EX-2(a)
Contribution Agreement
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CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT, dated as of October 29, 1999, by and between
CDBEAT.COM, INC., a Delaware corporation ("CDBeat"), and CAKEWALK LLC, a
Delaware limited liability company ("Cakewalk").
WHEREAS, Cakewalk is the owner of certain assets utilized in connection
with the development, creation, ownership and exploitation of recorded music,
record production, music publishing, CD-ROM, music-related merchandising and
music video production (the "Business");
WHEREAS, Cakewalk desires to contribute and assign, and CDBeat desires to
acquire, substantially all of the assets and liabilities relating to the
Business in exchange for 90% of the issued and outstanding voting shares of the
common stock, par value $.001, of CDBeat (the "CDBeat Stock") in a transaction
intended to qualify under ss. 351 of the Code, upon and subject to the terms and
conditions hereinafter set forth;
WHEREAS, Dylan LLC ("Dylan") has entered into that certain subscription
agreement, dated the date hereof, with Cakewalk (the "Dylan Subscription
Agreement"), attached hereto as Exhibit A, pursuant to which Dylan has
subscribed for a membership interest in Cakewalk; and
WHEREAS, certain terms used herein have the meanings set forth in
Article IX,
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
TRANSFER AND ACQUISITION
Section 1.1 Assets to be Transferred and Acquired.
(a) Subject to Section 1.1(b) hereof and to the other terms and conditions of
this Agreement, at the Closing (as hereinafter defined), Cakewalk will
contribute, assign, transfer and convey to CDBeat, free and clear of all Liens
(other than Permitted Liens), and CDBeat shall acquire from Cakewalk, all of the
tangible and intangible assets used, held for use or useful in the Business
(collectively, the "Assets") including:
(i) the membership interests of Cakewalk in Cakewalk BRE LLC;
(ii) all of the capital stock of Cakewalk Productions, Inc. and Cakewalk
Productions II, Inc.;
(iii) all of Cakewalk's rights, title and interest in and to property, plant and
equipment;
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(iv) all of Cakewalk's rights in, to and under the Intellectual Property Rights,
whether or not used in the Business, and all of Cakewalk's books, records and
computer programs relating thereto;
(v) all of Cakewalk's rights in, to and under the goodwill of the Business;
(vi) Cakewalk's rights under all Contracts and all prepaid expenses, claims and
other prepayments, including security deposits and other retentions held by
third parties, with respect to the Contracts as of the Closing Date;
(vii) all of Cakewalk's rights under all governmental licenses, certificates,
permits and approvals (the "Permits"), if any, relating to or necessary to the
lawful conduct of the Business as of the Closing Date, to the extent such
Permits are transferable;
(viii) all warranties, Claims, causes of action, guarantees or similar rights of
Cakewalk pertaining to the Assets;
(ix) cash on hand, cash equivalents, investments (including, without limitation,
stock, debt instruments, options and other instruments and securities) and bank
deposits of Cakewalk as of the Closing Date including, without limitation, the
moneys received by Cakewalk from Dylan under the Dylan Subscription Agreement;
(x) all of the accounts receivable of Cakewalk as of the Closing Date as well as
all reserve amounts with licensors and distributors;
(xi) all of Cakewalk's rights under any insurance policies; and
(xii) all books and records relating to the Business and the Assets (whether
kept or maintained by Cakewalk or any third party) including, without
limitation, copies of lists of customers and suppliers; records with respect to
costs and equipment; business development plans; advertising materials,
catalogues, correspondence, mailing lists, photographs, sales materials and
records; purchasing materials and records; personnel records with respect to
employees of the Business; media materials and plates; sales order files;
ledgers and other books of account of Cakewalk; plans, specifications, surveys,
appraisals, reports and other materials relating to the Assets; other records
required to continue the Business as heretofore and now being conducted by
Cakewalk; and all software programs, computer printouts, databases and related
items used in the Business.
(b) The Assets shall exclude all corporate records of Cakewalk including,
without limitation, the member ledger of Cakewalk and the minute books regarding
meetings of the members, managers and manager committees of Cakewalk (the
"Excluded Assets").
Section 1.2 Assumed Liabilities.
(a) At the Closing, CDBeat shall assume all liabilities and obligations
(including contingent liabilities and obligations) of Cakewalk pertaining to or
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arising out of the ownership of the Assets and the operation of the Business,
whether incurred or existing on or prior to the Closing Date or arising
thereafter, including, but not limited to:
(i) All Liabilities of Cakewalk relating to the ownership of the Assets or
operation of the Business;
(ii) All Liabilities in respect of borrowed moneys;
(iii) All accounts payable relating to the Business;
(iv) Liabilities and obligations under Contracts;
(v) Liabilities and obligations with respect to any Claims, arising out of
ownership of the Assets or the operation of the Business;
(vi) Liabilities and obligations to persons employed by Cakewalk (or any of such
employee's beneficiaries, heirs or assignees) arising out of such employee's
employment by Cakewalk; and
(vii) All liabilities of Cakewalk under the Dylan Subscription Agreement
including the tax indemnity.
All such duties, responsibilities, obligations or Liabilities described in
this Section 1.2 being referred to herein as "Assumed Liabilities."
(b) Notwithstanding the provisions of Section 1.2(a), except as set forth in
(vii) CDBeat shall not assume, and Cakewalk shall retain, any income Tax
Liability of Cakewalk.
Section 1.3 Consideration. In consideration for the contribution, assignment,
transfer and conveyance by Cakewalk to CDBeat of the Assets, at the Closing,
CDBeat shall issue 17,592,957 shares, being such number of shares of CDBeat
Stock as shall equal, after giving effect to such issuance, the conversion of
CDBeat's outstanding shares of Preferred Stock and the cancellation of certain
other shares all as hereinafter described, 90% of the issued and outstanding
common stock of CDBeat.
Section 1.4 Closing. Subject to the terms and conditions of this Agreement, the
sale and purchase of the Assets contemplated hereby (the "Closing") shall take
at the offices of Baer Marks & Upham LLP, 805 Third Avenue, New York, New York
10022, at 10:00 a.m., local time on November 5, 1999, or at such other date,
time or place as the parties may agree (the "Closing Date").
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ARTICLE II
REPRESENTATIONS AND
WARRANTIES OF CAKEWALK
Cakewalk represents and warrants to CDBeat that:
Section 2.1 Authority Relative to this Agreement. Cakewalk has full power,
capacity and authority to execute and deliver this Agreement and each other
Transaction Document to which it is or, at the Closing, will be a party and to
consummate the transactions contemplated hereby and thereby (the "Contemplated
Transactions"). The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions to which Cakewalk is or, at the
Closing, will be a party have been duly and validly authorized by Cakewalk, and
no other proceedings on the part of Cakewalk (or any other person) are necessary
to authorize the execution and delivery by Cakewalk of this Agreement or the
consummation of the Contemplated Transactions to which Cakewalk is or, at the
Closing, will be a party. This Agreement has been and, at the Closing, the other
Transaction Documents to which Cakewalk is a party will have been, duly and
validly executed and delivered by Cakewalk, and (assuming the valid execution
and delivery thereof by the other parties thereto) constitute or will at the
Closing constitute, as the case may be, the legal, valid and binding agreements
of Cakewalk enforceable against Cakewalk in accordance with their respective
terms, except as such obligations and their enforceability may be limited by
applicable bankruptcy and other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought (whether at law or in equity).
Section 2.2 No Conflicts; Consents. The execution, delivery and performance by
Cakewalk of this Agreement and each other Transaction Document to which it is or
will be a party or the consummation of the Contemplated Transactions does not
and will not (i) violate any provision of the Articles of Organization or the
Amended and Restated Operating Agreement (or comparable instruments) of
Cakewalk; (ii) except for any filings that may be required by applicable
securities laws, require Cakewalk or any other Affiliate of Cakewalk to obtain
any material consent, approval or action of or waiver from, or make any filing
with, or give any notice to, any Governmental Body or any other person, except
as set forth on Schedule 2.2 ("Cakewalk Required Consents"); (iii) if Cakewalk
Required Consents are obtained prior to Closing, violate, conflict with or
result in a breach or default under (after the giving of notice or the passage
of time or both), or permit the termination of, any Contract of a type required
to be listed on Schedule 2.8 to which Cakewalk is a party or by which it or any
of its assets may be bound or subject, or result in the creation of any Lien
upon the Assets pursuant to the terms of any such Contract; (iv) if Cakewalk
Required Consents are obtained prior to Closing, violate any Law or Order of any
Governmental Body against, or binding upon, Cakewalk or upon the Assets or the
Business; or (v) if Cakewalk Required Consents are obtained prior to Closing,
violate or result in the revocation or suspension of any Permit, except where
(A) the failure to obtain any Cakewalk Required Consent, or (B) any violation,
breach or default that would not reasonably be expected to have a Material
Adverse Effect.
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Section 2.3 Corporate Existence and Power. Cakewalk is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has all requisite powers and all material Permits
required to carry on the Business as now conducted. Except for Cakewalk BRE LLC,
a New York limited liability company, Cakewalk Productions, Inc., a New York
corporation, and Cakewalk Productions II, Inc., a New York corporation, Cakewalk
does not have any Subsidiaries or own any equity interest or equity investment
in any other person.
Section 2.4 Charter Documents and Corporate Records. (a) Cakewalk has heretofore
delivered to CDBeat true and complete copies of the Articles of Organization and
Amended and Restated Operating Agreement of Cakewalk as in effect on the date
hereof.
(b) All financial, business and accounting books, ledgers, accounts and official
and other records relating to Cakewalk and the Business have been properly and
accurately kept and completed in all material respects, and there are no
material inaccuracies or discrepancies contained or reflected therein.
Section 2.5 Financial Information. Cakewalk has previously furnished to CDBeat
true and complete copies of (i) Cakewalk's audited financial statements (the
"Audited Statements") at and for the year ended December 31, 1998, (ii) the
audited balance sheet of Cakewalk at December 31, 1997 (collectively with the
Audited Statements, the "Annual Statements"), and (iii) Cakewalk's unaudited
balance sheet, income statements, and cash flows at and for the period ended
March 31, 1999 (with the Annual Statements, the "Financial Statements"). Each
delivered financial statement has been prepared in accordance with GAAP
consistently applied and presents fairly in all material respects the financial
condition, results of operations and cash flows of Cakewalk as of its date and
the period covered thereby.
Section 2.6 Subsequent Events. Except as contemplated by this Agreement or
disclosed in Schedule 2.6, none of the following has occurred since the date of
the most recent Financial Statements: (a) any event that had, or is reasonably
likely to have, a Material Adverse Effect on Cakewalk; (b) any change by
Cakewalk in its accounting methods, practices, or principles, except as required
to comply with applicable Law or a change in GAAP; (c) any commitment or
transaction by Cakewalk that had, or is reasonably likely to have, a Material
Adverse Effect on Cakewalk and was not in the usual and ordinary course of
business; (d) any distributions in respect of, or redemption of, membership
interests; or (e) any event, action, or condition that (i) constitutes an
agreement by Cakewalk to do anything described in clauses (a)-(d) above, or (ii)
if it had occurred before the date of this Agreement, would have made any
representation or warranty by Cakewalk in this Agreement inaccurate in any
material respect.
Section 2.7 The Assets. Cakewalk has good and marketable title to the Assets,
free and clear of all Liens, except for (i) liens set forth on Schedule 2.7,
(ii) mechanic's, materialmen's, and similar liens, (iii) liens arising under
worker's compensation, unemployment insurance, social security, retirement, and
similar legislation, (iv) liens, easements, covenants, restrictions and other
similar encumbrances of record listed on Schedule 2.7, and (v) liens for Taxes
not yet due and payable, in each case arising in the ordinary course of business
of Cakewalk and not material to Cakewalk (collectively, "Permitted Liens").
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Section 2.8 Contracts. (a) Schedule 2.8 sets forth an accurate and complete list
of all Contracts material to the Business. True and correct copies of all
written Contracts listed on such Schedule and summaries of the material
provisions of all oral Contracts so listed have been made available to CDBeat.
(b) All Contracts listed on Schedule 2.8 are valid, subsisting, in full force
and effect and binding upon Cakewalk, as the case may be, and, to the knowledge
of Cakewalk, the other parties thereto in accordance with their terms. Cakewalk
is not in default (or alleged default) under any such Contract in any material
respect, nor, to the knowledge of Cakewalk, is any other party thereto in
default thereunder in any material respect, and, to Cakewalk's knowledge, there
is no condition that with notice or the lapse of time or both would constitute a
material default (or give rise to a termination right) under any such Contract.
To the knowledge of Cakewalk, none of the other parties to any Contract intends
to terminate or materially alter the provisions thereof by reason of the
Contemplated Transactions or otherwise. Except as set forth on Schedule 2.2, no
approval or consent of any person is required in order for the Contracts to
continue in full force and effect after the Closing.
Section 2.9 Claims and Proceedings. Except as set forth on Schedule 2.9, there
are no outstanding Orders of any Governmental Body against or involving
Cakewalk, the Assets or the Business. Except as set forth on Schedule 2.9, there
are no material actions, suits, claims or counterclaims or legal,
administrative, governmental, arbitral or other proceedings or investigations
(if the defense thereof or Liabilities in respect thereof are not covered by
insurance) (collectively, "Claims"), pending or to the knowledge of Cakewalk
threatened on the date hereof, against or involving Cakewalk, the Assets or the
Business. Except as set forth on Schedule 2.9, at the Closing there will be no
such Claims pending or, to the knowledge of Cakewalk, threatened, other than
Claims that, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect. Except as set forth on Schedule 2.9, to the
knowledge of Cakewalk, on the date hereof, there is no fact, event or
circumstances that would give rise to any such Claim.
Section 2.10 Compliance with Laws. Cakewalk is not in violation in any material
respect of any order, judgment, injunction, award, citation, decree, consent
decree or writ (collectively, "Orders"), or any material law, statute, code,
ordinance, rule, regulation or other requirement (collectively, "Laws"), of any
government or political subdivision thereof, whether federal, state, local or
foreign, or any agency or instrumentality of any such government or political
subdivision, or any court or arbitrator (collectively, "Governmental Bodies")
affecting the Assets or the Business, except for violations which would not
reasonably be expected to have a Material Adverse Effect.
Section 2.11 Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Cakewalk who might be entitled to any fee or commission from Cakewalk upon
consummation of the Contemplated Transactions.
Section 2.12 Investment Intent. Cakewalk is acquiring the CDBeat Shares for its
members own account for investment and not with a view towards resale, transfer
or distribution in a manner that would be in violation of applicable securities
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laws, but subject, nevertheless, to any requirement of law that the disposition
of Cakewalk's property shall at all times be within Cakewalk's control, and
without prejudice to Cakewalk's or its members right at all times to sell or
otherwise dispose of all or any part of such securities under a registration
under the Securities Act or under an exemption from said registration available
under the Securities Act.
Section 2.13 Tax Matters. Since its inception, Cakewalk has been treated as a
partnership for Federal Income tax purposes, has filed all Tax Returns required
to be filed by it and has paid the Taxes reflected thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF CDBEAT
CDBeat represents and warrants to Cakewalk that:
Section 3.1 Authority Relative to this Agreement. CDBeat has full power,
capacity and authority to execute and deliver this Agreement and each other
Transaction Document to which it is or, at the Closing, will be a party and to
consummate the Contemplated Transactions. The execution and delivery of this
Agreement and the consummation of the Contemplated Transactions to which CDBeat
is or, at the Closing, will be a party have been duly and validly authorized and
approved by the board of directors of CDBeat and no other corporate proceedings
on the part of CDBeat are necessary to authorize the execution and delivery by
CDBeat of this Agreement or the consummation of the Contemplated Transactions to
which it is or, at the Closing, will be a party. This Agreement has been and, at
the Closing, the other Transaction Documents to which CDBeat is a party will
have been duly and validly executed and delivered by CDBeat and (assuming the
valid execution and delivery thereof by the other parties thereto) constitutes
or will at the Closing constitute the legal, valid and binding agreement of
CDBeat, enforceable against CDBeat in accordance with their respective terms,
except as such obligations and their enforceability may be limited by applicable
bankruptcy and other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding therefor may be brought
(whether at law or in equity).
Section 3.2 No Conflicts; Consents. The execution, delivery and performance by
CDBeat of this Agreement and each other Transaction Document to which it is or,
at the Closing, will be a party and the consummation of the Contemplated
Transactions to which it is or, at the Closing, will be a party do not and will
not (i) violate any provision of the Certificate of Incorporation or By-laws of
CDBeat; (ii) except for any filings that may be required to be made under
applicable securities laws, require CDBeat to obtain any material consent,
approval or action of or waiver from, or make any filing with, or give any
notice to, any Governmental Body or any other person, and except as set forth in
Schedule 3.2 ("CDBeat Required Consents"); (iii) if CDBeat Required Consents are
obtained prior to the Closing, violate, conflict with or result in the breach or
default under (after the giving of notice or the passage of time); or permit the
termination of, any material Contract to which CDBeat is a party or by which
CDBeat or its assets may be bound or subject; or (iv) if CDBeat Required
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Consents are obtained prior to the Closing, violate any Law or Order of any
Governmental Body against, or binding upon, CDBeat or upon its assets or
business, except where any such violation would not reasonably be expected to
have a Material Adverse Effect.
Section 3.3 Corporate Existence and Power. CDBeat is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
Section 3.4 Charter Documents and Corporate Records. (a) CDBeat has
heretofore delivered to Cakewalk true and complete copies of the Certificate
of Incorporation and By-laws of CDBeat as in effect on the date hereof.
(b) All financial, business and accounting books, ledgers, accounts and official
and other records relating to CDBeat have been properly and accurately kept and
completed in all material respects, and there are no material inaccuracies or
discrepancies contained or reflected therein.
Section 3.5 Capitalization. The authorized capital stock of CDBeat consists of
(i) 20,000,000 shares of its common stock, par value $.001 (the "Common Stock"),
and (ii) 10,000,000 shares of convertible preferred stock (the "Preferred
Stock"), which has been designated as "Series A", "Series B" and "Series C." As
of the date hereof, the issued and outstanding capital stock of CDBeat consists
of (A) 4,504,197 shares of Common Stock, (B) 8.75 shares of "Series A" Preferred
Stock, and (C) 50,000 shares of "Series C" Preferred Stock. There are currently
no shares of "Series B" Preferred Stock issued and outstanding. In addition, as
of the date hereof not including the Atlantis Warrant, CDBeat has reserved up to
190,516 shares of Common Stock for issuance upon exercise of presently
outstanding warrants and options. Except as set forth on Schedule 3.5, CDBeat
does not, and at the Closing CDBeat will not, have outstanding any capital stock
or other securities or any rights, warrants, or options to acquire securities of
CDBeat or any convertible or exchangeable securities other than pursuant to this
Agreement. Except as set forth on Schedule 3.5, no person has or, at the Closing
will have, any right to purchase or otherwise acquire any securities of CDBeat.
Except as set forth on Schedule 3.5, there are, and at Closing will be, no
outstanding obligations of CDBeat to repurchase, redeem or otherwise acquire any
securities of CDBeat.
Section 3.6 CDBeat Stock. Immediately prior to the Closing, CDBeat will have
duly authorized and reserved for issuance the shares of CDBeat Stock to be
issued in connection herewith, and, when issued, such shares of CDBeat Stock
will be validly issued, fully paid and nonassessable and free of preemptive
rights. The issuance of the CDBeat Stock pursuant to this Agreement will not
violate or conflict with any agreement of CDBeat with any third party and will
not result in a breach or default under the governing documents of CDBeat.
Section 3.7 Filings. CDBeat has filed with the SEC all forms, reports,
schedules, and statements that were required to be filed by it with the SEC
since its registration statement was declared effective (the "SEC Documents"),
and previously has furnished to Cakewalk accurate and complete copies of all the
SEC Documents. As of their respective dates, the SEC Documents were prepared in
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accordance with the Exchange Act and the Securities Act and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in those documents or necessary to make the statements in those
documents not misleading, in light of the circumstances under which they were
made. CDBeat shall deliver to Cakewalk as soon as they become available accurate
and complete copies of any report or statement that it mails to its shareholders
generally or files with the SEC during the period after the date of this
Agreement and before the Closing Date. As of their respective dates, these
reports and statements will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated in them or necessary to
make the statements in them not misleading, in light of the circumstances under
which they are made and these reports and statements will comply in all material
respects with all applicable requirements of the Exchange Act and the Securities
Act.
Section 3.8 Financial Statements. The audited financial statements and unaudited
interim financial statements of CDBeat that are included or incorporated in the
SEC Documents were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as otherwise indicated in the notes to
them) and fairly present the financial position, results of operations, and cash
flows from operating, investing, and financing activities of CDBeat as of the
dates and for the periods indicated, except that the unaudited interim financial
statements in the SEC Documents are subject to normal year-end adjustments and
were prepared in accordance with the instructions to SEC Form 10-Q and,
accordingly, omit or condense certain footnotes and other information normally
included in financial statements prepared in accordance with GAAP. The financial
statements of CDBeat that are included or incorporated in any subsequent report
or statement that CDBeat mails to its shareholders generally or files with the
SEC during the period after the date of this Agreement and before the Closing
Date will be prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as otherwise indicated in them, the notes to
them, or any related report of CDBeat's independent accountants) and will fairly
present the financial information that they purport to present, except that the
unaudited, interim financial statements will be subject to normal year-end
adjustments and will omit or condense certain footnotes and other information
normally included in financial statements prepared in accordance with GAAP.
Section 3.9 Subsequent Events. Except as contemplated by this Agreement or
disclosed in Schedule 3.9, none of the following has occurred since the date of
the most recent consolidated balance sheet of CDBeat that is included in the SEC
Documents: (a) any event that had, or is reasonably likely to have, a Material
Adverse Effect on CDBeat; (b) any change by CDBeat in its accounting methods,
practices, or principles, except as required to comply with applicable Law or a
change in GAAP; (c) any commitment or transaction by CDBeat that had, or is
reasonably likely to have, a material adverse effect on CDBeat and was not in
the usual and ordinary course of business; (d) any declaration, payment, or
setting aside for payment of any dividends or other distributions (whether in
cash, stock, or property) in respect of the CDBeat's stock; or (e) any event,
action, or condition that (i) constitutes an agreement by CDBeat to do anything
described in clauses (a)-(d) above, or (ii) if it had occurred before the date
of this Agreement, would have made any representation or warranty by CDBeat in
this Agreement inaccurate in any material respect.
Section 3.10 Assets of CDBeat. The assets of CDBeat consist of all the assets
which are necessary for the conduct of CDBeat's business as presently conducted.
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Except as set forth in Schedule 3.10, CDBeat's assets are in good operating
condition and repair subject to ordinary wear and tear and to requirements for
periodic maintenance. CDBeat does not own any real property.
Section 3.11 Contracts. (a) Schedule 3.11 sets forth an accurate and complete
list of all Contracts material to the business of the CDBeat. True and correct
copies of all written Contracts listed on such Schedule and summaries of the
material provisions of all oral Contracts so listed have been made available to
Cakewalk.
(b) All Contracts listed on Schedule 3.11 are valid, subsisting, in full force
and effect and binding upon CDBeat, as the case may be, and, to the knowledge of
CDBeat, the other parties thereto in accordance with their terms. Except for
payment defaults, CDBeat is not in default (or alleged default) under any such
Contract in any material respect, nor, to the knowledge of CDBeat, is any other
party thereto in default thereunder in any material respect, and, to CDBeat's
knowledge, there is no condition that with notice or the lapse of time or both
would constitute a material default (or give rise to a termination right) under
any such Contract. To the knowledge of CDBeat, none of the other parties to any
Contract intends to terminate or materially alter the provisions thereof by
reason of the Contemplated Transactions or otherwise. Except as set forth on
Schedule 3.2, no approval or consent of any person is required in order for the
Contracts to continue in full force and effect after the Closing.
Section 3.12 Intangible Property. Set forth on Schedule 3.12 is a description of
all material Intellectual Property Rights owned, licensed or used by CDBeat in
its business, whether or not such intellectual property rights have been
currently afforded patent, copyright or trademark protection. The Contemplated
Transactions will not have a material adverse effect on the right, title and
interest of the CDBeat as of the Closing Date in and to the Intellectual
Property Rights. Except as disclosed in Schedule 3.12, (i) CDBeat has not
received any written Claim of material invalidity, interference, infringement or
misappropriation from any third party with respect to any of CDBeat's
Intellectual Property Rights; (ii) to the knowledge of CDBeat, CDBeat has not
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any intellectual property or other rights of any third parties; and (iii)
to the knowledge of CDBeat, no third party is interfering with, infringing upon,
misappropriating, or otherwise coming into conflict with any Intellectual
Property Rights of CDBeat.
Section 3.13 Compliance with Laws. CDBeat is not in violation in any material
respect of any Order or Law of any Governmental Bodies affecting the its assets
or its business, except for violations which are not reasonably expected to have
a Material Adverse Effect.
Section 3.14 Claims . Except as set forth on Schedule 3.14, there are no
outstanding Orders of any Governmental Body against or involving CDBeat. Except
as set forth on Schedule 3.15, there are no material Claims (if the defense
thereof or Liabilities in respect thereof are not covered by insurance), pending
or to the knowledge of CDBeat threatened on the date hereof, against or
involving CDBeat. Except as set forth on Schedule 3.15, at the Closing there
will be no such Claims pending or, to the knowledge of CDBeat, threatened, other
than Claims that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on CDBeat. Except as set forth on
Schedule 3.15, to the knowledge of CDBeat, on the date hereof, there is no fact,
event or circumstances that would give rise to any such Claim.
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Section 3.15 Finders' Fees. Except for Cliff Berger, who will receive 293,215
shares of CDBeat Common Stock as soon as additional shares of Common Stock are
authorized, there is no investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of CDBeat who might
be entitled to any fee or commission from CDBeat upon consummation of the
Contemplated Transactions.
Section 3.16 Tax Matters. Except as disclosed on Schedule 3.16, all Tax Returns
required to be filed by CDBeat on or before the Closing Date have been or shall
be timely filed and all Taxes which are due have been or shall be paid. All
Taxes of CDBeat attributable to periods ending on or before the Closing Date
which are not yet due have been adequately and accurately reserved against and
entered upon the books and records of CDBeat. As of the time of filing, the Tax
Returns correctly reflected (and, as to any Tax Returns not filed as of the date
thereof will correctly reflect) the facts regarding the income, business,
assets, operations, activities and status of CDBeat. There are no Tax Liens upon
any assets of CDBeat except for Liens for current Taxes not yet due and payable.
All amounts required to be withheld by CDBeat from employees for income Taxes,
social security and other payroll Taxes have been collected and withheld, and
either paid to the respective Governmental Bodies, set aside in accounts for
such purpose, or have been or will be accrued, reserved against and entered upon
the books and records of CDBeat. CDBeat has maintained and has in its possession
all records, supporting documents and exemption certificates required by
applicable sales Tax statutes and regulations to be retained in connection with
the collection and remittance of sales and use Taxes for all periods up to and
including the Closing Date. CDBeat is not a party to nor has it received any
notice with respect to any proposed or pending examination, investigation,
audit, action or Claim by any Tax Authority relating to Taxes, nor is CDBeat a
party to any dispute or, to CDBeat's knowledge, threatened dispute with respect
thereto and no Claim for assessment or collection of Taxes has been made upon
CDBeat. Schedule 3.16 includes a description of all such past examinations,
investigations, audits, actions or Claims within the past three years.
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 Conduct of Business of Cakewalk and CDBeat. (a) From the date hereof
through the Closing Date, each of Cakewalk and CDBeat agrees:
(i) To conduct its operations according to the ordinary and usual course of its
business consistent with past practice, to preserve intact its present business
organization and structure, to use reasonable efforts to keep available the
services of its officers, agents and full-time employees, to use reasonable
efforts to preserve and maintain its assets and the good will of its business
and to use reasonable efforts to preserve its relationships with customers and
suppliers.
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(ii) To maintain in the ordinary course of business, consistent with past
practice and in accordance with all Contracts to which each is a party, its
tangible assets in their present repair, order and condition, subject to
ordinary wear and tear and to the requirements of such Contracts.
(iii) Not to incur any Liability (other than Liabilities incurred in the
ordinary course of business, consistent with past practice, which are not in the
aggregate material thereto), nor enter into any Contract of a type required to
be included on any Schedule hereto.
(b) From the date hereof through the Closing Date, each of Cakewalk and CDBeat
agrees that it will use reasonable efforts to conduct its respective business in
such a manner so that its representations and warranties contained herein shall
continue to be true and correct on and as of the Closing Date as if made on and
as of the Closing Date.
(c) From the date hereof through the Closing Date, each of Cakewalk and CDBeat
agrees that it will consult with the other prior to any renewal, amendment,
extension or termination of, waiver of any material right under, or any failure
to renew, any Contract and will not take any such action if such other party
objects thereto in writing.
Section 4.2 Corporate Examinations and Investigations. Prior to the Closing
Date, each party hereto shall be entitled, through its directors, officers,
Affiliates, employees, attorneys, accountants, representatives, lenders,
consultants and other agents (collectively, "Representatives") to make such
investigation of the assets, the business and operations of the other party, and
such examination of the books, records and financial condition of the other
party, as each party hereto reasonably deems necessary. Any such investigation
and examination shall be conducted at reasonable times, under reasonable
circumstances and upon reasonable notice, and the parties hereto shall cooperate
fully therein. In that connection, each party hereto shall make available to
Representatives of the other party during such period, without however causing
any unreasonable interruption in the operations of such other party, all such
information and copies of such documents and records concerning the affairs of
such party as such Representatives may reasonably request, shall permit
Representatives of such party access to the assets and all parts thereof and to
such party's employees, customers, suppliers, contractors and others, and shall
cause such party's respective Representatives to cooperate fully in connection
with such review and examination. No investigation by either party hereto shall
diminish or obviate any of the representations, warranties, covenants or
agreements of either party contained in this Agreement.
Section 4.3 Filings and Authorizations. Cakewalk and CDBeat, as promptly as
practicable, shall make, or cause to be made, all filings and submissions under
such Laws as are applicable to them or to their respective Affiliates as may be
required for them to consummate the Contemplated Transactions in accordance with
the terms of this Agreement and shall furnish copies thereof to the other party
prior to such filing and shall not make any such filing or submission to which
CDBeat or Cakewalk, as the case may be, reasonably objects in writing. All such
filings shall comply in form and content in all material respects with
applicable Law.
Section 4.4 Efforts to Consummate. Subject to the terms and conditions herein,
each of Cakewalk and CDBeat, without payment or further consideration, shall use
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its good faith efforts to take or cause to be taken all action and to do or
cause to be done all things necessary, proper or advisable under applicable
Laws, Contracts, Permits and Orders to consummate and make effective, as soon as
reasonably practicable, the Contemplated Transactions, including, but not
limited to, the obtaining of all Cakewalk Required Consents and CDBeat Required
Consents and Permits or consents of any third party, whether private or
governmental, required in connection with such party's performance of such
transactions and each party hereto shall cooperate with the other in all of the
foregoing.
Section 4.5 Notices of Certain Events. Prior to the Closing Date, Cakewalk
and CDBeat shall promptly notify the other of:
(a) any notice or other communication delivered or received by such party (or
its Representatives) to or from any other person (other than notices or other
communications solely between Cakewalk and CDBeat) with respect to the
Contemplated Transactions (including, without limitation, any notice or other
communication to or from any person objecting to, or alleging that the consent
of any person is or may be required in connection with, the Contemplated
Transactions);
(b) any notice or other communication from any Governmental Body in connection
with the Contemplated Transactions; and
(c) any event, condition or circumstance occurring from the date hereof through
the Closing Date that would constitute a violation or breach of any
representation or warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach of any covenant of
any party contained in this Agreement.
Section 4.6 Public Announcements. Prior to the Closing Date, Cakewalk and CDBeat
will consult with each other before issuing any press release or otherwise
making any public statement with respect to the Contemplated Transactions, and
no party hereto will issue any such press release or make any such public
statement without the prior approval of CDBeat or Cakewalk, as the case may be,
except as may be required by applicable Law in which event the other party shall
have the right to review and comment upon (but not approve) any such press
release or public statement prior to its issuance.
Section 4.7 Expenses. Except as otherwise specifically provided in this
Agreement, CDBeat and Cakewalk shall bear their respective expenses, in each
case, incurred in connection with the preparation, execution and performance of
this Agreement and the Contemplated Transactions, including, without limitation,
all fees and expenses of their respective Representatives.
Section 4.8 Tax Considerations. The parties contemplate that the Contemplated
Transactions shall qualify under Section 351 of the Code. Each party shall
report the transactions contemplated hereunder as they apply to such party on
its appropriate tax return consistent with such treatment.
Section 4.9 Negotiations With Others. (a) From and after the date hereof and
until this Agreement shall have been terminated in accordance with its terms,
each party agrees that it will not, directly or indirectly, encourage or solicit
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any inquiries or proposals by or engage in any discussions or negotiations with,
or enter into any Contract or understanding with, any person concerning an
Acquisition Proposal subject, however, to such actions which, in the good faith
judgment of the Board of Directors of CDBeat and the management of Cakewalk,
based upon the advice of counsel, are required under applicable Law to be taken
in the exercise of its fiduciary duties. Each party shall advise the other of
any unsolicited written proposal or offer to enter into an Acquisition Proposal.
(b) If: (i) Cakewalk is willing and able to consummate the Contemplated
Transactions and the conditions to such consummation, not within the control of
CDBeat, have been satisfied or waived, and (ii) CDBeat enters into a contract or
consummates an Acquisition Proposal with any person other than Cakewalk or any
of its Affiliates on or before November 30, 1999, CDBeat shall pay to Cakewalk a
fee of $1,000,000 as compensation for its efforts hereunder. In addition, CDBeat
shall reimburse Cakewalk for the expenses of negotiating the terms of this
Agreement including the reasonable fees and expenses due to its investors,
lawyers and advisors; provided, however, that such reimbursement shall not
exceed $100,000, in the aggregate.
(c) If: (i) CDBeat is willing and able to consummate the Contemplated
Transactions and the conditions to such consummation, not within the control of
Cakewalk, have been satisfied or waived, and (ii) Cakewalk enters into a
contract or consummates an Acquisition Proposal with any person other than
CDBeat or any of its Affiliates on or before November 30, 1999, Cakewalk shall
pay to CDBeat a fee of $1,000,000 as compensation for its efforts hereunder. In
addition, Cakewalk shall reimburse CDBeat for the expenses of negotiating the
terms of this Agreement including the reasonable fees and expenses due to its
investors, lawyers and advisors; provided, however, that such reimbursement
shall not exceed $100,000, in the aggregate.
Section 4.10 Past-Closing Matters. (a) Promptly after the Closing of the
Contemplated transactions, CD Beat intends to (i) transfer all its existing
business into a wholly owned subsidiary; and (ii) transfer the business of
Cakewalk into a wholly owned subsidiary, so that CD Beat will then operate as a
holding company.
(b) Cakewalk hereby agrees on behalf of itself and its members that
if it seeks to elect a majority of the Board of Directors of CDBeat other than
at a meeting of stockholders of CDBeat, it will cause CDBeat to comply with the
provisions of Section 14(f) of the Securities Exchange Act of 1934, as amended.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to the Obligations of the Parties. The obligations of
Cakewalk and CDBeat to consummate the Contemplated Transactions are subject to
the satisfaction of the following conditions, which, in the case of Section
5.1(b), may be waived by CDBeat and Cakewalk acting together:
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(a) No Injunction. No provision of any applicable Law and no Order shall
prohibit the consummation of the Contemplated Transactions.
(b) No Proceeding or Litigation. No Claim instituted by any person (other than
CDBeat, Cakewalk or their respective Affiliates), shall have been commenced or
pending against Cakewalk, CDBeat or any of their respective Affiliates, officers
or directors which Claim seeks to restrain, prevent, change or delay in any
material respect the Contemplated Transactions or seeks to challenge any of the
material terms or provisions of this Agreement or seeks material damages in
connection with any of such transactions.
(c) Dylan Subscription Agreement. The transactions contemplated by the Dylan
Subscription Agreement shall have been consummated which shall include, without
limitation, the amendment of the stock purchase warrant originally held by
Atlantis Equities, Inc. dated September 23, 1999.
Section 5.2 Conditions to the Obligations of Cakewalk. All obligations of
Cakewalk hereunder are subject, at the option of Cakewalk, to the fulfillment
prior to or at the Closing of each of the following further conditions:
(a) Performance. CDBeat shall have performed and complied in all material
respects with all agreements, obligations and covenants required by this
Agreement to be performed or complied with by CDBeat at or prior to the Closing
Date.
(b) Representations and Warranties. The representations and warranties of CDBeat
contained in this Agreement and in any certificate or other writing delivered by
CDBeat pursuant hereto shall be true in all material respects at and as of the
Closing Date as if made at and as of such time.
(c) Consideration. CDBeat shall have delivered to Cakewalk certificates
representing the CDBeat Stock.
(d) Director Appointment. The Board of Directors of CDBeat shall have been
expanded to two members and Robert Miller shall have been elected to fill the
vacancy resulting from such expansion.
(e) CDBeat Required Consents. All CDBeat Required Consents shall have been
obtained.
(f) Options. At the Closing, the only options or warrants that shall be
outstanding to acquire any securities of CDBeat shall be those options or
warrants described in Schedule 3.5 hereto.
(g) Conversion and Cancellation of Stock; Waiver of Severance Payments. On or
prior to the Closing Date, all of the issued and outstanding Preferred Stock
shall have been converted into Common Stock. In addition, Joel Arberman and
Bryan Eggers shall have (i) surrendered 2,727,450 and 321,974 shares,
respectively, of CDBeat Common Stock to CDBeat for cancellation; and (ii) waived
the right to receive any severance payments under their respective employment
agreements as a result of the consummation of the Contemplated Transactions.
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(h) Documentation. There shall have been delivered to Cakewalk the following:
(i) A certificate, dated the Closing Date, of the Chairman of the Board, the
President or Chief Financial Officer of CDBeat confirming the matters set forth
in Sections 5.2(a) and (b) hereof.
(ii) A certificate, dated the Closing Date, of the Secretary or Assistant
Secretary of CDBeat certifying, among other things, that attached or appended to
such certificate (A) is a true and correct copy of its Certificate of
Incorporation and all amendments if any thereto as of the date thereof; (B) is a
true and correct copy of its By-laws as of the date thereof; (C) is a true copy
of all corporate actions taken by it, including resolutions of its board of
directors authorizing the execution, delivery and performance of this Agreement,
and each other Transaction Document to be delivered by CDBeat pursuant hereto;
and (D) are the names and signatures of its duly elected or appointed officers
who are authorized to execute and deliver this Agreement and any certificate,
document or other instrument in connection herewith.
(iii) Evidence of the good standing and corporate existence of CDBeat reasonably
requested by Cakewalk.
(iv) Copies of all CDBeat Required Consents.
(i) Due Diligence. The continuing due diligence investigation by Cakewalk of the
business, financial condition and prospects of CDBeat shall not have disclosed
to Cakewalk any event, condition or matter that may reasonably be likely to
result in a Material Adverse Effect of CDBeat or cast any doubt on CDBeat's
ownership or right to use its Intellectual Property Rights. Without derogating
from the generality of the foregoing, Cadnetics, Inc. and its employees,
consultants and independent contractors shall have assigned to CDBeat any rights
that they may have to CDBeat's Intellectual Property Rights.
(j) Amendment of Prudential Warrant. The Warrant to Purchase Equity Units in
Cakewalk LLC dated June, 1999 held by Entertainment Finance International, LLC
shall have been amended to eliminate therefrom the antidilution protection
relating to additional issuances of securities or changes in the exercise price
or conversion ratio of any existing securities.
(k) Employment of Robert Miller. CDBeat shall have entered into an Employment
Agreement with Robert Miller, effective as of the Closing Date, in form and
substance reasonably satisfactory to him under which (i) Mr. Miller will serve
as the Chairman, President and Chief Executive Officer of CDBeat, (ii) he will
receive an initial base annual salary of $200,000 subject to such increases or
bonuses as the new Board of Directors of CDBeat shall authorize; (iii) he will
receive such other benefits and prerequisites as shall be consistent with his
positions, (iv) he will receive options to purchase, for such consideration as
may be agreed upon by him and by the new Board of Directors of CDBeat, 1,955,750
shares of CDBeat Common Stock (out of 2, 932,159 stock options to be reserved
for management of CDBeat), of which one-third of such options will vest upon the
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signing of the Employment Agreement and one-third will vest after each
anniversary thereof; (v) all unvested options will immediately vest upon a
change of control of CDBeat; (vi) upon a change of control, Mr. Miller will have
the right to resign and (vii) if Mr. Miller resigns upon a change of control or
he is removed without cause he will receive a severance benefit equal to the
greater of (A) the unexpired term of the Employment Agreement or (B) twice his
then annual salary plus the immediate vesting of all unvested options.
(l) Tax Free Treatment. Neither Cakewalk nor any member of
Cakewalk will be required to report any income as a result of the
Contemplated Transactions.
Section 5.3 Conditions to the Obligations of CDBeat. All obligations of CDBeat
hereunder are subject, at the option of CDBeat, to the fulfillment prior to or
at the Closing of each of the following further conditions:
(a) Performance. Cakewalk shall have performed and complied in all material
respects with all agreements, obligations and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date.
(b) Representations and Warranties. The representations and warranties of the
Cakewalk contained in this Agreement and in any certificate or other writing
delivered by Cakewalk pursuant hereto shall be true in all material respects at
and as of the Closing Date as if made at and as of such time.
(c) Cakewalk Required Consents. All Cakewalk Required Consents shall have been
obtained.
(d) Documentation. There shall have been delivered to CDBeat the following:
(i) A certificate dated the Closing Date, of a Manager of Cakewalk, confirming
the matters relating to it set forth in Sections 5.3(a) and (b).
(ii) A certificate, dated the Closing Date, of the Managers of Cakewalk
certifying, among other things, that attached or appended to such certificate
(A) is a true and correct copy of its Articles of Organization and all
amendments if any thereto as of the date thereof; (B) is a true and correct copy
of its Amended and Restated Operating Agreement as of the date thereof; (C) is a
true copy of all actions taken by it, authorizing the execution, delivery and
performance of this Agreement, and each other Transaction Document to be
delivered by such party pursuant hereto; and (D) are the names and signatures of
its duly elected or appointed members who are authorized to execute and deliver
this Agreement and any certificate, document or other instrument in connection
herewith.
(iii) Evidence of the good standing of Cakewalk reasonably requested by CDBeat.
(iv) Copies of all Cakewalk Required Consents.
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(v) Such instruments of conveyance as may be needed to convey the Assets from
Cakewalk to CDBeat.
ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) By mutual written consent of Cakewalk and CDBeat;
(b) By Cakewalk if (i) there has been a material misrepresentation or breach of
warranty on the part of CDBeat in the representations and warranties contained
herein and such material misrepresentation or breach of warranty, if curable, is
not cured within 30 days after written notice thereof from Cakewalk; (ii) CDBeat
has committed a material breach of any covenant imposed upon it hereunder and
fails to cure such breach within 30 days after written notice thereof from
Cakewalk; or (iii) any condition to Cakewalk's obligations hereunder becomes
incapable of fulfillment through no fault of Cakewalk and is not waived by
Cakewalk; provided that, on the date of termination, the conditions to CDBeat's
obligations hereunder specified in Section 5.3 hereof shall have been satisfied,
and Cakewalk shall be otherwise ready, willing and able to proceed with the
Closing hereunder;
(c) By CDBeat, if (i) there has been a material misrepresentation or breach of
warranty on the part of Cakewalk in the representations and warranties contained
herein and such material misrepresentation or breach of warranty, if curable, is
not cured within 30 days after written notice thereof from CDBeat; (ii) Cakewalk
has committed a material breach of any covenant imposed upon it hereunder and
fails to cure such breach within 30 days after written notice thereof from
CDBeat; or (iii) any condition to CDBeat's obligations hereunder becomes
incapable of fulfillment through no fault of CDBeat and is not waived by CDBeat;
provided that, on the date of termination, the conditions to Cakewalk's
obligations hereunder specified in Section 5.2 hereof shall have been satisfied,
and CDBeat shall be otherwise ready, willing and able to proceed with the
Closing hereunder; or
(d) By Cakewalk or by CDBeat, if there shall be any Law that makes consummation
of the Contemplated Transactions illegal or otherwise prohibited, or if any
Order enjoining Cakewalk or CDBeat from consummating the Contemplated
Transactions is entered and such Order shall have become final and
nonappealable.
(e) By Cakewalk if the Contemplated Transactions shall not have been
consummated on or before November 30, 1999.
Section 6.2 Effect of Termination; Right to Proceed. Subject to the provisions
of Section 6.1 hereof, in the event that this Agreement shall be terminated
pursuant to Section 6.2, all further obligations of the parties under the
Agreement shall terminate without further liability of any party hereunder;
provided, however, that a party shall remain liable for its breach of any of its
representations, warranties or obligations under this Agreement. In the event
that a condition precedent to its obligation is not met, nothing contained
herein shall be deemed to require any party to terminate this Agreement, rather
than to waive such condition precedent and proceed with the Contemplated
Transactions.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. (a) Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally by hand or by
recognized overnight courier, telecopied or mailed (by registered or certified
mail, postage prepaid) as follows:
(i) If to CDBeat, one copy to:
CDBeat.com, Inc.
Bedford Towers
444 Bedford Street, Suite 8S
Stamford, Connecticut
Telecopier: (203) 602-9995
Attn: Joel Arberman, President
with a copy to:
Squadron Ellenoff Plesent & Sheinfeld
551 Fifth Avenue
New York, New York, 10176
Telecopier (212) 697-6686
Attention: Kenneth R. Koch, Esq.
(ii) If to Cakewalk, one copy to:
Cakewalk LLC.
250 West 57th Street, Suite 720
New York, New York 10107
Telecopier: (212) 265-1067
Attn: Robert Miller, President
with a copy to:
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Telecopier: (212) 702-5941
Attn: Ivan W. Dreyer, Esq.
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(b) Each such notice or other communication shall be effective (i) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
in Section 7.1(a) (with confirmation of transmission) or (ii) if given by any
other means, when delivered at the address specified in Section 7.1(a). Any
party by notice given in accordance with this Section 7.1 to the other party may
designate another address (or telecopier number) or person for receipt of
notices hereunder. Notices by a party may be given by counsel to such party.
Section 7.2 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the collateral agreements executed in connection with the
consummation of the Contemplated Transactions contain the entire agreement among
the parties with respect to the subject matter hereof and related transactions
and supersede all prior agreements, written or oral, with respect thereto.
Section 7.3 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, cancelled, renewed or
extended only by a written instrument signed by Cakewalk and CDBeat. The
provisions hereof may be waived in writing by the party to be charged therewith.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. Except as
otherwise provided herein, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
Section 7.4 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely within such State, without regard to the conflict
of laws rules thereof.
Section 7.5 Binding Effect; No Assignment. This Agreement and all of its
provisions, rights and obligations shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs and legal
representatives. This Agreement may not be assigned (including by operation of
Law) by a party without the express written consent of CDBeat (in the case of
assignment by Cakewalk) or Cakewalk (in the case of assignment by CDBeat) and
any purported assignment, unless so consented to, shall be void and without
effect. Nothing herein express or implied is intended or shall be construed to
confer upon or to give anyone other than the parties hereto and their respective
heirs, legal representatives and successors any rights or benefits under or by
reason of this Agreement and no other party shall have any right to enforce any
of the provisions of this Agreement.
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Section 7.6 Exhibits. All Exhibits and Schedules attached hereto are hereby
incorporated by reference into, and made a part of, this Agreement.
Section 7.7 Severability. If any provision of this Agreement for any reason
shall be held to be illegal, invalid or unenforceable, such illegality shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such illegal, invalid or unenforceable provision had never been
included herein.
Section 7.8 Counterparts. The Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
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 the signatories.
Section 7.9 Third Parties. Except as specifically set forth or referred to
herein, nothing herein express or implied is intended or shall be construed to
confer upon or give to any person other than the parties hereto and their
permitted successors or assigns, any rights or remedies under or by reason of
this Agreement or the Contemplated Transactions.
Section 7.10 Title and Risk of Loss. Legal title, equitable title and risk of
loss with respect to the Assets and rights to be transferred hereunder shall not
pass to CDBeat until the Assets or rights are transferred at the Closing
hereunder.
Section 7.11 Survival. None of the representations or warranties
contained in this Agreement shall survive the Closing of the Contemplated
Transactions.
ARTICLE VIII
DEFINITIONS
Section 8.1 Definitions. (a) The following terms, as used herein, have the
following meanings:
"Acquisition Proposal" shall mean any proposal for the acquisition of, or
merger or other business combination involving CDBeat or Cakewalk or the sale of
any controlling equity interest in, CDBeat or Cakewalk, other than the
transactions contemplated by this Agreement.
"Affiliate" of any person shall mean any other person directly or
indirectly through one or more intermediary persons, controlling, controlled by
or under common control with such person.
"Agreement" or "this Agreement" shall mean, and the words "herein,"
"hereof" and "hereunder" and words of similar import shall refer to, this
agreement as it from time to time may be amended.
The term "audit" or "audited" when used in regard to financial statements
shall mean an examination of the financial statements by a firm of independent
certified public accountants in accordance with generally accepted auditing
standards for the purpose of expressing an opinion thereon.
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"Certificate of Incorporation" shall mean, in the case of any corporation,
the certificate of incorporation, articles of incorporation or charter of a
corporation, howsoever denominated under the laws of the jurisdiction of its
incorporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Contract" shall mean any contract, agreement, indenture, note, bond,
lease, conditional sale contract, mortgage, license, franchise, instrument,
commitment or other binding arrangement, whether written or oral, and all
modifications and amendments thereto and substitutions thereof.
The term "control," with respect to any person, shall mean the power to
direct the management and policies of such person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" shall mean generally accepted accounting principles in effect on
the date hereof as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States.
"Intellectual Property Rights" shall mean all patents, patent
applications, trade names, trademarks, copyrights, servicemarks, trademark and
servicemark registrations and applications, trade secrets, formulae and
specifications and technical know-how, whether currently being used or under
development, including engineering and other drawings, data, design and
specifications, product literature and related materials, in each case whether
owned or licensed.
"IRS" shall mean the Internal Revenue Service.
"Liability" shall mean any direct or indirect indebtedness, liability,
assessment, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential, contingent or otherwise
(including any liability under any guaranties, letters of credit, performance
credits or with respect to insurance loss accruals).
"Lien" shall mean, with respect to any asset, any mortgage, lien
(including mechanics, warehousemen, laborers and landlords liens), claim,
pledge, charge, security interest, preemptive right, right of first refusal,
option, judgment, title defect, or encumbrance of any kind in respect of or
affecting such asset.
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The term "person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity,
including a government or political subdivision or an agency or instrumentality
thereof.
"Subsidiary" of Cakewalk or CDBeat shall mean any person of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are owned directly or indirectly through one or more intermediaries, or both, by
Cakewalk or CDBeat.
"Material Adverse Effect" with reference to a person shall mean a material
adverse effect on the business, properties or financial condition of such person
and its subsidiaries taken as whole.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall mean (i)(A) any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, transfer gains, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, rent, recording,
occupation, premium, real or personal property, intangibles, environmental or
windfall profits tax, alternative or add-on minimum tax, customs duty or other
tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever
(including but not limited to taxes assessed to real property and water and
sewer rents relating thereto), together with (B) any interest, penalty, addition
to tax, fine or other additional amount imposed thereon or with respect thereto
by any Governmental Body (domestic or foreign) (a "Tax Authority") responsible
for the imposition of any such tax and interest in respect of such penalties,
additions to tax, fines or additional amounts, in each case, with respect to
Cakewalk, CDBeat, the Business or the Assets (or the transfer thereof); (ii) any
liability for the payment of any amount of the type described in the immediately
preceding clause (i) as a result of Cakewalk or CDBeat being a member of an
affiliated or combined group with any other corporation at any time on or prior
to the Closing Date and (iii) any liability of Cakewalk or CDBeat for the
payment of any amounts of the type described in the immediately preceding clause
(i) as a result of a contractual obligation to indemnify any other person.
"Tax Return" shall mean any return or report (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to any Tax Authority.
"Transaction Documents" shall mean, collectively, this Agreement, and each
of the other agreements and instruments to be executed and delivered by all or
some of the parties hereto in connection with the consummation of the
transactions contemplated hereby.
(b) The following terms are defined in the following sections of this Agreement:
Term Section
Annual Statements 2.5
Assets 1.1(a)
Assumed Liabilities 1.2(a)
Dylan Recital
30
Dylan Subscription Agreement Recital
Audited Statements 2.5
Business Recital
Cakewalk Recital
CDBeat Recital
CDBeat Required Consents 3.2
CDBeat Stock Recital
Claims 2.9
Closing 1.4
Closing Date 1.4
Common Stock 3.5
Contemplated Transactions 2.1
Excluded Assets 1.1(b)
Financial Statements 2.5
Governmental Bodies 2.10
Laws 2.10
New Board Members 4.9
Orders 2.10
Permits 1.1(a)
Permitted Liens 2.7
Preferred Stock 3.5
Representatives 4.2
SEC Documents 3.7
Section 8.2 Interpretation. Unless the context otherwise requires, the terms
defined in Section 8.1 shall have the meanings herein specified for all purposes
of this Agreement, applicable to both the singular and plural forms of any of
the terms defined herein. All accounting terms defined in Section 8.1, and those
accounting terms used in this Agreement not defined in Section 8.1, except as
otherwise expressly provided herein, shall have the meanings customarily given
thereto in accordance with GAAP. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. 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. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
31
IN WITNESS WHEREOF, the undersigned have executed this Contribution
Agreement as of the date set forth above.
CAKEWALK LLC
By:
Name:
Title:
CDBEAT.COM, INC.
By:
Name:
Title:
32
555456.9
Contribution AGREEMENT
BETWEEN
CDBEAT.COM., INC.
AND
CAKEWALK LLC
OCTOBER 29, 1999
33
TABLE OF CONTENTS
Page
ARTICLE I TRANSFER AND ACQUISITION......................................1
Section 1.1 Assets to be Transferred and Acquired......................1
Section 1.2 Assumed Liabilities........................................2
Section 1.3 Consideration..............................................3
Section 1.4 Closing....................................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF CAKEWALK....................4
Section 2.1 Authority Relative to this Agreement.......................4
Section 2.2 No Conflicts; Consents.....................................4
Section 2.3 Corporate Existence and Power..............................5
Section 2.4 Charter Documents and Corporate Records....................5
Section 2.5 Financial Information......................................5
Section 2.6 Subsequent Events..........................................5
Section 2.7 The Assets.................................................5
Section 2.8 Contracts..................................................6
Section 2.9 Claims and Proceedings.....................................6
Section 2.10Compliance with Laws.......................................6
Section 2.11Finders' Fees..............................................6
Section 2.12Investment Intent..........................................6
Section 2.13Tax Matters................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CDBEAT......................7
Section 3.1 Authority Relative to this Agreement.......................7
Section 3.2 No Conflicts; Consents.....................................7
Section 3.3 Corporate Existence and Power..............................8
Section 3.4 Charter Documents and Corporate Records....................8
Section 3.5 Capitalization.............................................8
Section 3.6 CDBeat Stock...............................................8
Section 3.7 Filings....................................................8
Section 3.8 Financial Statements.......................................9
Section 3.9 Subsequent Events..........................................9
Section 3.10Assets of CDBeat..........................................10
-i-
34
TABLE OF CONTENTS
(continued)
Page
Section 3.11Contracts................................................10
Section 3.11Intangible Property......................................10
Section 3.13Compliance with Laws.....................................10
Section 3.14Claims...................................................10
Section 3.15Finders' Fee.............................................11
Section 3.16Tax Matters..............................................11
ARTICLE IV COVENANTS AND AGREEMENTS....................................11
Section 4.1 Conduct of Business of Cakewalk and CDBeat...............11
Section 4.2 Corporate Examinations and Investigations................12
Section 4.3 Filings and Authorizations...............................12
Section 4.4 Efforts to Consummate....................................12
Section 4.5 Notices of Certain Events................................13
Section 4.6 Public Announcements.....................................13
Section 4.7 Expenses.................................................13
Section 4.8 Tax Considerations.......................................13
Section 4.9 Negotiations With Others.................................13
Section 4.10Past-Closing Restructurin................................14
CONDITIONS TO CLOSING......................................................14
Section 5.1 Conditions to the Obligations of the Parties.............14
Section 5.2 Conditions to the Obligations of Cakewalk................15
Section 5.3 Conditions to the Obligations of CDBeat..................16
ARTICLE VI TERMINATION.................................................17
Section 6.1 Termination..............................................17
Section 6.2 Effect of Termination; Right to Proceed..................18
ARTICLE VII MISCELLANEOUS...............................................18
Section 7.1 Notices..................................................18
Section 7.2 Entire Agreement.........................................19
Section 7.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies.................................19
Section 7.4 Governing Law............................................20
-iii-
35
TABLE OF CONTENTS
(continued)
Page
Section 7.5 Binding Effect; No Assignment.............................20
Section 7.6 Exhibits..................................................20
Section 7.7 Severability..............................................20
Section 7.8 Counterparts..............................................20
Section 7.9 Third Parties.............................................20
Section 7.10Title and Risk of Loss....................................20
Section 7.11Survival..................................................20
ARTICLE VIII DEFINITIONS..................................................21
Section 8.1 Definitions...............................................21
Section 8.2 Interpretation............................................23
SCHEDULES
Schedule 2.2 - Cakewalk Required Consents
Schedule 2.6 - Subsequent Events - Cakewalk
Schedule 2.7 - Liens of Cakewalk
Schedule 2.8 - Contracts of Cakewalk
Schedule 2.9 - Claims and Proceedings - Cakewalk
Schedule 3.2 - CDBeat Required Consents
Schedule 3.5 - Capitalization of CDBeat
Schedule 3.9 - Subsequent Events - CDBeat
Schedule 3.10 - Assets of CDBeat
Schedule 3.11 - Contracts of CDBeat
Schedule 3.13 - Intangible Property of CDBeat
Schedule 3.15 - Claims and Proceedings - CDBeat
Schedule 3.17 - Tax Matters - CDBeat
EXHIBITS
Exhibit A -. Dylan Subscription Agreement
36
556427.4
CAKEWALK MEMBERSHIP INTEREST
SUBSCRIPTION AGREEMENT
CAKEWALK MEMBERSHIP INTEREST SUBSCRIPTION AGREEMENT (the
"Agreement"), dated as of October 29, 1999 by and between DYLAN LLC, a Delaware
limited liability company ("Dylan"), and CAKEWALK LLC, a Delaware limited
liability company ("Cakewalk"):
W I T N E S S E T H:
WHEREAS, Atlantis Equities, Inc., a Delaware corporation and an
affiliate of Dylan, is the holder of a stock purchase warrant, dated September
23, 1999 (the "Atlantis Warrant"), issued by CDBeat.com, Inc., a Delaware
corporation ("CDBeat"), pursuant to which Atlantis has the right to purchase
eighty (80%) percent of the issued and outstanding voting shares of the common
stock, par value $.001 (the "CDBeat Stock"), of CDBeat; and
WHEREAS, Cakewalk has entered into that certain contribution
agreement, dated the date hereof, with CDBeat (the "Contribution Agreement"),
pursuant to which Cakewalk has agreed to contribute and assign to CDBeat
substantially all of the assets of Cakewalk in exchange for 90% of the CDBeat
stock in a transaction intended to qualify under ss. 351 of the Internal Revenue
Code of 1986, as amended (the "Code");
WHEREAS, Dylan desires to acquire and Cakewalk desires to sell to
Dylan a membership interest (the "Membership Interest") in Cakewalk consisting
of Class A Units, as that term is defined in the Amended and Restated Operating
Agreement (the "Operating Agreement") of Cakewalk dated as of February 13, 1998,
a copy of which has been reviewed by Dylan;
NOW, THEREFORE, in consideration of the premises and the respective
mutual agreements, covenants, representations and warranties herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the parties agree as follows:
1. Purchase and Sale of Membership Interest. Subject to all of the terms and
conditions of this Agreement, Cakewalk agrees to sell, transfer and deliver to
Dylan the Membership Interest and Dylan agrees to purchase, acquire and accept
from Cakewalk, the Membership Interest at the Closing (as hereinafter defined),
free and clear of all liens, pledges and encumbrances.
2. Consideration. The purchase price (the "Purchase Price") for the Membership
Interest shall be $900,000, payable on the Closing Date by wire transfer of
immediately available funds to an account designated by Cakewalk.
3. Closing. The closing ("Closing") shall take place at the offices of Baer
Marks & Upham LLP, 805 Third Avenue, New York, New York 10022 at 10:00 a.m.
local time on the date on which the closing under the Contribution Agreement
37
occurs, or at such other date, time or place as the parties may
agree (the "Closing Date").
4. Admission of Dylan as Member; Amendment of Operating Agreement; Use of
Subscription Funds.
(a) At the Closing, the Atlantis Warrant will be transferred to Dylan and Dylan
will be admitted as a Member of Cakewalk holding a Class A Unit pursuant to an
amendment to the Operating Agreement (the "Amendment") under which:
(i) The Membership Interest will entitle Dylan to be allocated and thereafter to
receive a distribution, immediately following a closing under the Contribution
Agreement, of 7,819,092 shares of CDBeat Stock;
(ii) The current members of Cakewalk (the "Existing Members") will agree that
gain ("Gain") recognized by Cakewalk, if any, as a result of the transactions
contemplated by this Agreement and the Contribution Agreement will be allocated
to the Existing Members and not to Dylan;
Cakewalk acknowledges and agrees that, at the
Closing, the Atlantis Warrant will be amended to (A) eliminate the right of
Dylan to acquire 7,819,092 shares of CDBeat Stock; (B) require Dylan to pay
CDBeat $100,000 on or prior to the Closing to acquire 762,064 options from
CDBeat exercisable at $2.50 each until December 31, 2000 and (C) retain the
registration rights reflected therein with respect to all securities of CDBeat
owned by Dylan, it being understood by Dylan that all principal stockholders of
CDBeat will be entitled to substantially similar registration rights; and
Dylan will agree to be bound by and observe all the
terms of the Operating Agreement.
(b) Cakewalk hereby agrees to indemnify and hold Atlantis, Dylan and the members
of Dylan harmless from and against any cost, damages or loss (including
reasonable accounting and legal fees) as a result of any Gain that may be
allocated to it by Cakewalk, and any taxable income relating to the amendment
(but not the assignment, transfer, or other disposition) of the Atlantis
Warrant, the acquisition of the Membership Interest or the distribution of the
CDBeat Stock to Dylan, notwithstanding the provisions of Section 4(a)(ii)
hereof.
(c) Cakewalk agrees to contribute the proceeds of the Purchase Price to CDBeat
pursuant to the Contribution Agreement.
5. Representations and Warranties of Cakewalk. Cakewalk represents and
warrants to Dylan as follows:
(a) Due Execution. Cakewalk has full power, capacity and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby (the "Contemplated Transactions"). This Agreement has been duly and
validly executed and delivered by Cakewalk and constitutes the valid and binding
38
agreement of Cakewalk, enforceable against Cakewalk in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by the principles governing the availability of equitable remedies.
(b) No Conflicts. The execution and delivery of this Agreement, the consummation
of the Contemplated Transactions and the fulfillment of the terms thereof will
not (i) violate any provision of the Certificate of Formation or the Operating
Agreement of Cakewalk (the "Cakewalk Organizational Documents"); (ii) constitute
a breach of or result in a termination or modification of, or constitute a
default under, or conflict with or cause any acceleration of any obligation
under, or permit any other party to modify or terminate, any agreement or other
instrument relating to Cakewalk; or (iii) violate any judgment, decree, order or
award of any court, governmental body or arbitrator relating to Cakewalk.
(c) Consents. Except for any filings that may be necessary under applicable
securities laws, no consent, approval or authorization of, or registration or
filing with, any governmental authority or other regulatory agency or any other
person is required to be made by Cakewalk in connection with the execution or
delivery of this Agreement or the consummation of the Contemplated Transactions.
6. Representations and Warranties of Dylan. Dylan represents and warrants
to Cakewalk as follows:
(a) Due Execution. Dylan has full power, capacity and authority to execute and
deliver this Agreement and to consummate the Contemplated Transactions. This
Agreement has been duly and validly executed and delivered by Dylan and
constitutes the valid and binding agreement of Dylan, enforceable against Dylan
in accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by the principles governing the availability of equitable
remedies.
(b) No Conflicts. The execution and delivery of this Agreement, the consummation
of the Contemplated Transactions and the fulfillment of the terms thereof will
not (i) violate any provision of the Certificate of Incorporation or By-laws of
Dylan; (ii) constitute a breach of or result in a termination or modification
of, or constitute a default under, or conflict with or cause any acceleration of
any obligation under, or permit any other party to modify or terminate, any
agreement or other instrument relating to Dylan; or (iii) violate any judgment,
decree, order or award of any court, governmental body or arbitrator relating to
Dylan.
(c) Consents. Except for any filings that may be necessary under applicable
securities laws, no consent, approval or authorization of, or registration or
filing with, any governmental authority or other regulatory agency or any other
person is required to be made by Dylan in connection with the execution or
delivery of this Agreement or the consummation of the Contemplated Transactions.
(d) Investment Intention. Dylan is acquiring the Membership Interest for its own
account and not with a present intention to make any sale, disposition,
distribution or other transfer of the Membership Interest in a manner that would
be in violation of any applicable securities laws.
39
(e) Investigation by Dylan. Dylan has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the subscription for the Membership Interest contemplated hereby and it is able
to bear the economic risk of such subscription for an indefinite period of time.
It has been furnished access to such information and documents as it has
requested and has been afforded an opportunity to ask questions of and receive
answers from representatives of Cakewalk concerning the terms and conditions of
this Agreement and the subscription for the Membership Interest contemplated
hereby.
7. Notices of Certain Events. Each of Cakewalk and Dylan shall promptly
notify the other of:
(a) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with the Contemplated
Transactions;
(b) any notice or other communication from any governmental body in connection
with the Contemplated Transactions; and
(c) any event, condition or circumstance occurring from the date hereof through
the Closing Date that would constitute a violation or breach of any
representation or warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach of any covenant of
any party contained in this Agreement.
8. Public Announcements. Cakewalk and Dylan will consult with each other before
issuing any press release or otherwise making any public statement with respect
to the Contemplated Transactions, and will not issue any such press release or
make any such public statement without the prior approval of the other party,
except as may be required by applicable law in which event the other party shall
have the right to review and comment upon any such press release or public
statement prior to its issuance.
9. Expenses. Cakewalk agrees to bear and pay for all of its own and Dylan's and
Atlantis's expenses in connection with the preparation, execution and delivery
of this Agreement and the Contemplated Transactions including the expenses
incurred by Atlantis and Dylan in connection with obtaining and amending the
Atlantis Warrant and preparing the related reports on Schedule 13D, Securities
and Exchange Commission Forms 3 and 4 and any amendments thereto.
10. Board Representation. If, following the closing, the Board of Directors of
CDBeat (the "CDBeat Board") is expanded to seven members, Dylan shall have the
right to designate two representatives out of seven to the CDBeat Board, and
must consent to any expansion of the CDBeat Board. The parties agree to cause
CDBeat promptly to obtain D&O insurance with a minimum of $3 million of
coverage, and use its best efforts to obtain $5 million of such coverage in the
40
near future. CDBeat Board members designated by Dylan shall be entitled to
receive the same compensation (stock options, fees, etc.) as are received by
other non-management CDBeat Board members. By signing this Agreement where
indicated below, Robert Miller agrees to vote all shares beneficially owned by
him in favor of the election of the Dylan designees, and Dylan agrees to vote
all shares owned by it in favor of the election of Robert Miller or his
designee.
11. Mutual Conditions. The obligations of the parties hereunder are
subject to the fulfillment of each of the following conditions:
(a) Closing Under the Contribution Agreement. The closing under the Contribution
Agreement shall occur concurrently with the closing hereunder.
(b) Amendment. Dylan and the Existing Members shall have entered into the
Amendment and such Amendment shall be in form and substance reasonably
satisfactory to Cakewalk and Dylan.
(c) No Injunction. No injunction, judgment or order, nor any provision of any
applicable law, statute, code, ordinance, rule, regulation or other requirement
of any governmental body, shall prohibit the consummation of the Contemplated
Transactions.
12. Conditions to the Obligations of Cakewalk. All obligations of Cakewalk
hereunder are subject to the fulfillment of each of the following conditions:
(a) Performance. Dylan shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date.
(b) Representations and Warranties. The representations and warranties of Dylan
contained in this Agreement and in any certificate or other writing delivered by
Dylan pursuant hereto shall be true in all material respects at and as of the
Closing Date as if made at and as of such time.
(c) Purchase Price. In accordance with the provisions of Section 2 hereof, Dylan
shall have paid the Purchase Price by wire transfer of immediately available
funds to Cakewalk (or in such other manner acceptable to Cakewalk).
(d) Amendment of Warrant. The Atlantis Warrant shall be amended as contemplated
by the provisions of Section 4(a)(iii) and such amendment shall be in form and
substance reasonably satisfactory to Dylan.
13. Conditions to the Obligations of Dylan. All obligations of Dylan hereunder
are subject, at its option, to the fulfillment of each of the following
conditions:
(a) Performance. Cakewalk shall have performed in all material respects all of
its obligations hereunder required by it at or prior to the Closing Date.
(b) Representations and Warranties. The representations and warranties of
Cakewalk contained in this Agreement and in any certificate or other writing
delivered by Cakewalk pursuant hereto shall be true in all material respects at
and as of the Closing Date as if made at and as of such time.
41
(c) Engagement of Atlantis. At the Closing, CDBeat shall have confirmed the
retention of Atlantis as its exclusive financial advisor pursuant to the letter
agreement dated the date hereof between Atlantis and Cakewalk.
(d) Material Changes. No amendment shall have occurred, without the prior
consent of Dylan, in the Cakewalk Organizational Documents, the Certificate of
Incorporation or By-Laws of CDBeat, or the Contribution Agreement.
14. Termination. If the Contribution Agreement is terminated, this
Agreement shall be terminated concurrently therewith.
15. Miscellaneous
(a) Captions. The section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(b) Cooperation. Subject to the terms and conditions herein provided, each of
the parties hereto shall use its diligent efforts to take, or cause to be taken,
such action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all things
necessary, proper or advisable under the provisions of this Agreement and under
applicable law, to effectuate the purpose of this Agreement.
(c) Notices. (i) Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally by hand,
telecopied, or mailed, certified or registered, return receipt requested,
postage prepaid as follows:
if to Dylan, to:
Dylan LLC
750 Lexington Avenue, 23rd Floor
New York, NY 10022
Telecopier: (212) 750-6667
42
with a copy to:
Squadron Ellenoff Plesent & Sheinfeld
551 Fifth Avenue
New York, NY 10176
Telecopier: (212) 697-6686
Attention: Kenneth R. Koch, Esq.
if to Cakewalk, to:
Cakewalk LLC
250 West 57th Street, Suite 720
New York, New York 10107
Attention: Robert Miller, President
Telecopier: (212) 265-1667
with a copy to:
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022-7513
Telecopier: (212) 702-5941
Attention: Ivan W. Dreyer, Esq.
(ii) Each notice or other communication shall be deemed given (A) on the date of
delivery if delivered by messenger, overnight courier or other similar personal
delivery; (B) on the date of transmission, if transmitted by telecopier; or (C)
three days after the date of deposit in the mails, if mailed by certified or
registered mail, return receipt requested.
(iii) Any party, by notice given in accordance with this Section to the other
parties, may designate another address (or telecopier number) or person for
receipt of notices hereunder. Notices by a party may be given by counsel to such
party.
(d) Entire Agreement. This Agreement contains the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
agreements or undertakings, written or oral, of any nature whatsoever.
(e) Amendments. This Agreement may not be amended nor shall any waiver, change,
modification, consent or discharge be effected except by an instrument in
writing executed by or on behalf of the party seeking or against whom
enforcement of any amendment, waiver, change, modification, consent or discharge
is sought.
(f) No Waiver. Any failure or delay on the part of a party in exercising any
power or right hereunder shall not operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power preclude any other or
further exercise thereof or the exercise of any other right or power hereunder
or otherwise available in law or in equity. Any waiver of any default hereunder
shall not be effective unless in writing.
43
(g) Severability. If any provisions of this Agreement for any reason shall be
held to be illegal, invalid or unenforceable, such illegality shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such illegal, invalid or unenforceable provision had never been herein.
(h) Governing Law. This agreement shall be governed and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed entirely within such state.
(i) Binding Effect. This Agreement and all of its provisions, rights and
obligations shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing herein
express or implied is intended or shall be construed to confer upon or give
anyone other than the parties hereto and their respective successors and
permitted assigns any rights or benefits under of by reason of this Agreement.
(j) Counterparts. The Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original as against any party whose
signature appears thereon, and all of which shall together 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 the signatories.
44
IN WITNESS WHEREOF, the parties hereto have executed this Cakewalk
Membership Interest Subscription Agreement as of the date set forth above.
CAKEWALK LLC
By:
Name:
Title:
DYLAN LLC
By:
Name:
Title:
45