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Exhibit 2.3
ASSET PURCHASE
DATE: As of 6 January 1997
PARTIES:
(1) "The Vendor": XXXXXX WORD LIMITED (registered no 918469) whose
registered office is at 0 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxx Xxxxxx XX0
0XX.
(2) "The Purchaser": WORD ENTERTAINMENT LIMITED (registered no 3244424)
whose registered office is at 0 Xxx Xxxxxxxxxx Xxxxxx, Xxxxxx, X0X
0XX.
RECITALS
WHEREAS certain of the assets of Xxxxxx Xxxxxx Inc, a Tennessee Corporation
("Xxxxxx"), Word Incorporated, a Delaware Corporation ("Word") and Word Direct
Partners, L.P., a Texas Limited Partnership ("Word Direct"), wholly owned direct
and indirect subsidiaries of Xxxxxx and certain of the assets of Word
Communications, Limited, a British Columbia Company and the Vendor, also wholly
owned subsidiaries of Word, together comprise the music division of Xxxxxx;
WHEREAS, Xxxxxx, Word and Word Direct (collectively the "US Sellers") have
agreed to sell to Xxxxxxx Entertainment Company ("Xxxxxxx") and Xxxxxxx has
agreed to purchase from the US Sellers substantially of all of the assets and to
assume certain of the liabilities associated with the music division of Xxxxxx
pursuant to the terms of an Asset Purchase Agreement dated as of the 21st day of
November 1996, as amended by Amendment No. 1, dated as of 6th day of January
1997 ("the Principal Asset Purchase Agreement"); and
WHEREAS, the Vendor and the Purchaser (a subsidiary of Xxxxxxx) have entered
into this Agreement pursuant to Section 7.5(B) of the Principal Asset Purchase
Agreement for the purpose of conveying to the Purchaser the assets and
liabilities of the Vendor which form part of the music division of Xxxxxx
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OPERATIVE PROVISIONS:
1. INTERPRETATION
1.1 In this agreement, including the Schedules:
1.1.1 the following words and expressions have the following
meanings, unless they are inconsistent with the context:
"ACQUISITION AGREEMENTS" means and includes individually and
collectively each and every contract (excluding Artist
Agreements, Writer Agreements, Distributed Label Agreements,
Audio Visual Works Agreements and Producer Agreements) pursuant
to which the Vendor owns an interest in the Intellectual
Property Assets related to the Business including without
limitation catalogue purchase, master licence, co-publishing,
royalty participation, administration, sub-publishing
agreements and any and all rights and benefits thereunder and
assignments thereof including the benefit of any Unrecouped
Advances and other outstanding third party balances in favour
of the Vendor;
"AFFILIATE" means any body corporated or unincorporated which
directly or indirectly controls, is controlled by or is under
common control with the Vendor including without limitation
Xxxxxx Xxxxxx Inc, Word, Incorporated and Word Direct Partners
LP;
"ACCOUNTS DATE" means the date to which the Principal Accounts
have been prepared;
"ARTIST AGREEMENTS" shall mean all agreements, including all
amendments thereto, required for the exploitation of the
Masters or the Audio Visual Works (other than artists who
perform solely as "sidemen" on such Masters for whose
performances the Vendor has, and at Completion shall have, all
necessary
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rights), including without limitation those artist
agreements described in Schedule 14 hereto;
"ARTWORK" shall mean the photographs, negatives, photographic
plates, covers, liners, textual advertising, point of purchase
and promotional materials related to the Intellectual Property
Assets and all rights to make commercial use thereof as used in
the Business prior to the date hereof;
"ASSETS" means the property, assets and rights of the Business
to be purchased by the Purchaser as described in clause 2.2;
"ASSUMED CONTRACTS" shall mean the Contracts defined as such
in clause 2.3 (i);
"ASSUMED LIABILITIES" shall mean the Liabilities to be assumed
by the Purchaser pursuant to the provisions of sub-clauses 2.3
(i), (ii) and (iii);
"AUDIO VISUAL WORKS" means works owned in whole or in part by
the Vendor and directly related to the Business that consist of
a series of related images which are intrinsically intended to
be shown by the use of machines or devices such as projectors,
viewers or electronic equipment, together with accompanying
sounds (if any) regardless of the nature of the material
objects such as films or tapes in which the works are embodied
including without limitation those Audio Visual Works
designated in Part I of Schedule 15 hereto;
"AUDIO VISUAL WORKS AGREEMENTS" means all agreements related to
the production, manufacturing and distribution or other
exploitation of the Audio Visual Works including without
limitation those Audio Visual Works agreements designated in
Part II Schedule 15;
"AUDIT CLAIMS" shall mean the Audit Claims as defined in
clause 2.3(iii);
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"BALANCE SHEET DATE" means 30 June 1996;
"BUSINESS" means the music business carried on by the Vendor
at the Effective Date, which consists principally of the
production and distribution of recorded music and related
products, the domestic and international distribution of
recordings for other companies and music publishing,
including songwriter development, print music, music
publishing and copyright administration;
"CATALOGUE" means the Vendor's catalogue of current
compositions, records and related products attached hereto as
Schedule 5;
"COMPLETION" means completion of the sale and purchase of the
Business in accordance with clause 4;
"COMPOSITIONS" means all right, title and interest in all
musical works and any associated literary works (for example,
lyrics, spoken text and similar works) owned in whole or in
part by the Vendor or in which the Vendor owns an interest and
directly related to the Business including without limitation,
derivative works thereof, arrangements, titles, lyrics and
music thereof, all demonstration recordings thereof and all
other rights therein and thereto whether now or hereafter known
and all claims, demands, accrued or to accrue with respect
thereto and the copyrights and the future contingent renewal
and extended terms of copyright therein and thereto and all
rights to secure renewals, revivals and extensions of copyright
throughout the world including without limitation those musical
compositions set forth in Schedule 6 attached hereto;
"CONTRACTS" means all of the current contracts and engagements
of the Vendor in relation to the Business, including without
limitation, those listed in Schedule 20, including the
Intellectual Property Contracts, but excluding contracts with
employees;
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"COPYRIGHT" has the meaning attributed to that expression in
the Copyright, Designs and Patents Xxx 0000 together with (to
the extent that the same are not included in such definition
and without limitation thereto) all like rights throughout the
world whether or not now recognised or in existence including
(without limitation to the generality of the foregoing) all
proprietary rights and all rights of exploitation including
without limitation any rental right and any public lending
right and any and all rights to secure renew and extend any and
all such rights and all revival rights;
"CUSTOMS DEPOSIT" means the deposit of L.40,000 of the Vendor
with Lloyds Bank Plc pursuant to the Deposit Agreement to
secure Own Liabilities dated 2nd October 1996 expressed to be
under investment account numbered 0000000 or such other account
as from time to time substituted therefor;
"DELIVERABLE ASSETS" means all plant, machinery, tools,
equipment, vehicles and other chattels on the Properties or
otherwise owned by the Vendor at the Effective Date for the
purpose of the Business as listed in Schedule 10;
"DIRECT MARKETING ASSETS" means (1) all customer lists owned by
the Vendor and used at any time within the last year, to
solicit the sale of any finished goods Inventory together with
any other lists in the possession of the Vendor (2) the
Vendor's catalogues and any other mail pieces used for mail and
telemarketing of any finished goods inventory, (3) the Vendor's
toll-free number used in direct marketing and telemarketing in
connection with the Business and (4) all other assets and
properties used by the Vendor in the direct marketing and
telemarketing of finished goods inventory;
"DISTRIBUTED LABEL AGREEMENTS" means all contracts, including
all amendments thereto directly related to the Business
pursuant to which the Vendor has been granted the right to use
or exploit in any way sound recordings, records or audiovisual
works owned in whole or in part by any other person, firm or
entity including without limitation those distributed label
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agreements set forth in the Schedule 7;
"DISTRIBUTION AGREEMENTS" shall mean all contracts including
all amendments thereto granting others the right to use or
exploit in any way the Masters, Audio Visual Works, Trade Marks
or Artwork, (including without limitation agreements granting
others the right to manufacture, distribute and sell records
manufactured from the Masters), including without limitation,
those distribution agreements set forth in Schedule 8;
"EFFECTIVE DATE" means the close of business on 6 January 1997
or such other date as shall be nominated as the "Closing Date"
under the Principal Asset Purchase Agreement;
"EMPLOYEES" means the persons who, at the Effective Date, were
employed by the Vendor for the purposes of the Business and
whose employment passes to the Purchaser by virtue of the
Regulations, being those whose names are set out in Schedule
24;
"EXCLUDED ASSETS" means the assets listed in Schedule 2 which
are owned by the Vendor but are excluded from the sale to the
Purchaser;
"GOODWILL" means the goodwill of the Vendor in relation to the
Business, together with the exclusive right for the Purchaser
or its assignee to represent itself as carrying on the Business
in succession to the Vendor, and all trade names associated
with the Business;
"THE INTELLECTUAL PROPERTY ASSETS" means the Masters, the
Compositions, the Print Music, the Artwork, the Audio Visual
Works and the Trade Marks;
"THE INTELLECTUAL PROPERTY CONTRACTS" means the Acquisition
Agreements, the Artist Agreements, the Producer Agreements, the
Audio Visual Work Agreements, the Licences, the Distribution
Agreements, the Distributed Label
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Agreements, the Software Agreements (to the extent assignable
and to the extent of the Vendor's interest therein), the
Writer Agreements all amendments thereto and all other
contracts directly related to the use, exploitation or
ownership of the Intellectual Property Assets or the Vendor's
or the Purchaser's ability to collect any income derived
therefrom anywhere in the world including any exclusive
contracts (other than Acquisition Agreements), any
co-publishing, administration, collection or participation
agreement, any performing rights agreements and any other
blanket licenses;
"LEASEHOLD PROPERTY" means the leasehold premises owned by the
Vendor as listed in Schedule 1;
"LEASE" means the lease or underlease under which the
Leasehold Property is held;
"LIABILITIES" means the debts, liabilities, obligations,
royalty payments, duties and responsibilities of any kind and
description, whether absolute or contingent, monetary or
non-monetary, direct or indirect, known or unknown, matured or
unmatured or of any other nature of the Business ;
"LICENCES" means and includes individually and collectively
each and every licence, sub-publishing agreement,
administration agreement, participation, licensing or
collection agreements, mechanical or public performance society
agreements directly related to the Business and all other
contracts and agreements relating to the use or exploitation of
the Compositions, Print Music, the Masters or the Audio Visual
Works and any and all rights and benefits thereunder;
"LIEN" means any security, interest, lien, mortgage, claim,
charge, pledge, restriction, right of first or last refusal,
right of first negotiation, matching right, equitable interest
or encumbrance or adverse claim of any nature;
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"MASTERS" shall mean all original media directly related to the
Business in which sounds of a performance of an artist are
fixed in any method now known and from which sounds can be
perceived, record used or otherwise reproduced either directly
or with aid of a machine device or process as well as
out-takes, demonstration recordings, alternative versions of
the same and alternative mixes, together with all intangible
and/or incorporeal rights attached thereto or in a sound
recording, including without limitation, to the extent the same
are extant, all copyrights and similar rights including without
limitation the sound recordings specified in Schedule 11
hereto;
"OPERATING INFORMATION" means all operating data and records of
the Vendor directly related to the Business including books,
records, sales and sales promotional data, advertising,
customer lists including all consumer, direct marketing and
record club lists and information, credit information, cost and
pricing information supplier lists, business plans, reference
catalogues and all data in computer readable form relating to
any of the foregoing items;
"PERSON" means any natural person, corporation, limited
liability company, business trust, joint venture, association,
company, firm, partnership or other entity or governmental
authority;
"PRINCIPAL ASSET PURCHASE AGREEMENT" means the Asset Purchase
Agreement entered into by and between Xxxxxx Xxxxxx Inc, Word,
Incorporated, Word Direct Partners, LP and Xxxxxxx
Entertainment Company and dated as of 21 November 1996 as
amended;
"PRINT MUSIC" means the Vendor's interest in and to all print
music work directly related to the Business, reproducing the
music and/or lyrics of one or more musical works or associated
literary works (for example, lyrics, spoken text and similar
works of authorship), all artwork related thereto and all
photographic or engraving plates and any other manufacturing
parts embodying all or part thereof;
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"PRODUCER AGREEMENTS" means any agreement with any individual
producer of any of the Masters or Audio Visual Works;
"RECEIVABLES" means all accounts and notes receivable and the
right to receive royalties and other income payable and other
trade debts owed to the Vendor in connection with the Business,
including without limitation the Customs Deposit;
"RECORDS" shall mean any reproduction of a Master which
reproduction is in any form now known in which reproductions of
sound with or without visual images are fixed by any method now
known and from which sounds with or without visual images can
be perceived be produced or otherwise communicated either
directly or with the aid of a machine, device or process and
including the object in which sounds without visual images are
fixed included but not limited to those records, soundtracks,
film, tapes, tape cartridges and cassettes tapes, digital audio
tapes, compact disc and all light and sound devices including
audio-visual devices as such term is used in the Copyright,
Designs and Patents Xxx 0000;
"REGULATIONS" means the Transfer of Undertakings (Protection
of Employment) Regulations 1981;
"RETURNS" means all returns, declarations, reports, estimates,
information returns and statements required to be filed with or
supplied to any taxing authority in connection with any Taxes;
"ROYALTIES" shall mean all royalties, share of profits and/or
other consideration due and payable due to writers,
co-publishers, artists, producers or any other royalty
participants in connection with any intellectual property;
"SOFTWARE AGREEMENTS" shall mean all agreements acquiring the
right to make use of any computer software used in the course
of or in connection with the
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Business;
"STOCKS" means the stocks, including raw materials, work in
progress and finished goods, owned by the Vendor at the
Effective Date in connection with the Business, including items
which, although subject to reservation of title, are under the
control of the Vendor;
"SUBSIDIARY" means a subsidiary as defined in the Companies
Xxx 0000 s 736;
"TAXES" means all taxes, charges, fees, levies, or other
assessments including without limitation, income, gross
receipts, excise, real and personal property, sales, transfer,
withholding licence, payroll and franchise taxes imposed by any
governmental authority and shall include any interest,
penalties or additions to tax attributed to any of the
foregoing;
"TRADE MARKS" shall mean all trade marks whether or not
registered, trade xxxx registrations if any, trade xxxx
applications if any, trade names and logos which are owned
being used or are used by or on behalf of the Vendor in
connection with the Business together with the goodwill
associated therewith including but not limited to the
trademarks listed in Schedule 12;
"UNRECOUPED ADVANCES" means advances and other recoupable costs
and expenses relating to the Assets paid by the Vendor to any
third party or incurred by the Vendor on behalf of the third
party which are unrecouped as of the Balance Sheet Date,
substantially all of which are set forth in Schedule 13;
"WARRANTIES" means the representations and warranties of the
Vendor contained in Schedule 4;
"WRITER AGREEMENTS" shall mean and include individually and
collectively, each of the songwriter, co-publishing,
administration and other agreements between the Vendor on the
one hand and any songwriter or arranger on the
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other and directly related to the Business including,
without limitation, the writer agreements identified in
Schedule 16;
1.1.2 all references to a statutory provision shall be construed as
including references to:
(a) any statutory modification, consolidation or
re-enactment (whether before or after today's date)
for the time being in force;
(b) all statutory instruments or orders made pursuant to
it;
(c) any statutory provisions of which it is a
consolidation, re-enactment or modification;
1.1.3 except where the context otherwise requires, words denoting the
singular include the plural and vice versa; words denoting any
gender include all genders; words denoting persons include
firms and corporations and vice versa;
1.1.4 unless otherwise stated, a reference to a clause, sub-clause
or Schedule is a reference to a clause or a sub-clause of, or
a Schedule to, this Agreement;
1.1.5 clause headings are for ease of reference only and do not
affect the construction of this Agreement;
1.1.6 for the purpose of this Agreement references to trademarks and
trade names shall be treated as including service marks and
service names;
1.1.7 terms defined in the Principal Asset Purchase Agreement bear
the same meanings there used in this Agreement unless the
contrary intention appears.
2. AGREEMENT FOR SALE
2.1 The parties refer to the Principal Asset Purchase Agreement and agree
that this
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Agreement shall be subject to, contingent upon and entered into
pursuant to the Principal Asset Purchase Agreement.
2.2 Subject to the terms and conditions of this Agreement, the Vendor with
full title guarantee to the extent of the Vendor's interest therein
shall sell to the Purchaser which shall purchase as at the Effective
Date the following assets and rights of the Vendor used in the conduct
of the Business:
(a) the Goodwill;
(b) the Leasehold Property;
(c) the Deliverable Assets;
(d) the Stocks;
(e) the benefit of the Contracts;
(f) the Direct Marketing Assets;
(g) the Intellectual Property Assets;
(h) the Operating Information;
(i) the Receivables ;
(j) the Unrecouped Advances;
but excluding the Excluded Assets.
2.3 The Purchaser shall, as from the Effective Date, assume and discharge
the Liabilities of the Vendor:-
(i) existing on and arising subsequent to the Effective
Date under the Contracts and under all purchase and
sales commitments and orders existing at the Effective
Date (the "Assumed Contracts");
(ii) all accounts payable, accrued expenses and other
Liabilities reflected on the Closing Statement (as
defined in the Principal Asset Purchase Agreement) ;
(iii) the pending claim for audit of accountings and
payments owed by the
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Vendor to parties to the Contracts as specified in
Schedule 20 and any other such claims made after the
date of this agreement to the extent that such claims
relates to periods prior to the Effective Date
(together "the Audit Claims");
The liabilities referred to in sub clauses (i), (ii) and (iii)
above are herein called the "Assumed Liabilities". Except as
provided above and notwithstanding anything else to the
contrary contained in this agreement, the Purchaser is not
assuming and shall not be liable for any Liabilities of the
Vendor other than the Assumed Liabilities. For the avoidance of
doubt the Purchaser is not liable for any Liabilities which
consists of any of the following Liabilities:
(a) indebtedness for borrowed money or overdrafts
including any inter company debts;
(b) relating to or in any way arising out of the Excluded
Assets;
(c) any fees and expenses incurred by the Vendor in
connection with this agreement, including without
limitation to the generality of the foregoing the
legal fees and expenses of Messrs Bird & Bird and any
other legal fees and expenses, all of which will be
borne by the Vendor;
(d) to any shareholder or Affiliate or to any current or
former employee, officer or director of the Vendor,
including without limitation any severance pay,
post-retirement medical benefits, obligation to make
any contribution to any pension scheme or to make any
pension payments or annuity or other benefit whether
by operation of law or otherwise, save as to the
extent that any such liability arises with respect to
the Employees under clause 7;
(e) relating to the execution, delivery and consummation
of this agreement by the Vendor and the transactions
contemplated herein, including without limitation to
the generality of the foregoing any and all Taxes
incurred as a result of the sale contemplated by this
agreement;
(f) any Taxes accrued or incurred prior to the Effective
Date or relating to any period (or portion of a
period) prior thereto;
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(g) relating to or arising out of any environmental
matter, including, without limitation to the
generality of the foregoing, any violation of any
statutory or regulatory provision or any other legal
provision relating to the health and safety of the
public or the employees of the Vendor;
(h) relating to holiday, sick days, and similar benefits
accruing prior to the Effective Date in respect any
of the Employees;
(i) relating to any obligations of the Vendor arising
under or pursuant to this Agreement;
It is expressly declared that the Purchaser shall not assume or be
bound by any Liabilities except as expressly set out in this Agreement.
2.4 The provisions of Clause 11 shall more particularly apply in relation
to the transfer of the Leased Property.
3. PURCHASE CONSIDERATION
3.1 The consideration for the sale by the Vendor of the Assets shall be the
amounts set out in Schedule 3 totalling the sum of Xxx Xxxxxxx Xxxx
Xxxxxxx xxx Xxxxx Xxx Xxxxxxxx Xxxxxx Xxxxxx Dollars ($1,561,000) plus
the Assumed Liabilities (the "Consideration").
3.2 The cash element of the Consideration shall be paid in cash upon
Completion in accordance with Clause 4.
3.3 The Consideration is exclusive of value added tax and the provisions of
Clause 8 shall apply to the treatment of the Consideration for value
added tax purposes.
4. COMPLETION
4.1 Completion of the sale and purchase of the Business shall take place
on the Effective Date at such location as the parties shall agree when
the following matters shall be effected:-
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4.1.1 the Purchaser shall pay to the Vendor the cash element of the
Consideration by transfer of immediately available funds as
the Vendor shall direct.
4.1.2 the Vendor shall deliver to the Purchaser, at the principal
office of the Business, such of the Assets as are capable of
being transferred by delivery.
4.1.3 the Vendor shall cause to be delivered or (if so requested by
the Purchaser) made available to the Purchaser:
4.1.4 such documents in a form reasonably satisfactory to the
Purchaser's solicitors as are necessary to complete the sale
and purchase of the Assets and vest title to the Assets in the
Purchaser, including (but without limitation) assignments of
the Goodwill, the benefit of the Contracts and the
Intellectual Property Assets;
4.1.5 all its books of account, payroll records, income records,
stock and other accounting records, information relating to
customers and suppliers and other books and documents which
relate to the Business (other than minute books relating to
directors' and shareholders' meetings and statutory books);
4.1.6 all its design and drawings, plans, instructional and
promotional material, sales publication, advertising material,
terms and conditions of sale and other technical material and
sales matter which relate to the Business, together with any
plates, blocks, negatives and similar material relating to
them;
4.1.7 all records of National Insurance and PAYE relating to all the
Employees duly completed and up to date;
4.1.8 the value added tax records referred to in clause 8.6;
4.1.9 a certified copy of the special resolution resolving to change
the name of the Vendor in accordance with clause 12.1.
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4.2 Upon completion of the matters referred to above the Purchaser shall
pay the purchase Consideration in the manner specified in clause 3.2.
4.3 The Purchaser shall not be obliged to complete the purchase of any of
the Assets unless the purchase of all the Assets is completed in
accordance with this Agreement or waived pursuant to clause 4.4 below.
4.4 The Purchaser may in its absolute discretion waive any requirement
contained in clause 4.1 provided that any waiver of any such
requirement shall be effective only if made in writing signed by a duly
authorised officer of the Purchaser.
4.5 The Purchaser shall not be obliged to complete the purchase of any of
the Assets until the Closing of the Principal Asset Purchase Agreement
(as defined therein).
4.6 This Agreement will terminate if the Principal Asset Purchase Agreement
terminates before Completion. The Purchaser may not terminate this
Agreement in any other circumstances. In the event of such termination
all further negotiations of the parties under this Agreement will
terminate, except that the Purchaser shall return all non public
documents furnished hereunder, shall destroy all documents or portions
thereof prepared by the Purchaser or its representatives that contain
non public information received pursuant hereto or shall maintain the
same in the same degree of confidence with which it maintains its own
like information unless or until such information is or becomes a
matter of public knowledge or is or becomes known to the party
receiving such information through persons (other than the party
providing such information) having no obligation to maintain such
information in confidence. Furthermore the provision of clauses 17
(Costs) and 21 (Proper Law) shall continue in full force and effect.
4.7 The Assignment of the Lease shall be dealt with in accordance with the
provisions of clause 11.
5. THE CUSTOMS DEPOSIT
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The Vendor and the Purchaser shall co-operate to procure that, as soon
as practicable following Completion, the bond issued by Lloyds Bank Plc
H.M. Customs and Excise which is secured by the Customs Deposit (the
"Customs Bond") shall be released, that the Customs Deposit is returned
to the Vendor and that the Vendor is released from all security granted
by it in relation to the Customs Deposit. The Vendor shall account to
the Purchaser for the Customs Deposit promptly upon receipt of the
same. Pending release of the Customs Bond, the Purchaser shall
indemnify and hold harmless the Vendor against all claims, liabilities
and expenses suffered or incurred by the Vendor in relation to the
Customs Bond arising out of any act of the Purchaser or the conduct of
the Business following completion.
6. CONDUCT OF BUSINESS PRIOR TO COMPLETION
6.1 Pending Completion, the Vendor shall cause the Business to be conducted
only in the ordinary and regular course consistent with past practices
and shall not without the prior written consent of the Purchaser
purchase, sell, lease, encumber or otherwise dispose of any of the
Assets, except Stocks in the ordinary course of business and consistent
with past practice, or make any change in the Business operations or
the manner of conducting the Business.
6.2 The Vendor shall preserve the existence, rights and business
organisation of the Business, keep available to the Purchaser, the
Vendor's officers and employees engaged in the Business and use its
best efforts to preserve for the Purchaser the present relationships of
the Vendor in respect of the Business with its songwriters, artists,
suppliers and customers and any other person having business
relationships with the Vendor.
6.3 The Vendor shall:
6.3.1 ensure that, without the prior written consent of the Purchaser
no Contract or commitment is entered into in relation to the
Business which is likely to involve expenditure in excess of
L.5,000 or result in any material change in the
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operations or activities of the Business;
6.3.2 take all reasonable steps to preserve and protect the Assets
and notify the Purchaser in writing promptly of any adverse
change therein (whether or not covered by insurance or other
indemnity);
6.3.3 not knowingly do, allow or procure any act or omission which
would constitute a breach of any of the Warranties if they were
given at Completion or which would make any of the Warranties
inaccurate or misleading if they were so given; and
6.3.4 not take any other action which is inconsistent with provisions
of this Agreement or the consummation of the transaction
contemplated hereunder.
7. EMPLOYEES
7.1 The Vendor warrants that it has complied with the provisions of
Regulation 10 of the Regulations. The parties acknowledge and agree
that the sale of the Assets from the Vendor to the Purchaser is a
"relevant transfer" as that term is defined in the Regulations.
7.2 All amounts payable to or in relation to the Employees by the Vendor
including but not limited to wages and salaries in respect of the
period to the close of business on the Effective Date shall be
discharged by the Vendor and the Vendor shall indemnify the Purchaser
against any costs, claims, liabilities and expenses arising out of or
in connection with such amounts. All necessary apportionments shall be
made to give effect to this sub-clause.
7.3 If any contract of employment of a person who is not one of the
Employees has effect as if originally made between the Purchaser and
such person as a result of the provisions of Regulation 5 of the
Regulations, then the Vendor shall keep the Purchaser indemnified
against any costs, claims, liabilities and expenses arising out of or
in
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connection with the termination by the Purchaser of any such
employment.
7.4 Nothing in this clause shall have the effect of imposing on the Vendor
any liability in respect of:-
7.4.1 any claim by an Employee in respect of the termination of his
employment after the Effective Date;
7.4.2 any liability arising in connection with the employment of the
Employees after the Effective Date;
and the Purchaser shall indemnify the Vendor accordingly against any
such liabilities.
8. VALUE ADDED TAX
8.1 The Vendor and the Purchaser intend that article 5 of the Value Added
Tax (Special Provisions) Order 1992 shall apply to the sale of the
Assets under this Agreement, so that the sale is treated as neither a
supply of goods nor a supply of services.
8.2 If nevertheless any value added tax is chargeable on any supply the
Vendor under this Agreement, the Purchaser shall pay it the amount of
that tax (and indemnify it for any related interest and penalties) and
the Vendor shall issue to the Purchaser a proper tax invoice in respect
of that tax.
8.3 Without limiting sub-clause 8.2 and subject as otherwise herein
provided, value added tax (the "VAT ruling") shall be treated as
chargeable if HM Customs & Excise rules that it is chargeable. If they
have done so before Completion, the tax shall be payable by the
Purchaser on Completion. If they do so on or after Completion, the tax
shall be payable by the Purchaser within five days after the Vendor
gives the Purchaser notice of the VAT ruling and delivers to the
Purchaser a lawful invoice therefor. In the event of a VAT ruling the
Vendor shall immediately inform the Vendor thereof and shall be
entitled to require the Vendor to appeal against such ruling. Any such
appeal and all negotiations with respect thereto shall be handled by
such professional advisors
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as the Purchaser shall direct. In the event of such appeal the tax
subject to the ruling shall be paid at such time and in such manner as
the Vendor is legally obliged to make payment and other risk in
accordance with any compromise reached with H M Customs & Excise and
shall only otherwise be paid in accordance with the final outcome of
such appeal after due process has been exhausted and in accordance with
the statutory and other provisions governing the outcome and conduct of
such appeal. The Vendor undertakes to co-operate with the Purchaser in
the outcome of such appeal and to do and execute all such acts and
things and deeds as the Vendor may reasonably require with respect
hereto. The Purchaser agrees to keep the Vendor effectively indemnified
against all costs and expenses suffered or incurred by the Vendor as
the result of any such appeal.
8.4 If the Purchaser fails to pay the amount of tax on the due date under
sub-clause 8.3, it shall pay interest on that amount from the due date
until actual payment (excluding any period for which interest
indemnified under sub-clause 8.2 runs) at the rate of four per cent per
annum above the base rate for the time being of Royal Bank of Scotland
compounded monthly.
8.5 With a view to procuring that article 5 of the Value Added Tax (Special
Provisions) Order 1992 applies, the Purchaser shall ensure that the
Purchaser is registered for value added tax on or promptly following
Completion.
8.6 The Vendor and the Purchaser intend that s.33 of the Value Added Tax
Act 1983 shall apply to the sale of the Assets under this agreement and
accordingly:
(a) the Vendor shall on completion deliver to the Purchaser all
records referred to in s.33;
(b) the Vendor shall not make any request to HM Customs & Excise
for those records to be preserved by the Vendor rather than
the Purchaser;
(c) the Purchaser shall preserve those records for such period as
may be required
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by law, and shall do so in the United Kingdom;
(d) the Purchaser shall during that period or such longer period as
it retains the records permit the Vendor reasonable access to
them in the United Kingdom to inspect or make copies of them;
(e) the Vendor (or any person for the time being nominated under
this paragraph) may by written notice to the Purchaser nominate
another person for the purposes of paragraphs (d) in which the
reference in that paragraph to the Vendor shall be read as a
reference to the person nominated.
9. PENSIONS, LIFE ASSURANCE AND MEDICAL INSURANCE
9.1 The Vendor undertakes actively to co-operate with the Purchaser with a
view to the transfer to the Purchaser of the pension arrangements set
out in Part I of Schedule 18 and the policies of insurance set out in
Parts II and III of Schedule 18 or by substitution therefor at the cost
of the Purchaser of similar arrangements or policies of insurance
mutatis mutandis and shall do and execute all such acts, deeds and
things as the Purchaser may reasonably require for such purpose and to
maintain those pension arrangements and such insurance policies in
force for the benefit of the Employees (to the extent that they remain
employed by the Purchaser), pending such transfer or substitution for a
period of not less than three months following the Effective Date
provided that the Purchaser shall meet all payments due under such
policies on behalf of the Vendor and shall indemnify the Vendor against
all claims, liabilities and expenses incurred by it as a result of
complying with the terms of this clause.
10. TITLE AND APPORTIONMENTS
10.1 Subject to the provisions of clause 11 relating to the Lease, the
Vendor shall take all necessary steps and co-operate fully with the
Purchaser to ensure that it obtains the full benefit of the Business
and Assets and shall execute such documents and take such other steps
(or procure other necessary parties so to do) as are reasonably
necessary or appropriate for vesting in the Purchaser all its rights
and interests in the Assets.
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10.2 Subject to the provisions of clause 11 relating to the Lease, insofar
as the Assets comprise the benefit of contracts which cannot
effectively be assigned to the Purchaser without the consent of a third
party or except by an agreement of novation:
10.2.1 the Vendor and the Purchaser shall use all reasonable
endeavours to obtain consent or to procure a novation;
10.2.2 unless and until consent is obtained or the contracts are
novated the Purchaser shall, for its own benefit and to the
extent that the contracts permit, perform on behalf of the
Vendor (but at the Purchaser's expense) all the obligations of
the Vendor arising after the Effective Date (insofar as they
have been disclosed to the Purchaser) and indemnify the Vendor
against all costs, proceedings, claims, demands and expenses
which may be incurred by the Vendor as a result of any act,
neglect, default or omission on the part of the Purchaser to
perform or comply with any such obligation of the Vendor which
falls to be performed after the Effective Date.
11. TRANSFER OF THE LEASEHOLD PROPERTY
11.1 The sale of the Leasehold Property is for the unexpired residue of the
term of the Lease and is at the rent reserved and subject to the
covenants on the part of the tenant and the conditions which it
contains subject (save as herein expressly varied) to the National
Conditions of Sale (20th Edition).
11.2. A copy of the Lease has been supplied to the Purchaser, which shall be
deemed to purchase with full knowledge of its contents and shall raise
no requisition, enquiry or objection in relation to them.
11.3 The assignment of the Lease shall be in consideration of a covenant on
the part of the Purchaser, as from the Effective Date, to pay the rent
reserved by the Lease and to observe and perform the covenants on the
part of the tenant and the conditions contained in the Lease and to
indemnify the Vendor against all claims, demands, proceedings, damages,
costs and expenses arising out of or incidental to their breach,
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non-observance or non-performance.
11.4 The Vendor shall use all reasonable endeavours to obtain, and will pay
the incidental costs for, any requisite reversioner's licences and the
Purchaser shall co-operate in obtaining the licences by and shall
supply such information and references as may reasonably be required.
Where the reversioner would otherwise be entitled to withhold a
licence, the Purchaser will offer to covenant direct with the
reversioner, with effect from the Effective Date, to pay the rent and
observe and perform the covenants contained in the Lease.
11.5 The following provisions of this clause shall apply with respect to the
period from the Effective Date to the date of the assignment in
relation to the Leasehold Property where the reversioner's licence is
required (or to the date of withdrawal of the property from the sale
under sub-clause 11.7, as the case may be):
11.5.1 The Purchaser may enter the Leasehold Property and occupy it as
licensee of the Vendor and the Vendor shall hold it upon trust
for the Purchaser according to the terms of this agreement.
11.5.2 Notwithstanding the capacity of the Purchaser as licensee of
the Vendor with respect to the occupation of the relevant
Leasehold Property, the Purchaser may carry on business on it
for its own account.
11.5.3 The Purchaser shall be responsible for, and if necessary
reimburse on demand the Vendor against, all rates, water rates,
insurance premiums and other outgoings of an annual or
recurring nature (apportioned on a day to day basis) and also
for all gas and electricity, telephone, telex and facsimile and
other charges in respect the relevant Leasehold Property.
11.5.4 The Purchaser shall pay on the date hereof to the Vendor an
amount equal to the rent reserved by the Lease of the Leasehold
Property for the period from the date hereof until the rent
next falls due and thereafter as and when the rent
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falls due from the Vendor and shall act or conduct itself in
such a manner that the covenants (other than for the payment of
rent and against alienation without prior consent) on the part
of the tenant contained in the Lease are fully observed and
performed and shall indemnify the Vendor against the breach,
non-observance or non-performance of those covenants
(including the covenant against alienation without prior
consent).
11.5.5 The Purchaser shall bear all third party public liability and
employer's liability risks attached to the occupation and use
of the relevant Leasehold Property and shall indemnify the
Vendor against them.
11.5.6 The assignment of the Lease shall be completed within seven (7)
days after the reversioner's licence has been obtained.
11.5.7 If the Leasehold Property is withdrawn from the sale the
Purchaser shall promptly deliver up vacant possession of that
Property in the state of repair required by the lease to the
Vendor and will cease to be the Vendor's licensee and the
Vendor shall cease to hold the Leasehold Property on trust for
the Purchaser under the terms of this agreement.
11.6 If the Vendor is unable to obtain a reversioner's licence to assign
after all reasonable and proper efforts on its part so to do
(including, where necessary or appropriate, applying at the joint
expense of the parties to the Court for a declaration that the licence
is being unreasonably withheld) the Leasehold Property may at the
election of the Vendor be withdrawn from the sale without prejudice to
the rights of either party against the other in damages or for the
costs of or incidental to the Leasehold Property prior to withdrawal.
11.7 The withdrawal of the Leasehold Property from the sale under clause
11.6 shall have the effect of making the provisions of this agreement
with respect to the Leasehold Property severable from the remainder but
this agreement shall otherwise remain in full force and effect.
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11.8 General condition 1 to 5, 9, 10, 11(5), 19(1) to (4) and 20 to 22 of
the National Conditions of Sale (20th Edition) shall not apply.
12. WARRANTIES BY THE VENDOR
12.1 The Vendor warrants to the Purchaser that the warranties and
representations set out in Schedule 4 are true and accurate in all
respects;
12.2 All the provisions of this Agreement shall so far as they are capable
of being performed or observed continue in full force and effect
notwithstanding Completion except in respect of those matters then
already performed. The failure to exercise any right under this
Agreement or otherwise shall not constitute a waiver of that or any
other right.
12.3 All claims, liabilities and expenses for breach of any of the
provisions of this Agreement including any breach of Warranty which are
attributable to any breach or default by the Vendor or the Purchaser
under this Agreement shall be governed and limited by the provisions
contained in Article 11 of the Principal Asset Purchase Agreement which
shall apply mutatis mutandis to claims under this Agreement.
13. NAME
13.1 The Vendor shall as soon as possible change its corporate name to
Xxxxxx Media (UK) Limited.
14. FUTURE ACTIVITIES
14.1 The Vendor shall promptly refer to the Purchaser all enquiries relating
to the Business and assign to the Purchaser all orders relating to the
Business, including enquiries or orders for any stocks, spares, parts,
accessories and other equipment manufactured or sold in connection with
the Business, which the Vendor may in future receive.
15. AVAILABILITY OF INFORMATION
15.1 The Vendor shall preserve all information, records and other documents
relating to the
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Excluded Assets for a period of not less than three (3) years and upon
reasonable notice by the Purchaser make such information, records and
documents as relate to the Business available for inspection by the
Purchaser or its authorised agents at reasonable times during normal
business hours.
15.2 The Vendor shall make available to the Purchaser free of charge any
information remaining in its possession relating to the Business which
the Purchaser may reasonably require relating to the Business and the
Assets. The Purchaser shall make available to the Vendor free of charge
any information and records which the Vendor may reasonably require
relating to the continuing business of the Vendor.
16. ANNOUNCEMENTS
16.1 No announcement of any kind shall be made in respect of the subject
matter of this agreement except as specifically agreed between the
Vendor and the Purchaser. Any announcement by either party shall in any
event be issued only after prior consultation with the other.
17. COSTS
17.1 All expenses incurred by or on behalf of the parties, including all
fees of agents, solicitors, accountants, and actuaries employed by
either of the parties in connection with the negotiation, preparation
and execution of this agreement shall be borne solely by the party
which incurred them.
18. NOTICES
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if delivered or mailed (registered or certified mail, postage
prepaid, return receipt requested) or if sent by telecopy as follows:-
If to the Vendor:
Xxxxxx Xxxxxx Inc.
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00
Xxxxxx Xxxxx at Xxx Xxxx Xxxx
X X Xxx 00000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxx X Xxxxxx, Executive Vice President and
Chief Financial Officer
Telephone Number : (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Inc.
Xxxxxx Place at Xxx Xxxx Xxxx
X X Xxx 00000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxxx X Xxxxxx Esq
Telephone Number : (000) 000-0000
and
Bird & Bird
00 Xxxxxx Xxxx
Xxxxxx XX0X 0XX
Attn: Xxxxxxxxxxx Xxxxxxx Esq
Telephone Number : 0000 000 0000
If to the Purchaser:
Xxxxxxx Entertainment Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: X X Xxxxxxxxx, Xx Esq
Telephone Number : (000) 000-0000
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with a copy to:
Xxxxxxxxx Xxxxx
0 Xxx Xxxxxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Attn: Xxxxx Xxxx Esq
Telephone Number : 0000 000 0000
or to such other address as any party may have furnished to the others
in writing in accordance herewith, except that notices of change of
address shall only be effective upon receipt.
19. ENTIRE AGREEMENT AND SCHEDULES
19.1 This Agreement and the Principal Asset Purchase Agreement and the
Schedules shall constitute the entire agreement and understanding
between the parties with respect to the sale and purchase of the
Business and the Assets. Neither party hereto has entered into this
Agreement in reliance upon any representation warranty or undertaking
of the other party which is not set out and referred to in this
Agreement. No variation of this Agreement shall be effective unless it
is in writing and signed by (or by some person duly authorised by) each
of the parties.
19.2 All the Schedules form part of this agreement.
19.3 This agreement shall be binding upon each party's successors and
permitted assigns.
19.4 Neither party may assign any of its rights under this agreement without
the prior consent of the other.
20. INVALIDITY
20.1 If any term or provision in this agreement shall in whole or in part be
held to any extent to be illegal or unenforceable under any enactment
or rule of law, that term or provision or part shall to that extent be
deemed not to form part of this agreement and
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the enforceability of the remainder of this agreement shall
not be affected.
21. PROPER LAW
21.1 The construction, validity and performance of this agreement shall be
governed by the laws of England.
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Duly signed by the parties on the date stated at the beginning of this
agreement:
SIGNED BY /s/ Xxx X. Xxxxxx )
)
For and on behalf of )
XXXXXX WORD LIMITED )
in the presence of: -
Witness signature /s/ Xxxx Xxxxxx
-----------------------------------
Name Xxxx Xxxxxx
-----------------------------------
Address Xxxxxx Xxxxxx, Inc. - Nashville
-----------------------------------
Occupation Attorney
-----------------------------------
SIGNED BY /s/ Xxxxx X. London )
)
For and on behalf of )
WORD ENTERTAINMENT LIMITED )
in the presence of: -
Witness signature /s/ Xxxxx Xxxxxxxxx, Xx.
-----------------------------------
Name Xxxxx Xxxxxxxxx, Xx.
-----------------------------------
Address c/o Gaylord Entertainment Company
-----------------------------------
Occupation Secretary
-----------------------------------
