shall execute
and file, or join in the execution and filing, of any application or other
document which may be necessary in order to obtain the authorization, approval
or consent of any Governmental Body, federal, state or local, which may be
reasonably required, or which GoodNoise may reasonably request, in connection
with the consummation of the transactions contemplated by this Agreement Nordic
shall use its best efforts to obtain all such authorizations, approvals and
consents.
6.6 Satisfaction of Conditions Precedent. Nordic will use its best
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Section 11, and, without limiting the generality of the
foregoing, to obtain all consents and authorizations of third parties and to
make all filings with, and give all notices to, third parties which may be
necessary or reasonably required on its part in order to effect the transactions
contemplated hereby.
6.7 Equity Compensation Arrangements. Prior to the Closing, any
obligation of Nordic to issue stock, warrants or options which have been offered
or promised to the employees of Nordic shall have been fulfilled or been
terminated to the satisfaction of GoodNoise.
6.8 Shareholder Consent. Prior to the Closing, whether by special
meeting or written consent of its shareholders, Nordic will submit this
Agreement, the Agreement of Merger and related matters to its shareholders for
consideration and approval, and the Board of Directors of Nordic will recommend
such approval to the Nordic Shareholders. Each of the Shareholders agrees to
vote all shares of Nordic capital stock in respect of which each such
shareholder is entitled to vote at any meeting, in favor of the Merger, the
approval of the transactions contemplated by this Agreement.
7. Covenants of GoodNoise and Sub.
7.1 Advice of Changes. GoodNoise and Sub will promptly advise Nordic
in writing of (i) any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of GoodNoise or Sub contained
in this Agreement, if made on or
29
as of the date of such event or the Closing Date, untrue or inaccurate in any
material respect and (ii) any material adverse change in GoodNoise's business,
taken as a whole.
7.2 Regulatory Approvals. Prior to the Closing, GoodNoise and Sub
shall execute and file, or join in the execution and filing, of any application
or other document which may be necessary in order to obtain the authorization,
approval or consent of any Governmental Body, federal, state or local, which may
be reasonably required, or which Nordic may reasonably request, in connection
with the consummation of the transactions contemplated by this Agreement. Such
persons and entities shall use their best efforts to obtain all such
authorizations, approvals and consents.
7.3 Satisfaction of Conditions Precedent. GoodNoise will use its
best efforts to satisfy or cause to be satisfied all the conditions precedent
which are set forth in Section 10, and GoodNoise will use its best efforts to
cause the transactions contemplated by this Agreement to be consummated, and,
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties which may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby. Notwithstanding
the foregoing, the condition precedent payment obligations of GoodNoise
hereunder, including the $25,000 signing bonus and $3,125 per week consulting
fees are due when payable in accordance with the terms hereof and are firm
commitments not subject to a best efforts condition.
7.4 Registration Rights. GoodNoise agrees that if prior to the time
the GoodNoise Shares may be freely sold pursuant to Rule 144, GoodNoise
registers for the account of any other person, or grants to any other party
rights to register, GoodNoise Shares under the Securities Act, GoodNoise shall
provide to the Shareholders the right to participate in such registration or
become parties to the registration rights agreement, as the case may be, on the
same or substantially the same terms and conditions as pertain to such other
party; provided however, that the foregoing shall not apply to the extent that
registration rights are granted in connection with an equity offering of or by
GoodNoise unless such rights are also granted to other existing shareholders of
GoodNoise or to other parties receiving shares in connection with any other
transaction, including a purchase or sale of assets or stock, between GoodNoise
and any other person. Notwithstanding the foregoing, GoodNoise shall not permit
either Xxxx Xxxxxxx or Xxxxxx Xxxx (the "GoodNoise Founders") to sell any shares
of GoodNoise stock owned by them into the public market unless or until the
GoodNoise Shares have been registered for resale under the Securities Act or are
otherwise eligible for resale pursuant to Rule 144.
7.5 Nasdaq Listing. Following the closing, GoodNoise shall use its
best efforts to obtain a Nasdaq listing for its Common Stock within one year of
the Effective Date.
7.6 Consulting Fee. Following the execution of this Agreement and
until the Closing or termination of this Agreement, GoodNoise shall pay to
Nordic a consulting fee of $3,125 per week payable on Monday of each week;
provided however, that GoodNoise shall not be obligated to pay such fee if
Nordic is in breach of this Agreement or otherwise if the delay in the closing
is due to actions or inaction of Nordic.
30
8. Mutual Covenants.
8.1 Confidentiality. Each party acknowledges that in the course of
the performance of this Agreement, it may obtain the Confidential Information of
the other party. The Receiving Party shall, at all times, both during the term
of this Agreement and thereafter, keep in confidence and trust all of the
Disclosing Party's Confidential Information received by it. The Receiving Party
shall not use the Confidential Information of the Disclosing Party other than as
expressly permitted under the terms of this Agreement or by a separate written
agreement. The Receiving Party shall take all reasonable steps to prevent
unauthorized disclosure or use of the Disclosing Party's Confidential
Information and to prevent it from falling into the public domain or into the
possession of unauthorized persons. The Receiving Party shall not disclose
Confidential Information of the Disclosing Party to any person or entity other
than its officers, employees, consultants and permitted sublicensees who need
access to such Confidential Information in order to effect the intent of this
Agreement and who have entered into confidentiality agreements with such
person's employer which protects the Confidential Information of the Disclosing
Party. The Receiving Party shall promptly give notice to the Disclosing Party of
any unauthorized use or disclosure of Disclosing Party's Confidential
Information. The Receiving Party agrees to assist the Disclosing Party to remedy
such unauthorized use or disclosure of its Confidential Information, which
remedies shall include injunctive relief without the necessity of posting a bond
or proving damages. These obligations shall not apply to the extent that
Confidential Information includes information which:
(a) is already known to the Receiving Party at the time of
disclosure, which knowledge the Receiving Party shall have the burden of
proving;
(b) is, or, through no act or failure to act of the Receiving
Party, becomes publicly known;
(c) is received by the Receiving Party from a third party
without restriction on disclosure;
(d) is independently developed by the Receiving Party without
reference to the Confidential Information of the Disclosing Party, which
independent development the Receiving Party will have the burden of proving;
(e) is approved for release by written authorization of the
Disclosing Party; or
(f) is required to be disclosed by a government agency to
further the objectives of this Agreement or by a proper order of a court of
competent jurisdiction; provided, however that the Receiving Party will use its
best efforts to minimize such disclosure and will consult with and assist the
Disclosing Party in obtaining a protective order prior to such disclosure.
GoodNoise and Sub, on the one hand, and Nordic and the Shareholders, on
the other, individually and collectively, agree that neither they nor their
Representatives will disclose the
31
existence of this Agreement or the transactions contemplated herein without the
prior written consent of the other party. Notwithstanding the foregoing,
GoodNoise may make any disclosure deemed by it based upon the advice of counsel
to be necessary or appropriate pursuant to the requirements of applicable
securities laws.
8.2 Exclusivity. Until the earlier of the Closing Date or the
termination of this Agreement, Nordic agrees that it will not (and that it will
use best efforts to assure that its employees, agents and affiliates do not on
its behalf) discuss or enter into any agreement concerning the sale or
acquisition of Nordic, a controlling interest in its stock (including by means
of any public offering thereof, but excluding issuance of stock and options to
employees in the ordinary course of business consistent with past practices) or
a substantial part of its assets with any party other than GoodNoise, and that
any such discussions presently in progress will be terminated or suspended
during that period. Nordic represents and warrants that it has the legal right
to terminate or suspend any such pending negotiations and agrees to indemnify
GoodNoise, its representatives and agents from and against any claims by any
party to such negotiations based upon or arising out of the discussion or any
consummation of the Merger.
8.3 Further Assurances. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
8.4 Tax-Free Organization. Each party shall each use its best
efforts to cause the Merger to be treated as a reorganization within the meaning
of Section 368(a) of the Code.
9. The Closing.
9.1 Merger. On the date of the Closing, but not prior to the
Closing, the Agreement of Merger shall be simultaneously filed with the office
of the Secretary of State of the States of California and Delaware and the
merger of Sub with and into Nordic shall be consummated.
9.2 Additional Documents.
(a) At any time and from time to time at or after the Closing,
the parties shall at the request of the other party execute and deliver or cause
to be executed and delivered all such assignments, consents and other documents
and take or cause to be taken all such other actions as either party may
reasonably deem necessary or desirable, in order to more fully and effectively
carry out the intents and purposes of this Agreement.
(b) Nordic shall execute and deliver to GoodNoise a statement
meeting the requirements of Treasury Regulation Section 1.897-2(h)(2) stating
that interests in Nordic are not United States real property interests.
32
10. Conditions Precedent to Nordic's Obligations.
Nordic's obligations hereunder are subject to the fulfillment or
satisfaction on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by Nordic, but only in a writing signed by
Nordic):
10.1 Accuracy of Representations and Warranties. The representations
and warranties of GoodNoise and Sub set forth in Section 4 shall be true on and
as of the Closing with the same force and effect as if they had been made at the
Closing and the conditions to Nordic's obligations set forth under Sections
10.1, 10.2, 10.3 and 10.4 shall have been satisfied. Nordic shall receive a
certificate to such effect from an executive officer of GoodNoise.
10.2 Covenants. GoodNoise and Sub shall have performed and complied
with all of their covenants contained in this Agreement to be performed on or
before the Closing, and GoodNoise shall deliver to Nordic a certificate executed
by an executive officer of GoodNoise at Closing stating that such condition has
been satisfied.
10.3 No Litigation. No litigation or proceeding shall be threatened
or pending against GoodNoise or Sub with the purpose or with the probable effect
of enjoining or preventing the consummation of any of the transactions
contemplated by this Agreement or which would have a material adverse effect on
the business, liabilities, operations of GoodNoise following the Closing, taken
as a whole, and Nordic shall receive a certificate to such effect signed by an
executive officer of GoodNoise.
10.4 Authorizations. Nordic shall have received from GoodNoise and
Sub written evidence that the execution, delivery and performance of GoodNoise
and Sub's obligations under this Agreement and the Agreement of Merger have been
duly and validly approved and authorized by the Board of Directors of GoodNoise
and Sub, respectively, and the shareholder of Sub.
10.5 Government Consents. There shall have been obtained at or prior
to the date of Closing such permits or authorizations, and there shall have been
taken such other action, as may be required by any regulatory authority having
jurisdiction over the parties and the subject matter and the actions herein
proposed to be taken, including, but not limited to, compliance with applicable
state and federal securities laws.
10.6 Employment Offers and Other Agreements. Xxxx Xxxxxx shall have
entered into a non-compete agreement with GoodNoise in substantially the same
form as attached hereto as Exhibit C, and an employment agreement in
---------
substantially the form as attached hereto as Exhibit D.
---------
10.7 Financing. GoodNoise shall have raised not less than $3,000,000
through the issuance of additional equity securities within ninety (90) days
from the date of this Agreement.
33
10.8 Payments. GoodNoise shall have made all payments due to Nordic
or Xxxxxx pursuant to the terms of this Agreement or the Xxxxxx Employment
Agreement prior to the Closing.
11. Conditions to GoodNoise and Sub's Obligations.
GoodNoise's and Sub's obligations hereunder are subject to the
fulfillment or satisfaction on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by GoodNoise, but only in a
writing signed by GoodNoise):
11.1 Accuracy of Representations and Warranties. The representations
and warranties of Nordic contained in Section 3 and the Shareholders in Section
5 shall be true on and as of the Closing with the same force and effect as if
they had been made at the Closing and the conditions to GoodNoise's and Sub's
obligations set forth under Sections 11.1, 11.2, 11.3 and 11.4 shall have been
satisfied. GoodNoise shall receive a certificate to such effect from an
executive officer of Nordic.
11.2 Covenants. Nordic and the Shareholders shall have performed and
complied with all of their covenants set forth in this Agreement on or before
the Closing.
11.3 No Litigation. On and as of the Closing, no litigation or
proceeding shall be threatened or pending against Nordic for the purpose or with
the probable effect of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement, or which would have a material
adverse effect on the business, liabilities, income, property, operations or
prospects of Nordic subsequent to the Closing.
11.4 Authorizations. GoodNoise shall have received from Nordic
written evidence that (i) the execution, delivery and performance of this
Agreement and the Agreement of Merger have been duly and validly approved and
authorized by its Board of Directors and (ii) the Nordic Shareholders holding
not less than 85% of the Nordic Shares shall have approved this Agreement, the
Merger and the transactions contemplated hereby and thereby.
11.5 No Adverse Development. There shall be no order, decree, or
ruling by any court or Governmental Body or threat thereof or any other fact or
circumstance, which might prohibit or render illegal or have a Material adverse
effect on the business, prospects, liabilities, income, property, assets or
operations of Nordic subsequent to the Closing. Nordic shall not have sustained
a loss, whether or not insured, by reason of physical damage caused by fire,
flood or earthquake, accident or other calamity which materially affects the
Nordic Balance Sheet or its ability to carry on its business as proposed to be
conducted, and which, in the judgment of GoodNoise, renders it inadvisable to
proceed with the Closing. There shall have been no other event which, in the
reasonable judgment of GoodNoise, has a material and adverse effect on Nordic's
assets, business, liabilities, income, property, assets, prospects or operations
subsequent to the Closing.
11.6 Required Consents. GoodNoise shall have received all written
consents, assignments, waivers, authorizations or other certificates reasonably
deemed necessary by
34
GoodNoise's legal counsel to provide for the continuation in full force and
effect of any and all contracts and leases of Nordic.
11.7 Government Consents. There shall have been obtained at or prior
to the Closing Date such permits or authorizations and there shall have been
taken such other action, as may be required by any regulatory authority having
jurisdiction over the parties and the subject matter and the actions herein
proposed to be taken, including, but not limited to, compliance with applicable
state and federal securities laws.
11.8 Employment Offers and Other Agreements. Xxxx Xxxxxx shall have
entered into non-compete and employment agreements with GoodNoise in
substantially the same form as attached hereto as Exhibits C and D.
-----------------
11.9 Financing. GoodNoise shall have raised not less than $3,000,000
through the issuance of additional equity securities within ninety (90) days of
the date upon which the last party hereto executed this Agreement.
11.10 Emusic Acquisition. GoodNoise shall have closed (or shall close
simultaneously with this Agreement) the acquisition of Creative Fulfillment,
Inc.
11.11 Disclosure Schedule. GoodNoise shall have been provided and
approved the Nordic Disclosure Schedule, which approval shall not be
unreasonably withheld.
12. Condition Subsequent. As a condition to the continued ownership of
Nordic by Good Noise, Good Noise shall have closed an aggregate of $5,000,000 or
more in financing (including the $3,000,000 which is a condition to the Closing
of this Agreement) within six months from the date of this Agreement and shall
have paid the Cash Merger Consideration in the sum of $300,000 on the earlier of
closing said $5,000,000 in financing or six months from the date hereof. Until
such time as (i) GoodNoise has raised not less than $5,000,000 of additional
financing (including the $3,000,000 which is a condition to the Closing of this
Agreement) and (ii) GoodNoise has paid the Cash Merger Consideration, the
GoodNoise Shares and Nordic Share shall remain in escrow pursuant to the terms
of the Indemnity Escrow Agreement. In the event that GoodNoise has not satisfied
the conditions of the preceding sentence (the "Conditions Subsequent") on or
before the date six months following the date of this Agreement, the Nordic
Shareholders, exercising the right by majority in interest, may elect to rescind
the Merger and have returned to them all of the Nordic Shares and related assets
of Nordic or exercise their rights under the Security Agreement. Such election
to rescind shall be effective fifteen (15) days following written notice thereof
from the Representative to GoodNoise, provided that GoodNoise shall have not
satisfied the Conditions Subsequent prior to that time.
12.1 Bankruptcy. During the period following the Closing and before
the Conditions Subsequent are satisfied, GoodNoise agrees that it shall remain
solvent and refrain from filing (voluntarily or involuntarily) for bankruptcy
protection and shall make no assignment for the benefit of creditors. If
GoodNoise files for bankruptcy protection, the Merger shall be deemed rescinded
on the date immediately prior to the date of the bankruptcy filing.
35
12.2 Non-Merger Consideration. It is expressly understood that if the
Merger fails to close or is rescinded in accordance with the provisions of this
Section, neither Nordic nor any Nordic Shareholder shall have any obligation to
return any payment or other non-GoodNoise Share consideration or other payments
received by such shareholder pursuant to the terms hereof and prior to the date
of such rescinding.
13. Termination of Agreement.
13.1 Mutual Agreement. This Agreement may be terminated at any time
prior to the Closing by the mutual written consent of each of the parties
hereto.
13.2 Failure to Fulfill Conditions. Either GoodNoise or Nordic may
terminate this Agreement if the Merger has not been consummated within ninety
(90) days of the date of this Agreement (provided that the right to terminate
this Agreement under this Section shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date). Any
termination of this Agreement under this Section shall be effective by the
delivery of notice of the terminating party to the other parties hereto.
13.3 No Liability. Any termination of this Agreement pursuant to this
Section shall be without further obligation or liability upon any party in favor
of any other party hereto.
13.4 Effect of Termination. The termination of the Agreement pursuant
to this Section shall terminate all sections hereof other than Section 8.1.
14. Indemnification.
14.1 Survival of Representations.
(a) The representations and warranties made by Nordic and the
Shareholders under Sections 3 and 5 hereof and the representations and
warranties set forth in any certificate delivered by Nordic in connection with
this Agreement shall survive the Closing and shall remain in full force and
effect and shall survive until the end of the Indemnification Period and shall
survive thereafter only with respect to any claims made prior to the end of the
Indemnification Period.
(b) The representations, warranties, covenants and obligations
of Nordic, and the rights and remedies that may be exercised by the Indemnitees
(as defined herein), shall not be limited or otherwise affected by or as a
result of any information furnished to, or any investigation made by or
knowledge of, any of the Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or other
item of information set forth in the Nordic Disclosure Schedule shall be deemed
to be a representation and warranty made by Nordic in this Agreement.
36
14.2 Indemnification by Nordic Shareholders.
(a) From and after the Closing Date, the Nordic Shareholders
shall be jointly and severally liable for and shall hold harmless and indemnify
GoodNoise and the Surviving Corporation (each an "Indemnitee") from and against,
and shall compensate and reimburse each of the Indemnitees for, any Damages
which are directly or indirectly suffered or incurred by any of the Indemnitees
or to which any of the Indemnitees may otherwise become subject (regardless of
whether or not such Damages relate to any third-party claim) and which arise
from or as a result of, or are directly or indirectly connected with: (i) any
inaccuracy in or breach of any representation or warranty set forth in Section 3
or 5 hereunder or in any certificate delivered by Nordic in connection with this
Agreement; (ii) any breach of any covenant or obligation of Nordic or the
Shareholders hereunder or pursuant to any agreement delivered in connection
herewith; or (iii) any Legal Proceeding relating to any inaccuracy, breach or
expense of the type referred to in clause "(i)" or "(ii)" above (including any
Legal Proceeding commenced by any Indemnitee for the purpose of enforcing any of
its rights under this Section if such Indemnitee is the prevailing party in any
such Legal Proceeding). The aggregate liability arising by reason of this
Section shall not exceed the value of the GoodNoise Shares held in escrow
pursuant to the terms of the Indemnity Escrow Agreement, even if the Damages
exceed the value of such shares.
(b) If the Surviving Corporation suffers, incurs or otherwise
becomes subject to any Damages as a result of or in connection with any
inaccuracy in or breach of any representation, warranty, covenant or obligation,
then (without limiting any of the rights of the Surviving Corporation as an
Indemnitee) GoodNoise shall also be deemed, by virtue of its ownership of the
stock of the Surviving Corporation, to have incurred Damages as a result of and
in connection with such inaccuracy or breach.
14.3 No Contribution. The Nordic Shareholders acknowledge and agree
that they shall not have and shall not exercise or assert (or attempt to
exercise or assert), any right of contribution, right of indemnity or other
right or remedy against the Surviving Corporation which they have in their
capacity as shareholders in connection with any indemnification obligation or
any other liability to which it may become subject under or in connection with
this Agreement or any certificate delivered by Nordic in connection with this
Agreement.
14.4 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against GoodNoise or against any other Person) with
respect to which the Nordic Shareholders may become obligated to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section, the
procedure set forth below shall be followed.
(a) Notice. GoodNoise shall give prompt written notice of the
commencement of any such Legal Proceeding against GoodNoise or the Surviving
Corporation for which indemnity may be sought; provided, however, that any
failure on the part of GoodNoise to so notify Nordic shall not limit any of the
obligations of Nordic under this Section unless the ability to defend such claim
is materially prejudiced by such failure or delay.
37
The Indemnification Period shall be tolled solely with respect to a particular
claim for the period beginning on the date the Nordic Shareholders receive
written notice of that claim until the final resolution of such claim so long as
such claim is made within the Indemnification Period.
(b) Defense of Claim. The Indemnitee shall have the right to be
represented by counsel of its choice and to defend or otherwise control the
handling of any claim, or Legal Proceeding for which indemnity is sought;
provided however that the choice of such counsel shall be subject to the
approval of the Shareholder Representative, which approval shall not be
unreasonably withheld. If the Indemnitee so proceeds with the defense of any
such claim or Legal Proceeding:
(i) all expenses relating to the defense of such claim or
Legal Proceeding (whether or not incurred by the Indemnitee) shall be borne and
paid exclusively by the Nordic Shareholders;
(ii) the Nordic Shareholders shall make available to the
Indemnitee any non-privileged documents and materials in the possession or
control of the Nordic Shareholders that may be necessary to the defense of such
claim or Legal Proceeding except for documents or materials which are sealed by
a court order or are subject to a nondisclosure agreement prohibiting disclosure
by the Nordic Shareholders;
(iii) the Indemnitee shall keep the Nordic Shareholders
informed of all material developments and events relating to such claim or Legal
Proceeding; and
(iv) the Nordic Shareholders shall have the right to
participate in the defense of such claim or legal proceeding through the
Shareholder Representative (including, if desired, obtaining counsel separate
and apart from GoodNoise); provided that any such participation shall be at
their sole cost and expense (including the costs of any such counsel); and
(v) the Indemnitee shall have the right to settle, adjust
or compromise such claim or Legal Proceeding with the written consent of the
Nordic Shareholders; provided, however, that the Nordic Shareholders shall not
unreasonably withhold such consent.
14.5 Indemnity Escrow. As soon as practicable after the Effective
Time, GoodNoise shall deposit into an escrow account (the "Indemnity Escrow")
with a national bank or other financial institution reasonably acceptable to
Nordic, as escrow agent (the "Indemnity Escrow Agent"), twenty percent (20%) of
the GoodNoise Shares (the "Indemnity Escrow Holdback"). The Indemnity Escrow
Holdback shall be withheld on a pro rata basis from the Nordic Shareholders who
otherwise are entitled to such amounts at the Effective Time and shall be
governed by the terms set forth herein and in an escrow agreement (the
"Indemnity Escrow Agreement") in substantially the form attached hereto as
Exhibit E. The Indemnity Escrow (but only up to a maximum of the total
----------
aggregate value of the Indemnity Escrow Holdback) shall be available to
compensate the Indemnitees for any loss, to the extent of the amount of Damages
that such Indemnitee has incurred and which are subject to indemnification
hereunder.
38
So long as the GoodNoise shares remain subject to escrow, the Shareholders
shall have the right to vote said shares or give a proxy for the same.
Furthermore, any distribution of money or property (including additional shares
of GoodNoise equity) paid by GoodNoise on the Indemnity Escrow Holdback shall be
added to the Indemnity Escrow Holdback and become subject to the Indemnity
Escrow. Said additions shall thereafter be distributed to the Shareholders upon
expiration of the Indemnity Escrow.
14.6 Shareholder Representative.
(a) By virtue of their approval of this Agreement, the Nordic
Shareholders will be deemed to have irrevocably constituted and appointed,
effective as of the Effective Time, Xxxx Xxxxxx (the "Shareholder
Representative"), as their true and lawful agent and attorney-in-fact to enter
into any agreement in connection with the transactions contemplated by this
Agreement or the Indemnity Escrow Agreement, to exercise all or any of the
powers, authority and discretion conferred on him under any such agreement, to
waive any terms and conditions of any such agreement, to give and receive
notices and communications, to authorize delivery to GoodNoise of the Indemnity
Escrow Holdback or other property from the Indemnity Escrow in satisfaction of
claims by GoodNoise, to object to such deliveries, to agree to, negotiate, enter
into settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to such claims, and to
take all actions necessary or appropriate in the judgment of the Shareholder
Representative for the accomplishment of the foregoing. Such agency may be
changed by the holders of a majority in interest of the Indemnity Escrow from
time to time upon not less than ten (10) days' prior written notice to
GoodNoise. The Shareholder Representative shall receive no compensation for his
services. Notices or communications to or from the Shareholder Representative
shall constitute notice to or from each of the Nordic Shareholders. This power
of attorney is coupled with an interest and is irrevocable.
(b) The Shareholder Representative shall not be liable for any
act done or omitted hereunder as Shareholder Representative while acting in good
faith and not in a manner constituting gross negligence, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith. The Nordic Shareholders shall severally indemnify the Shareholder
Representative and hold him harmless against any loss, liability or expense
incurred without gross negligence or bad faith on the part of such Shareholder
Representative and arising out of or in connection with the acceptance or
administration of his duties hereunder.
15. Miscellaneous.
15.1 Governing Laws. It is the intention of the parties hereto that
the internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto.
39
15.2 Binding upon Successors and Assigns. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained herein shall be binding upon, and inure to
the benefit of, the permitted successors, executors, heirs, representatives,
administrators and assigns of the parties hereto.
15.3 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
15.4 Entire Agreement. This Agreement, the exhibits and schedules
hereto, the documents referenced herein, and the exhibits and schedules thereto,
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto and
thereto. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
15.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
15.6 Expenses. Except as provided to the contrary herein, each party
shall pay all of its own costs and expenses incurred with respect to the
negotiation, execution and delivery of this Agreement and the exhibits hereto.
In the event the Merger is consummated, all legal and accounting fees incurred
by Nordic and the Nordic Shareholders in connection with the Merger shall be
deemed to be expenses of the Nordic Shareholders, shall be borne by the Nordic
Shareholders and shall not become obligations of Nordic, GoodNoise or the
Surviving Corporation. The Nordic Shareholders shall make arrangements
satisfactory to GoodNoise at or prior to the Closing for the satisfaction of
such amounts.
15.7 Other Remedies. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law on such
party, and the exercise of any one remedy shall not preclude the exercise of any
other.
15.8 Amendment and Waivers. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default
40
in payment of any amount due hereunder or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default.
15.9 Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby notwithstanding any investigation of the parties hereto.
15.10 No Waiver. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
15.11 Attorneys' Fees. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party shall be entitled to recover,
as an element of the costs of suit and not as damages, reasonable attorneys'
fees to be fixed by the court (including without limitation, costs, expenses and
fees on any appeal). The prevailing party shall be the party entitled to recover
its costs of suit, regardless of whether such suit proceeds to final judgment. A
party not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in calculating the
amount of a judgment for purposes of determining if a party is entitled to
recover costs or attorneys' fees.
15.12 Notices. Any notice provided for or permitted under this
Agreement will be treated as having been received (a) when delivered personally,
(b) when sent by confirmed telex or telecopy, (c) one (1) day following when
sent by commercial overnight courier with written verification of receipt, or
(d) three (3) days following when mailed postage prepaid by certified or
registered mail, return receipt requested, to the party to be notified, at the
address set forth below, or at such other place of which the other party has
been notified in accordance with the provisions of this Section:
Nordic: Nordic Entertainment Worldwide, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxx, Xxxxxxxxxx 00000
With copy to: X.X. Xxxxxxx, Esq.
XXXX XXXXXXX, LLP
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
GoodNoise or Sub: GoodNoise Corporation
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
41
With copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
15.13 Time. Time is of the essence of this Agreement.
15.14 Construction of Agreement. This Agreement has been negotiated
by the respective parties hereto and their attorneys and the language hereof
shall not be construed for or against any party. The titles and headings herein
are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole.
15.15 No Joint Venture. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other. No party shall hold itself out as having any authority or
relationship in contravention of this Section 15.15.
15.16 Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
15.17 Further Assurances. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
15.18 Absence of Third Party Beneficiary Rights. No provisions of
this Agreement are intended, nor shall be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement .
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
42
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
GOODNOISE CORPORATION NORDIC ENTERTAINMENT
WORLDWIDE, INC.
By: /s/ By: /s/
-------------------------- ---------------------------
GNA CORPORATION SHAREHOLDERS:
By: /s/ By: /s/
-------------------------- ---------------------------
Xxxx Xxxxxx
[SIGNATURE PAGE FOR AGREEMENT AND PLAN OF REORGANIZATION]