EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
GOODNOISE CORPORATION,
ATLANTIS VENTURES CORP.,
GN ACQUISITION CORP.
TIDEWATER ENTERPRISES LTD.
AND
Xxxx X. Xxxxx
Dated as of May 11, 1998
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of May 11, 1998 by and among GoodNoise Corporation, a Delaware
corporation ("GoodNoise"), Atlantis Ventures Corp., a Florida corporation
("Atlantis"), GN Acquisition Corp., a Delaware corporation ("Sub"), and
Tidewater Enterprises Ltd., a British Columbia corporation, and Xxxx X. Xxxxx
(together the "Principal Shareholder").
The parties agree as follows:
1. THE MERGER.
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
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subject to and upon the terms and conditions of this Agreement, Sub shall be
merged into GoodNoise (the "Merger), the separate corporate existence of Sub
shall cease and GoodNoise shall continue as the surviving corporation and as a
wholly-owned subsidiary of Atlantis. The surviving corporation after the Merger
is hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Effective Time. Unless this Agreement is earlier terminated
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pursuant to Section 8.1, the closing of the Merger (the "Closing") will take
place as promptly as practicable, but no later than five (5) business days
following satisfaction or waiver of the conditions set forth in Section 6, at
the offices of Xxxx Xxxx Xxxx & Freidenrich, LLP, 000 Xxxxxxxx Xxxxxx, Xxxx
Xxxx, Xxxxxxxxxx, unless another place or time is agreed to in writing by
Atlantis and GoodNoise. The date upon which the Closing actually occurs is
herein referred to as the "Closing Date." On the Closing Date, the parties
hereto shall cause the Merger to be consummated by filing Articles of Merger (or
like instrument) in the form attached hereto as Exhibit A with the Secretary of
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State of the State Delaware (the "Merger Articles"), in accordance with the
applicable provisions of Delaware law (the time of acceptance by the Secretary
of State of the State of Delaware of such filing being referred to herein as the
"Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
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Merger shall be as provided in the applicable provisions of Delaware law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
Sub and GoodNoise shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Sub and GoodNoise shall become the debts, liabilities
and duties of the Surviving Corporation.
1.4 Articles of Incorporation, Bylaws. As of the Effective Time, the
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Articles of Incorporation and Bylaws of Atlantis shall be amended to read as set
forth in Exhibits B-1 and B-2 hereto and the form of Indemnity Agreement set
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forth in Exhibit B-3 shall have been approved by the shareholders of Atlantis.
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The Certificate of Incorporation and Bylaws of GoodNoise shall be the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
1.5 Directors and Officers. Directors of the Surviving Corporation
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and Atlantis immediately after the Effective Time shall be the directors of
GoodNoise immediately
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prior to the Effective Time, each to hold the office in accordance with the
provisions of applicable laws and the Bylaws of the Surviving Corporation and
Atlantis, respectively, until their successors are duly qualified and elected.
The officers of Surviving Corporation immediately after the Effective Time shall
be the officers of GoodNoise and Atlantis immediately prior to the Effective
Time, each to hold office in accordance with the provisions of the Bylaws of the
Surviving Corporation and Atlantis, respectively.
1.6 Conversion of GoodNoise Common Stock.
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(a) At the Effective Time, each share of GoodNoise Common Stock,
par value $0.001 per share ("GoodNoise Common Stock"), upon the terms and
subject to the conditions set forth below shall be converted automatically into
1.18 shares (the "Exchange Ratio") of Atlantis Common Stock par value $0.01 per
share ("Atlantis Common Stock").
(b) At the Effective Time, any outstanding options or warrants
(collectively, "GoodNoise Options") to acquire GoodNoise Common Stock, will be,
in connection with the Merger, assumed by Atlantis. Each GoodNoise Option so
assumed or replaced by Atlantis under this Agreement shall continue to have, and
be subject to, the same terms and conditions, including vesting (if applicable),
set forth in the respective GoodNoise Option agreements immediately prior to the
Effective Time, except that (A) such assumed or replaced GoodNoise Option will
be exercisable for that number of whole shares of Atlantis Common Stock equal to
the product obtained by multiplying the number of shares of GoodNoise Common
Stock that were issuable upon exercise of such assumed or replaced GoodNoise
Option immediately prior to the Effective Time, by the Exchange Ratio, rounded
down to the nearest whole number of shares of Atlantis Common Stock and (B) the
per share exercise price for the shares of Atlantis Common Stock issuable upon
exercise of such assumed or replaced GoodNoise Option shall be equal to the
quotient obtained by dividing the exercise price per share of GoodNoise Common
Stock at which such assumed or replaced GoodNoise Option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to the
nearest whole cent. It is the intention of the parties that any GoodNoise
Options that qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), shall remain
"incentive stock options" following the Effective Time. GoodNoise Options shall
be assumed in accordance with the rules of Section 424(a) of the Code, and the
regulations promulgated thereunder, and such rules shall apply even with respect
to options that are not "incentive stock options."
(c) The Exchange Ratio shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into Atlantis Common Stock or
GoodNoise Common Stock), reorganization, recapitalization or other like charge
with respect to Atlantis Common Stock or GoodNoise Common Stock occurring after
the date hereof.
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(d) No fractional share of Atlantis Common Stock shall be issued
in the Merger. In lieu thereof, any fractional share shall be rounded up to the
nearest whole share of Atlantis Common Stock.
(e) Each share of Common Stock of Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of Common Stock of
the Surviving Corporation. Each stock certificate of Sub evidencing ownership of
any such shares shall continue to evidence ownership of such shares of capital
stock of the Surviving Corporation.
1.7 Surrender of Certificates.
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(a) Exchange Agent. The Corporate Secretary of Atlantis shall
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serve as exchange agent (the "Exchange Agent") in the Merger.
(b) Atlantis to Provide Cash and Common Stock. Promptly after the
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Effective Time, Atlantis shall make available to the Exchange Agent for exchange
in accordance with this Section, the shares of Atlantis Common Stock issuable
pursuant to Section 1.6(b) in exchange for all of the outstanding shares of
GoodNoise Common Stock.
(c) Exchange Procedures. On or after the Closing Date, the
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holders of GoodNoise Common Stock will surrender the certificates representing
their GoodNoise Common Stock (the "GoodNoise Stock Certificate") to Atlantis for
cancellation together with a letter of transmittal in such form and having such
provisions that Atlantis reasonably requests. Promptly following the Effective
Time, Atlantis will issue to the such stockholders certificates for the number
of shares of Atlantis Common Stock to which such stockholders are entitled
pursuant to Section 1.6.
(d) Transfers of Ownership. If any certificate for shares of
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Atlantis Common Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered or if any cash is to
be delivered to a person other than the person whose name is on the certificate
surrendered, it will be a condition to the issuance and/or delivery thereof that
the certificate so surrendered will be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange will have paid to
Atlantis or any agent designated by it any transfer or other taxes required by
reason or the issuance of a certificate for shares of Atlantis Common Stock or
the delivery of any cash in any name other than that of the registered holder of
the certificate surrendered, or established to the satisfaction of Atlantis or
any agent designated by it that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in
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this Section 1.7, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to a holder of shares of Atlantis Common Stock or
GoodNoise Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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1.8 No Further Ownership Rights in GoodNoise Common Stock. All shares
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of Atlantis Common Stock issued upon the surrender for exchange of shares of
GoodNoise Common Stock in accordance with the terms hereof, and any cash paid in
respect thereof, shall be deemed to be full satisfaction of all rights
pertaining to such shares of GoodNoise Common Stock, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
shares of GoodNoise Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, GoodNoise Stock Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Section 1.
1.9 Lost, Stolen or Destroyed Certificates. In the event any
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certificates evidencing shares of GoodNoise Common Stock shall have been lost,
stolen or destroyed, the Exchange Agent 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 amount, if any, as may be required pursuant to
Section 1.6; provided, however, that Atlantis may, in its discretion and as a
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condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificates to deliver a bond or indemnity in such sum as
it may reasonably direct against any claim that may be made against Atlantis or
the Exchange Agent with respect to the certificates alleged to have been lost,
stolen or destroyed.
1.10 Tax Consequences. It is intended by the parties hereto that the
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Merger will constitute a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended. Each party has consulted with its own
tax advisors with respect to the tax consequences of the Merger.
1.11 Taking of Necessary Action; Further Action. If, at any time
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after the Effective Time, any such further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of GoodNoise, the officers and directors of
GoodNoise and Atlantis are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
2. REPRESENTATIONS AND WARRANTIES OF ATLANTIS AND THE
PRINCIPAL SHAREHOLDER.
Each of Atlantis and the Principal Shareholder hereby, jointly and
severally, represents and warrants to GoodNoise, subject to such exceptions as
are specifically disclosed in the Atlantis Disclosure Schedule (referencing the
appropriate Section and paragraph numbers) supplied by Atlantis and the
Principal Shareholder to GoodNoise (the "Atlantis Disclosure Schedule") and
dated as of the date hereof, as follows:
2.1 Organization of Atlantis. Each of Atlantis and Sub is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and Delaware, respectively. Each has the corporate power
to own its properties and to carry on its business as proposed to be conducted
following the Effective Date. Atlantis is duly qualified to
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do business and in good standing as a foreign corporation in each jurisdiction
in which the failure to be so qualified could have a material adverse effect on
the business, assets (including intangible assets), condition (financial or
otherwise), results of operations or prospects of Atlantis (hereinafter referred
to as a "Material Adverse Effect"). GoodNoise has delivered a true and correct
copy of its Articles of Incorporation and Bylaws and the Certificate of
Incorporation and Bylaws of Sub, each as amended to date, to GoodNoise. Xxxxxxxx
Xxxxxxx is the sole director and officers of Atlantis and Sub. Neither Atlantis
nor Sub has ever has never conducted any operations.
2.2 Atlantis Capital Structure.
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(a) The authorized capital stock of Atlantis consists of
200,000,000 shares of authorized Common Stock, par value $0.01 per share, of
which 3,700,000 shares are issued and outstanding and 500,000 shares of
preferred stock, par value $0.01 per share, none of which are outstanding.
Atlantis Common Stock is held by the persons, with the domicile addresses and in
the amounts set forth on Section 2.2(a) of the Atlantis Disclosure Schedule. All
outstanding shares of Atlantis Common Stock are duly authorized, validly issued,
fully paid and non-assessable and not subject to preemptive rights created by
statute, the Articles of Incorporation or Bylaws of Atlantis or any agreement to
which Atlantis is a party or by which it is bound and have been issued in
compliance with federal and state securities laws. Atlantis has no other capital
stock authorized, issued or outstanding.
(b) Atlantis has outstanding warrants granted as of May 8, 1998
originally entitling the holders thereof to purchase a total of up to 500,000
shares of Atlantis Common Stock until three months following the completion of
the Merger at an exercise price of $1.00 per share (the "Atlantis Warrants").
The Atlantis Warrants have been exercised as to 200,000 shares. Except for the
Atlantis Warrants, there are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which Atlantis or any of its
shareholders is a party or by which Atlantis or any of its shareholders is bound
obligating Atlantis or any of its shareholders to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of Atlantis or obligating Atlantis to
grant, extend, accelerate the vesting of, change the price of, otherwise amend
or enter into any such option warrant, call, right, commitment or agreement.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to Atlantis. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting stock of Atlantis.
(c) The shares of Atlantis Common Stock to be issued pursuant to
the Merger will be duly authorized, validly issued, fully paid, non-assessable.
(d) The Atlantis Common Stock has been duly approved for
quotation on the NASD OTC Bulletin Board.
2.3 Subsidiaries. Atlantis does not have, and has never had, any
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subsidiaries or affiliated companies other than Sub and does not otherwise
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own, and has not otherwise owned, any shares in the capital of or any interest
in, or control, directly or indirectly, any other corporation, partnership,
association, joint venture or other business entity. Atlantis owns all of the
outstanding securities of Sub.
2.4 Authority. Each of Atlantis, Sub and the Principal Shareholder
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has all requisite power and authority to enter into this Agreement and any
Related Agreements (as hereinafter defined) to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and any Related Agreements to which it is a party and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Atlantis and
Sub, and no further action is required on the part of Atlantis, Sub or the
Principal Shareholder to authorize the Agreement, any Related Agreements to
which it is a party and the transactions contemplated hereby and thereby. This
Agreement and any Related Agreements to which Atlantis, Sub or the Principal
Shareholder is a party have been duly executed and delivered by Atlantis or such
Principal Shareholder, as the case may be, and, assuming the due authorization,
execution and delivery by the other parties hereto and thereto, constitute the
valid and binding obligation of Atlantis or such Principal Shareholder, as the
case may be, enforceable in accordance with their respective terms, subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and to rules of law governing specific performance,
injunctive relief or other equitable remedies. The "Related Agreements" shall
mean all such ancillary agreements required in this Agreement to be executed and
delivered in connection with the transactions contemplated hereby.
2.5 Conflict. The execution and delivery of this Agreement and any
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Related Agreements to which it is a party by Atlantis, Sub and the Principal
Shareholder do not, and, the consummation of the transactions contemplated
hereby and thereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation, modification or acceleration of any
obligation or loss of any benefit under (any such event, a "Conflict") (i) any
provision of the Articles of Incorporation and Bylaws of Atlantis or Sub, (ii)
any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise or license to which Atlantis, Sub or the Principal
Shareholder or any of their respective properties or assets are subject, or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Atlantis, Sub or the Principal Shareholder or their respective
properties or assets.
2.6 Consents. No consent, waiver, approval, order or authorization
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of, or registration, declaration or filing with, any court, administrative
agency or commission or other federal, state, county, local or other foreign
governmental authority, instrumentality, agency or commission ("Governmental
Entity") or any third party, including a party to any agreement with Atlantis or
Sub (so as not to trigger any Conflict), is required by or with respect to
Atlantis or Sub in connection with the execution and delivery of this Agreement
and any Related Agreements to which Atlantis or Sub or the Principal Shareholder
is a party or the consummation of the transactions contemplated hereby and
thereby, except for (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
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applicable securities laws thereby, and (ii) the filing of the Merger Articles
with the Secretary of State of the Delaware.
2.7 Atlantis Financial Statements. Atlantis has provided GoodNoise
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with a copy of it's audited balance sheets as of March 13, 1998, December 31,
1997 and December 31, 1996 and the related audited statements of operations,
stockholders' equity and cash flow for the periods then ended (the "Audited
Financials") and Atlantis's unaudited balance sheet of April 1998 and the
related unaudited statements of income and cash flow for the period from March
13, 1998 to such date (the "Unaudited Financials"). The Audited Financials and
the Unaudited Financials are correct in all material respects and have been
prepared in accordance with GAAP applied on a basis consistent throughout the
periods indicated and consistent with each other (except that the Unaudited
Financials do not contain all the notes that may be required by GAAP). The
Audited Financials and Unaudited Financials present fairly the financial
condition, operating results and cash flows of Atlantis as of the dates and
during the periods indicated therein, subject in the case of the Unaudited
Financials, to normal year-end adjustments, which will not be material in amount
or significance.
2.8 No Undisclosed Liabilities. Atlantis and Sub do not have any
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liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in financial
statements in accordance with GAAP).
2.9 No Changes. Since inception of Atlantis, there has not been,
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occurred or arisen any:
(a) transaction, commitment or obligation by Atlantis of any kind
other than the stock and warrant issuances described in paragraph (b) hereof;
(b) issuance or sale, or contract to issue or sell, by Atlantis
of any shares of Atlantis Common Stock, or securities exchangeable, convertible
or exercisable therefor, or any securities, warrants, options or rights to
purchase any of the foregoing, except for the issuance of 3,700,000 shares of
Atlantis Common Stock and the issuance of the Atlantis Warrants;
(c) negotiation or agreement by Atlantis or any officer or
employees thereof to do any of the things described in the preceding clauses (a)
or (b) (other than negotiations with GoodNoise and its representatives regarding
the transactions contemplated by this Agreement).
2.10 Restrictions on Business Activities. There is no agreement
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(noncompete or otherwise), commitment, judgment, injunction, order or decree to
which Atlantis is a party or otherwise binding upon Atlantis which has or may
have the effect of prohibiting or impairing any business practice of Atlantis or
the Surviving Corporation, any acquisition of property (tangible
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or intangible) by Atlantis or the Surviving Corporation or the conduct of
business by Atlantis or the Surviving Corporation.
2.11 Agreements, Contracts and Commitments. Atlantis is not a party
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to nor is it bound by any contracts, obligations or agreements or any kind.
Atlantis is in compliance with and has not breached, violated or defaulted
under, or received notice that it has breached, violated or defaulted under, any
of the terms or conditions of any agreement, contract, covenant, instrument,
lease, license or commitment to which Atlantis is a party or by which it is
bound (collectively a "Contract"), nor is Atlantis or the Principal Shareholder
aware of any event that would constitute such a breach, violation or default
with the lapse of time, giving of notice or both. Atlantis has obtained, or will
obtain prior to the Closing Date, all necessary consents, waivers and approvals
as are required in connection with the Merger.
2.12 Litigation. There is no action, suit or proceeding of any nature
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pending, or, to Atlantis's or the Principal Shareholder's knowledge, threatened,
against Atlantis, its properties or any of its officers or directors, nor, to
the knowledge of Atlantis or the Principal Shareholder, is there any reasonable
basis therefor. There is no investigation pending or, to Atlantis's or the
Principal Shareholder's knowledge threatened, against Atlantis, its properties
or any of its officers or directors (nor, to the best knowledge of Atlantis or
the Principal Shareholder, is there any reasonable basis therefor) by or before
any Governmental Entity. No Governmental Entity has at any time challenged or
questioned the legal right of Atlantis or any subsidiary to conduct its
operations as presently or previously conducted.
2.13 Minute Books. The minutes of Atlantis made available to counsel
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for GoodNoise are the only minutes of Atlantis and contain a reasonably accurate
summary of all meetings of the Board of Directors (or committees thereof) of
Atlantis and its shareholders or actions by written consent since the time of
incorporation of Atlantis.
2.14 Brokers' and Finders' Fees: Third Party Expenses. Atlantis has
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not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Agreement or any transaction contemplated hereby.
2.15 Compliance with Laws. Atlantis has complied with, is not in
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violation of, and has not received any notices of violation with respect to, any
foreign, federal, state or local statute, law or regulation.
2.16 Complete Copies of Materials. Atlantis has delivered or made
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available true and complete copies of each document (or summaries of same) that
has been requested by GoodNoise or its counsel.
2.17 Representations Complete. None of the representations or
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warranties made by Atlantis or the Principal Shareholder (as modified by the
Atlantis Disclosure Schedule), nor any statement made in any Schedule or
certificate furnished by Atlantis or the Principal Shareholder pursuant to this
Agreement or finished in or in connection with documents mailed or
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delivered to the shareholders of Atlantis for use in soliciting their consent to
this Agreement and the Merger contains or will contain at the Effective Time,
any untrue statement of a material fact, or omits or will omit at the Effective
Time to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which made,
not misleading.
3. REPRESENTATIONS AND WARRANTIES OF GOODNOISE.
GoodNoise represents and warrants to Atlantis as follows:
3.1 Organization Standing and Power. GoodNoise is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware. GoodNoise has the corporate power to own its properties and to carry
on its business as now being conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the failure to be so qualified
would have a material adverse effect on the ability of GoodNoise to consummate
the transactions contemplated hereby.
3.2 Authority. GoodNoise has all requisite corporate power and
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authority to enter into this Agreement and the Related Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of GoodNoise except that the Merger
must be approved by the stockholders of GoodNoise. This Agreement has been duly
executed and delivered by GoodNoise and constitutes, and the Related Agreements,
when duly executed and delivered by GoodNoise, will constitute the valid and
binding obligations of GoodNoise, enforceable in accordance with their terms,
except as such enforceability may be limited by principles of public policy and
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
3.3 Capital Structure.
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(a) The authorized stock of GoodNoise consists of 10,000,000
shares of Common Stock, $0.001 par value, of which 9,207,500 shares are issued
and outstanding. All such shares of GoodNoise have been duly authorized, and all
such issued and outstanding shares have been validly issued, are fully paid and
nonassessable and are free of any liens or encumbrances other than any liens or
encumbrances created by or imposed upon the holders shares of Common Stock under
applicable securities laws and except to the extent that certain of such shares
are subject to a right of repurchase in favor of GoodNoise relating to a vesting
schedule based upon continued service to GoodNoise.
(b) Except for options to purchase 1,540,000 shares of Common
Stock granted pursuant to the GoodNoise 1998 Stock Option Plan (the "GoodNoise
Option Plan"), there are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which GoodNoise or any of its
stockholders is a party or by which GoodNoise or any
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of its stockholders is bound obligating GoodNoise or any of its stockholders to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of the capital stock of GoodNoise.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to GoodNoise.
3.4 Conflict. The execution and delivery of this Agreement and any
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Related Agreements to which it is a party by GoodNoise do not, and, the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the Articles
of Incorporation and Bylaws of GoodNoise, (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise or
license to which GoodNoise or any of its properties or assets are subject, or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to GoodNoise or its properties or assets.
3.5 Consents. No consent, waiver, approval, order or authorization
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of, or registration, declaration or filing with, any court, administrative
agency or commission or other federal, state, county, local or other foreign
governmental authority, instrumentality, agency or commission ("Governmental
Entity") or any third party, including a party to any agreement with GoodNoise
(so as not to trigger any Conflict), is required by or with respect to GoodNoise
in connection with the execution and delivery of this Agreement and any Related
Agreements to which GoodNoise is a party or the consummation of the transactions
contemplated hereby and thereby, except for (i) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws thereby, and (ii) the filing of
the Merger Articles with the Secretary of State of the Delaware.
3.6 GoodNoise Financial Statements. GoodNoise has furnished Atlantis
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with a true and complete copy of its unaudited balance sheet as of March 31,
1998 (the "GoodNoise Financials"). The GoodNoise Financials present fairly the
financial condition of GoodNoise as of the date indicated therein, subject, to
year-end adjustments.
3.7 Restrictions on Business Activities. Other than license and other
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restrictions included in agreements entered into in the ordinary course of
business, there is no agreement (noncompete or otherwise), commitment, judgment,
injunction, order or decree to which GoodNoise is a party or otherwise binding
upon GoodNoise which has or may have the effect of prohibiting or impairing any
business practice of GoodNoise or the Surviving Corporation, any acquisition of
property (tangible or intangible) by GoodNoise or the Surviving Corporation or
the conduct of business by GoodNoise or the Surviving Corporation.
3.8 Agreements, Contracts and Commitments. GoodNoise is in compliance
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with and has not breached, violated or defaulted under, or received notice that
it has breached, violated or defaulted under, any of the terms or conditions of
any agreement, contract, covenant,
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instrument, lease, license or commitment to which GoodNoise is a party or by
which it is bound (collectively a "Contract"), nor is GoodNoise aware of any
event that would constitute such a breach, violation or default with the lapse
of time, giving of notice or both. GoodNoise has obtained, or will obtain prior
to the Closing Date, all necessary consents, waivers and approvals as are
required in connection with the Merger.
3.9 Litigation. There is no action, suit or proceeding of any nature
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pending, or, to GoodNoise's knowledge, threatened, against GoodNoise, its
properties or any of its officers or directors, nor, to the knowledge of
GoodNoise, is there any reasonable basis therefor. There is no investigation
pending or, to GoodNoise's knowledge threatened, against GoodNoise, its
properties or any of its officers or directors (nor, to the best knowledge of
GoodNoise, is there any reasonable basis therefor) by or before any Governmental
Entity. No Governmental Entity has at any time challenged or questioned the
legal right of GoodNoise to conduct its operations as presently or previously
conducted.
3.10 Minute Books. The minutes of GoodNoise made available to counsel
------------
for Atlantis are the only minutes of GoodNoise and contain a reasonably accurate
summary of all meetings of the Board of Directors (or committees thereof) of
GoodNoise and its shareholders or actions by written consent since the time of
incorporation of GoodNoise.
3.11 Brokers' and Finders' Fees: Third Party Expenses. GoodNoise has
------------------------------------------------
not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Agreement or any transaction contemplated hereby.
3.12 Compliance with Laws. GoodNoise has complied with in all
--------------------
material respects, is not in violation of, and has not received any notices of
violation with respect to, any foreign, federal, state or local statute, law or
regulation.
3.13 Complete Copies of Materials. GoodNoise has delivered or made
----------------------------
available true and complete copies of each document (or summaries of same) that
has been requested by Atlantis or its counsel.
3.14 Representations Complete. None of the representations or
------------------------
warranties made by GoodNoise (as modified by the GoodNoise Disclosure Schedule),
nor any statement made in any Schedule or certificate furnished by GoodNoise
pursuant to this Agreement or finished in or in connection with documents mailed
or delivered to the shareholders of GoodNoise for use in soliciting their
consent to this Agreement and the Merger contains or will contain at the
Effective Time, any untrue statement of a material fact, or omits or will omit
at the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
4. CONDUCT PRIOR TO THE EFFECTIVE TIME.
11
4.1 Conduct of Business of GoodNoise. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, GoodNoise agrees that it shall not:
(a) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of its capital stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities except if in connection therewith, it negotiates a
proportionate adjustment in the Exchange Ratio.
(b) cause or permit any amendments to its Articles of
Incorporation or Bylaws; or
(c) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1 above, or any other action that would prevent
GoodNoise from performing or cause GoodNoise not to perform its covenants
hereunder.
4.2 Conduct of Business of Atlantis. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Atlantis agrees that it shall not:
(a) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of its capital stock (other than shares issued upon exercise of the
Atlantis Warrants) or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible securities
except if in connection therewith, it negotiates a proportionate adjustment in
the Exchange Ratio;
(b) enter into any contract, arrangement or obligation of any
kind;
(c) cause or permit any amendments to its Articles of
Incorporation or Bylaws; or
(d) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.2 above, or any other action that would prevent
Atlantis from performing or cause Atlantis not to perform its covenants
hereunder.
5. ADDITIONAL AGREEMENTS.
5.1 Sale of Shares. The parties hereto acknowledge and agree that the
--------------
shares of Atlantis Common Stock issuable to the stockholders of GoodNoise
pursuant to Section 1.6 (the "Merger Shares") shall constitute "restricted
securities" within the meaning of the Securities Act. The certificates for the
Merger Shares shall bear appropriate legends to identify such
12
privately placed shares as being restricted under the Securities Act, to comply
with applicable state securities laws and, if applicable, to notice the
restrictions on transfer of such shares.
5.2 Stockholder Approval. GoodNoise and Atlantis shall promptly
--------------------
submit this Agreement and the transactions contemplated hereby to their
stockholders for approval and adoption as required by law. The Principal
Shareholder agrees to vote in favor of the Merger.
5.3 Access to Information. Each party shall afford the other and its
---------------------
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to (a) all of such
party's properties, books, contracts, commitments and records and (b) all other
information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of such party as the other may
reasonably request. No information or knowledge obtained in any investigation
pursuant to this Section shall affect or be deemed to modify any representation
or warranty contained herein or the conditions to the obligations of the parties
to consummate the Merger.
5.4 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 or employees (or outside legal, financial or accounting
advisors) 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 or who are subject to ethical
restrictions on disclosure which protects the Confidential Information of the
Disclosing Party. The Receiving Party shall immediately 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. 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;
13
(c) is received by the Receiving Party from a third party without
restriction on disclosure (although this exception shall not apply if such third
party is itself violating a confidentiality obligation by making such
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 Body 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.
5.5 Expenses. Whether or not the Merger is consummated, all fees and
--------
expenses incurred in connection with the Merger including, without limitation,
all legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties ("Third Party Expenses") incurred by a party in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby, shall be the obligation
of the respective party incurring such fees and expenses. The costs and expenses
incurred by Atlantis in connection with the Merger in excess of $10,000 shall be
considered costs and expenses of the shareholders of Atlantis and shall be borne
by such shareholders and not Atlantis or the Surviving Corporation.
5.6 Public Disclosure. Unless otherwise required by law, prior to the
-----------------
Effective Time, no disclosure (whether or not in response to an inquiry) of the
subject matter of this Agreement shall be made by any party hereto unless
approved by Atlantis and GoodNoise prior to release, provided that such approval
shall not be unreasonably withheld.
5.7 Consents. Each party shall use its best efforts to obtain the
--------
consents, waivers and approvals as may be required in connection with the Merger
so as to preserve all rights of, and benefits to, such party following the
Merger.
5.8 Reasonable Effort. Subject to the terms and conditions provided
-----------------
in this Agreement, each of the parties hereto shall use commercially reasonable
efforts to take promptly, or cause to be taken, all actions, and to do promptly,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to complete and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings and to remove any injunctions
or other impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions
14
contemplated by this Agreement for the purpose of securing to the parties hereto
the benefits contemplated by this Agreement.
5.9 Notification of Certain Matters. Each party shall give prompt
-------------------------------
notice to the other of (i) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which is likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate at
or prior to the Effective Time and (ii) any failure of such party to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect any remedies available to the
party receiving such notice.
5.10 Additional Documents and Further Assurances. Each party hereto,
-------------------------------------------
at the request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
6. CONDITIONS TO THE MERGER.
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
------------------------------------------------------------
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.
(b) Governmental Approval. Approvals from Governmental Entities
---------------------
(if any) deemed appropriate or necessary by any party to this Agreement shall
have been timely obtained.
(c) Litigation. There shall be no bona fide action, suit, claim
----------
or proceeding of any nature pending, or overtly threatened, against the Atlantis
or GoodNoise, their respective properties or any of their officers or directors,
arising out of, or in any way connected with, the Merger or the other
transactions contemplated by the terms of this Agreement.
(d) Warrant Exercise. The Atlantis Warrants shall have been
----------------
exercised as to not less than 200,000 shares of Atlantis Common Stock.
(e) Minimum Asset Value. Effective as of the Closing and
-------------------
assuming that $10,000 has been previously paid for expenses as permitted
hereunder, Atlantis shall have
15
not less than $690,000 of cash and shall have no commitments, obligations or
liabilities, whether fixed, accrued or contingent, other than as set forth in
this Agreement.
6.2 Additional Conditions to Obligations of GoodNoise. The
-------------------------------------------------
obligations of GoodNoise to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by GoodNoise:
(a) Representations, Warranties and Covenants. The
-----------------------------------------
representations and warranties of Atlantis, Sub and the Principal Shareholder in
this Agreement shall be true and correct in all material respects on and as of
the Effective Time as though such representations and warranties were made on
and as of such time and each of Atlantis, Sub the Principal Shareholder shall
have performed and complied in all material respects with all covenants and
obligations of this Agreement required to be performed and complied with by it
as of the Effective Time.
(b) Claims. There shall not have occurred any claims (whether or
------
not asserted in litigation) of any kind which may adversely affect the
consummation of the transactions contemplated hereby or the business, assets
(including intangible assets), financial condition or results of operations of
Atlantis or GoodNoise.
(c) Articles, Bylaws. The Articles of Incorporation, Bylaws and
----------------
form of Indemnity Agreement attached as Exhibits B-1, B-2, and B-3 shall have
been approved by the shareholders of Atlantis.
(d) Certificate of President. GoodNoise shall have been provided
------------------------
with a certificate executed on behalf of Atlantis by its President to the effect
that, as of the Effective Time:
(i) all representations and warranties made by the
Atlantis, Sub and the Principal Shareholder in this Agreement are true and
correct in all material respects;
(ii) all covenants and obligations of this Agreement to be
performed by the Atlantis, Sub and the Principal Shareholder on or before such
date have been so performed in all material respects.
(iii) the conditions set forth in Section 6.1 and 6.2 have
been satisfied.
(e) Officers and Directors. The officers and directors of
Atlantis shall have submitted written resignations effective as of the Closing
and the officers and directors of GoodNoise shall have been appointed as the
officers and directors of Atlantis effective as of the Closing.
16
6.3 Additional Conditions to the Obligations of Atlantis. The
----------------------------------------------------
obligations of Atlantis to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by Atlantis:
(a) Representations, Warranties and Covenants. The
-----------------------------------------
representations and warranties of GoodNoise in this Agreement shall be true and
correct in all material respects on and as of the Effective Time as though such
representations and warranties were made on and as of the Effective Time and
GoodNoise shall have performed and complied in all material respects with all
covenants and obligations of this Agreement required to be performed and
complied with by it as of the Effective Time.
(b) Claims. There shall not have occurred any claims (whether or
------
not asserted in litigation) which may materially and adversely affect the
consummation of the transactions contemplated hereby or may have a material
adverse effect on GoodNoise.
(c) Third Party Consents. Any and all consents, waivers, and
--------------------
approvals required by GoodNoise shall have been obtained.
(d) No Material Adverse Changes. There shall not have occurred
---------------------------
any material adverse change in the business, assets (including intangible
assets), results of operations, liabilities (contingent or accrued), financial
condition or prospects of GoodNoise since the date of this Agreement.
(e) Certificate of GoodNoise. Atlantis shall have been provided
------------------------
with a certificate executed on behalf of GoodNoise by its President to the
effect that, as of the Effective Time:
(i) all representations and warranties made by GoodNoise in
this Agreement are true and correct in all material respects; and
(ii) all covenants and obligations of this Agreement to be
performed by GoodNoise on or before such date have been so performed in all
material respects.
(iii) the provisions set forth in Section 6.3 have been
satisfied.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
7.1 Survival of Representations and Warranties. Atlantis' and the
------------------------------------------
Principal Shareholder's representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall terminate on the
thirty-six (36) month anniversary of the Effective Time; provided, however, that
the representations and warranties relating or pertaining to any Tax or Returns
related to such Tax set forth in Section 2 hereof, shall survive until the
17
expiration of all applicable statutes of limitations, or extensions thereof,
governing each Tax or Returns related to such Tax.
7.2 Indemnity. Atlantis and the Principal Shareholder jointly and
---------
severally agree to indemnify and hold GoodNoise and its stockholders prior to
the Effective Time (the "GoodNoise Stockholders"), and the officers, directors
and affiliates of GoodNoise harmless against all claims, losses, liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses of investigation and defense (hereinafter individually a "Loss" and
collectively "Losses") incurred by Atlantis, GoodNoise, the GoodNoise
stockholders or the Surviving Corporation, or its officers, directors, or
affiliates, directly or indirectly as a result of (i) any inaccuracy or breach
of a representation or warranty of Atlantis, Sub, or the Principal Shareholder
contained in this Agreement, or (ii) any failure by Atlantis, Sub or the
Principal Shareholder to perform or comply with any covenant contained in this
Agreement. The shareholders of Atlantis shall not have any right of contribution
from Atlantis with respect to any Loss claimed after the Effective Time. Nothing
herein shall limit the liability of Atlantis, Sub or the Principal Shareholder
for any breach of any representation, warranty or covenant if the Merger does
not close.
7.3 Indemnity Claims. In the event of any Loss, Atlantis or the
----------------
GoodNoise Representative, as hereinafter defined, shall deliver to the
Shareholder Representative a certificate signed by any officer of Atlantis or
the GoodNoise Representative (an "Officer's Certificate"): (A) stating that
Atlantis has paid or properly accrued or reasonably anticipates that it will
have to pay or accrue Losses, and (B) specifying in reasonable detail the
individual items of Losses included in the amount so stated, the date each such
item was paid or properly accrued, or the basis for such anticipated liability,
and the nature of the misrepresentation, breach of warranty or covenant to which
such item is related. In the event such claim is not contested by the
Shareholder Representative, Atlantis shall promptly issue to the GoodNoise
Stockholders, in proportion to the number of shares of GoodNoise Common Stock
held by each immediately prior to the Effective Time, new shares of Atlantis
Common Stock with an aggregate value equal to such Losses. For the purposes of
determining the number of shares of Atlantis Common Stock to be delivered as
indemnity pursuant to this Section 7, the shares of Atlantis Common Stock shall
be valued at $0.143 per share.
7.4 Objections to Claims. For a period of thirty (30) days after
--------------------
delivery of an Officer's Certificate to the Shareholder Representative, Atlantis
shall make no delivery to the GoodNoise Stockholders of any new Atlantis Common
Stock unless Atlantis shall have received written authorization from the
Shareholder Representative to make such delivery. After the expiration of such
thirty (30) day period, Atlantis shall make delivery of shares of Atlantis
Common Stock in accordance with Section 7.3 hereof, provided, however, that no
-------- -------
such delivery may be made if the Shareholder Representative shall object in a
detailed written statement to the claim made in the Officer's Certificate, and
such statement shall have been delivered to Atlantis prior to the expiration of
such thirty (30) day period.
18
7.5 Resolution of Conflicts; Arbitration.
------------------------------------
(a) In case the Shareholder Representative shall object in
writing to any claim or claims made in any Officer's Certificate within thirty
(30) days after delivery of such Officer's Certificate, the Shareholder
Representative and the GoodNoise Representative shall attempt in good faith to
agree upon the rights of the respective parties with respect to each of such
claims. If the Shareholder Representative and the GoodNoise Representative
should so agree, a memorandum setting forth such agreement shall be prepared and
signed by both parties.
(b) If no such agreement can be reached after good faith
negotiation, either the Shareholder Representative or the GoodNoise
Representative may demand arbitration of the matter unless the amount of the
damage or Loss is at issue in pending litigation with a third party, in which
event arbitration shall not be commenced until such amount is ascertained or
both parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by one arbitrator mutually agreeable to the
GoodNoise Representative and the Shareholder Representative. In the event that
within forty-five (45) days after submission of any dispute to arbitration, the
GoodNoise Representative and the Shareholder Representative cannot mutually
agree on one arbitrator the GoodNoise Representative and the Shareholder
Representative shall each select one arbitrator, and the two arbitrators so
selected shall select a third arbitrator. The arbitrator or arbitrators, as the
case may be, shall set a limited time period and establish procedures designed
to reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrator or majority of the
three arbitrators, as the case may be, to discover relevant information from the
opposing parties about the subject matter of the dispute. The arbitrator or a
majority of the three arbitrators, as the case may be, shall rule upon motions
to compel or limit discovery and shall have the authority to impose sanctions,
including attorneys' fees and costs, to the extent as a competent court of law
or equity, should the arbitrators or a majority of the three arbitrators, as the
case may be, determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of the arbitrator or a majority of the three
arbitrators, as the case may be, as to the validity and amount of any claim in
such Officer's Certificate shall be binding and conclusive upon the parties to
this Agreement. Such decision shall be written and shall be supported by written
findings of fact and conclusions which shall set forth the award, judgment,
decree or order awarded by the arbitrator(s).
(c) Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Santa Xxxxx County, California, under the rules then in effect of the American
Arbitration Association. The arbitrator(s) shall determine how all expenses
relating to the arbitration shall be paid, including without limitation, the
respective expenses of each party, the fees of each arbitrator and the
administrative fee of the American Arbitration Association.
7.6 Third-Party Claims. In the event the GoodNoise Representative
------------------
becomes aware of a third-party claim which Atlantis believes may result in a
Claim, the GoodNoise Representative shall notify the Shareholder Representative
of such claim, and the Shareholder
19
Representative shall be entitled, at its expense, to participate in, but not to
determine or conduct, the defense of such claim. Atlantis shall have the right
in its sole discretion to conduct the defense of and settle any such claim;
provided, however, that except with the consent of the Shareholder
-------- -------
Representative, no settlement of any such claim with third-party claimants shall
be determinative of the number of shares issuable pursuant to Section 7.3. In
the event that the Shareholder Representative has consented to any such
settlement, the shareholders of Atlantis shall have no power or authority to
object to the amount of any claim by the GoodNoise Stockholders with respect to
such settlement.
7.7 Shareholder Representative.
--------------------------
(a) In the event that the Merger is approved, effective upon such
vote, and without further act of any shareholder of Atlantis, the Principal
Shareholder shall be appointed as agent and attorney-in-fact (the "Shareholder
Representative") for each such shareholder, for and on behalf of shareholders,
to give and receive notices and communications, to authorize delivery to the
GoodNoise Stockholders of shares of Atlantis Common Stock in satisfaction of
Claims, 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 shareholders of Atlantis prior to the Effective Time (the
"Atlantis Shareholders") from time to time upon not less than thirty (30) days
prior written notice to Atlantis; provided, however, that the Shareholder
-------- -------
Representative may not be removed unless holders of a two-thirds interest of the
Atlantis Shareholders agree to such removal and to the identity of the
substituted agent. Any vacancy in the position of Shareholder Representative may
be filled by approval of the holders of a majority in interest of the Atlantis
Shareholders. No bond shall be required of the Shareholder Representative, and
the Shareholder Representative shall not receive compensation for his or her
services. Notices or communications to or from the Shareholder Representative
shall constitute notice to or from each of the Atlantis Shareholders.
(b) A decision, act, consent or instruction of the Shareholder
Representative shall be final, binding and conclusive upon each of the Atlantis
Shareholders, and Atlantis may rely upon any such decision, act, consent or
instruction of the Shareholder Representative.
7.8 GoodNoise Representative.
------------------------
(a) In the event that the Merger is approved, effective upon such
vote, and without further act of any shareholder of GoodNoise, Xxxx Xxxxxxx
shall be designated as the representative of the holders of GoodNoise Common
Stock outstanding prior to the Effective Time (the "GoodNoise Representative").
The GoodNoise Representative shall be appointed as agent and attorney-in-fact
for each such stockholder, for and on behalf of stockholders, to give and
receive notices and communications, to approve any resolution of any matter with
respect to any Losses, to agree to, negotiate, enter into settlements and
compromises of, and demand
20
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 GoodNoise Representative for the accomplishment of the
foregoing. Such agency may be changed by the GoodNoise Stockholders from time to
time upon not less than thirty (30) days prior written notice to the Shareholder
Representative and Atlantis; provided, however, that the GoodNoise
-----------------
Representative may not be removed unless holders of a two-thirds interest of the
GoodNoise Stockholders agree to such removal and to the identity of the
substituted agent. Any vacancy in the position of Stockholder Representative may
be filled by approval of the holders of a majority in interest of the GoodNoise
Stockholders. No bond shall be required of the GoodNoise Representative, and the
GoodNoise Representative shall not receive compensation for his or her services.
Notices or communications to or from the GoodNoise Representative shall
constitute notice to or from each of the GoodNoise Stockholders.
(b) A decision, act, consent or instruction of the GoodNoise
Representative shall be final, binding and conclusive upon each of the GoodNoise
Stockholders, and Atlantis and may rely upon any such decision, act, consent or
instruction of the GoodNoise Representative.
(c) Without limiting the authority of the GoodNoise
Representative as granted above, the holders of a majority of the shares held by
the GoodNoise Stockholders shall have the right, on behalf of all of the
GoodNoise Stockholders, to amend or waive any rights of the GoodNoise
Stockholders under this Section 7.
8. TERMINATION, AMENDMENT AND WAIVER.
8.1 Termination. Except as provided in Section 8.2, this Agreement
-----------
may be terminated and the Merger abandoned at any time prior to the Effective
Time:
(a) by mutual consent of GoodNoise and Atlantis;
(b) by Atlantis or GoodNoise if (i) the Effective Time has not
occurred by May 15, 1998; (ii) there shall be a final nonappealable order of a
federal or state court in effect preventing consummation of the Merger; or (iii)
there shall be any statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to the Merger by any Governmental Entity that would
make consummation of the Merger illegal;
(c) by either party if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity, which would: (i) prohibit
Atlantis' ownership or operation of any portion of the business of GoodNoise or
(ii) compel Atlantis or GoodNoise to dispose of or hold separate all or a
portion of the business or assets of GoodNoise or Atlantis as a result of the
Merger;
(d) by GoodNoise if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or
21
agreement contained in this Agreement on the part of Atlantis, Sub or the
Principal Shareholder and such breach has not been cured within ten (10)
calendar days after written notice to Atlantis; provided, however, that, no cure
-------- -------
period shall be required for a breach which by its nature cannot be cured;
(e) by Atlantis if neither it nor Sub or the Principal
Shareholder is in material breach of their respective obligations under this
Agreement and there has been a material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of GoodNoise and
such breach has not been cured within ten (10) calendar days after written
notice to GoodNoise; provided, however, that no cure period shall be required
-----------------
for a breach which by its nature cannot be cured.
Where action is taken to terminate this Agreement pursuant to this Section
8.1, it shall be sufficient for such action to be authorized by the Board of
Directors (as applicable) of the party taking such action.
8.2 Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Atlantis or
GoodNoise, or their respective officers, directors or shareholders, provided
that each party shall remain liable for any breaches of this Agreement prior to
its termination; provided further that, the provisions of Sections 5.4, 5.5 and
5.6, Section 9 and this Section 8.2 shall remain in full force and effect and
survive any termination of this Agreement.
8.3 Amendment. This Agreement may be amended by the parties hereto at
---------
any time by execution of an instrument in writing signed on behalf of each of
the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time,
-----------------
Atlantis, GoodNoise and the Principal Shareholder, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations of
the other party hereto, (ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
9. GENERAL PROVISIONS.
9.1 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice), provided, however,
--------
that notices sent by mail will not be deemed given until received:
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(a) if to Atlantis or the Principal Shareholder, to:
Venture Law Corporation
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX, X0X 0X0
Attention: Xxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to GoodNoise or the GoodNoise Representative, to:
GoodNoise Corporation
Xxxx Xxxx, XX 00000
Attention: President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Telephone No: (000)000-0000
Facsimile No.: (000)000-0000
Attention: Xxxxx X. Xxxxx, Esq.
9.2 Interpretation. The words "include," "includes" and "including"
--------------
when used herein shall be deemed in each case to be followed by the words
"without limitation." The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.4 Entire Agreement; Assignment. This Agreement, the Exhibits hereto
----------------------------
and the documents and instruments and other agreements among the parties hereto
referenced herein: (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings both written and oral among the parties with respect to the
subject matter hereof, (b) are not intended to confer upon any other person any
rights or remedies hereunder; and (c) shall not be assigned by operation of law
or otherwise.
9.5 Severability. In the event that any provision of this Agreement
------------
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void
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or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to 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 that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
9.6 Other Remedies. Except as otherwise provided herein, any and all
--------------
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
9.7 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within Santa Xxxxx County, State of
California, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of California for
such persons and waives and covenants not to assert or plead any objection which
they might otherwise have to such jurisdiction, venue and such process.
9.8 Rules of Construction. The parties hereto agree that they have
---------------------
been represented by counsel during the negotiation and execution of this
Agreement and, therefor, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
ATLANTIS VENTURES CORP. GOODNOISE CORPORATION
By: /s/ By: /s/
------------------------------ -----------------------------
TIDEWATER ENTERPRISES LTD. GN ACQUISITION CORP.
By: /s/ By: /s/
------------------------------ -----------------------------
XXXX X. XXXXX
/s/
---------------------------------
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