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Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXX XXXXXX, INC., A TENNESSEE CORPORATION,
WORD, INCORPORATED, A DELAWARE CORPORATION
WORD DIRECT PARTNERS, L.P., A TEXAS LIMITED PARTNERSHIP
AND
XXXXXXX ENTERTAINMENT COMPANY, A DELAWARE CORPORATION
DATED AS OF NOVEMBER 21, 1996
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TABLE OF CONTENTS
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ARTICLE HEADING PAGE
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ARTICLE 1.
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2.
PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1. Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2. Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3.
CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2. Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3. Pre-Closing Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4. Preliminary Post-Closing Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5. Collection of Commingled Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6. Definitive Post-Closing Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4.
CLOSING; OBLIGATIONS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2. Obligations of the Parties at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES BY SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2. Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . 16
5.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.6. Records and Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.7. Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.8. Title to Assets; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.11. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.12. Orders, Decrees, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.13. Compliance With Law; Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.14. Other Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.15. Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.16. Fixed Assets; Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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5.17. Supplemental Schedule of Purchase and Sales Commitments and Orders . . . . . . . . . . . . 22
5.18. Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.19. Actions Not in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.20. No Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.21. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.22. Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.23. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.24. Secrecy and Noncompetition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.25. Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.26. No Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.27. Sellers Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES BY BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4. Sufficient Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5. Certain Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.6. Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 7.
COVENANTS AND AGREEMENTS OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1. Conduct of Business Pending the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3. Government Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4. Bulk Sales Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.5. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.6. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.7. Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.8. Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.9. Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.10. Supplemental Schedule of Compositions . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8.
COVENANTS AND AGREEMENTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.1. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2. Books and Records; Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.3. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4. Buyer's Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 9.
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CONDITIONS TO BUYER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2. Performance by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.3. Certificates of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.4. Opinion of Counsel for Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.7. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.8. Assignments and Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.9. Subsidiary Asset Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 10.
CONDITIONS TO SELLERS' OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.2. Performance by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.3. Certificates of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.4. Opinion of Counsel for Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.5. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7. License Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.8. Subsidiary Asset Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 11.
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.1. Indemnification by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.2. Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.3. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.4. Limitations; Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 12.
TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.1. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 13.
NONCOMPETE AND CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.2. Noncompete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.3. Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.4. Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.5. Geographic Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 14.
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MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.1. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.3. Assignability; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.4. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.5. Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.6. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.10. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.11. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.12. Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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SCHEDULES
1.1(a) Material Acquisition Agreements
1.1(d) Material Artist Agreements
1.1(g) Material A/V Works
1.1(h) Material A/V Work Agreements
1.1(j) Sellers' Catalogue
1.1(o) Compositions
1.1(r) Material Distributed Label Agreements
1.1(s) Material Distribution Agreements
1.1(v) Excluded Music Business Assets
1.1(aj) Masters
1.1(az) Trademarks
1.1(ba) Material Unison Music Agreements
1.1(bb) Unrecouped Advances
1.1(bc) Material Writer Agreements
2.2 Audit Claims
3.3(a) Accounting Principles
5.4 Consents (mortgages, instruments, etc.)
5.5 Interim Statement of Assets and Liabilities
5.7 Undisclosed Liabilities
5.8 Liens
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5.9(f) I/P Contracts not in full force and effect
5.11 Litigation
5.14 Material Other Contracts
5.16(a) Fixed Assets and Motor Vehicle Leases
5.16(b) Leased Real Estate
5.17 Purchase Commitments (to be delivered at closing)
5.18 Labor Agreements
5.20 Changes Since Balance Sheet Date
5.21 Employee Compensation
5.24 Secrecy and NonCompetition Agreements
7.5(c) Trademarks to be licensed to Seller under License Agreement
7.9 Assumed Contract Consents
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 21st day of November, 1996 between 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")
(Xxxxxx, Word and Word Direct each are sometimes defined herein as a "Seller"
and collectively as the "Sellers"), and XXXXXXX ENTERTAINMENT COMPANY, a
Delaware corporation ("Buyer").
RECITALS
WHEREAS, certain of the assets of Xxxxxx, Word and Word Direct, wholly
owned direct and indirect subsidiaries of Xxxxxx, and certain of the assets of
Word Communications, Ltd., a Canadian corporation ("Word Canada"), and Xxxxxx
Word, Ltd., a United Kingdom corporation ("Word U.K."; together with Word
Canada, the "Foreign Subsidiaries"), wholly owned subsidiaries of Word,
together comprise the music division of Xxxxxx; and
WHEREAS, Sellers desire to sell to Buyer at the Closing (as
hereinafter defined) and Buyer desires to purchase from Sellers substantially
all of the assets and to assume certain of the liabilities associated with the
Music Business (as hereinafter defined), as more fully described herein, upon
and subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the premises and of the mutual
representations, warranties and covenants which are made and to be performed by
the respective parties, it is agreed as follows:
ARTICLE 1.
CERTAIN DEFINITIONS
1.1. For purposes of this Agreement, certain defined terms
shall have the respective meanings set forth below:
(a) "Acquisition Agreements" shall mean and include
individually and collectively each and every contract (excluding
Artist Agreements, Writer Agreements,
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Distributed Label Agreements, A/V Work Agreements, the Unison Music
Agreements and Producer Agreements) pursuant to which Sellers own an
interest in the I/P Assets, including, without limitation, catalogue
purchase, master license, co-publishing, royalty participation,
administration, subpublishing and collection agreements, and any and
all rights and benefits thereunder, and assignments thereof, including
any Unrecouped Advances, including, without limitation, the Material
Acquisition Agreements described in Schedule 1.1(a).
(b) "Actions" means any claims, actions, suits,
proceedings and investigations, whether at law, in equity or before
any court, arbitrator, arbitration panel or Governmental Authority.
(c) "Affiliate" of a party means any Person other
than a natural person which, directly or indirectly, controls, is
controlled by or is under common control with such party, including
with respect to Sellers, without limitation, the Subsidiaries.
(d) "Artist Agreements" shall mean all agreements,
including all amendments thereto, required for exploitation of the
Masters or the A/V Works (other than artists who performed solely as
"sidemen" on such Masters for whose performance Seller has, and at the
Closing Date shall have, all necessary rights), including, without
limitation, those Material Artist Agreements described in Schedule
1.1(d) hereto.
(e) "Artwork" shall mean the photographs, negatives,
photographic plates, covers, liners, textual, advertising, point of
purchase and promotional materials related to the I/P Assets, and all
rights to make commercial use thereof as used in the Music Business
prior to the date hereof.
(f) "Assets" means all assets, properties, rights,
and businesses of every kind and description wherever located, whether
tangible or intangible, real, personal or mixed, owned in whole or in
part by Sellers on the date hereof, or at Closing, as the case may be,
or in which Sellers have any interest on the date hereof, or at
Closing, as the case may be, and directly related to the Music
Business, including, without limitation, the I/P Assets; the I/P
Contracts; Sellers' interest in the Leased Real Estate; the Operating
Information; the Books and Records as defined in Section 8.2; the
Other Contracts; the Receivables (including all rights to returned
products in respect thereof); the Song Files; the Unrecouped Advances;
the Inventory; Direct Marketing Assets; Home Page Assets; all prepaid
rent, prepaid supplies, advances and other prepaid expenses (other
than prepaid insurance) and deposits and deferred charges attributable
to any of the assets being assigned to Buyer hereunder; machinery,
fixtures, equipment, motor vehicles, computers, terminals, monitors,
non-mainframe hardware and all claims and causes of action relating to
any of the foregoing. Without limiting the foregoing the "Assets"
shall include (i) all assets, property, rights and business of Sellers
shown or reflected (or which should have been shown or reflected) on
the Financial Statements, (ii) all assets, property, rights and
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business directly relating to the Music Business acquired by Sellers
on or after the date hereof and prior to the Closing Date and, (iii)
to the extent of Sellers' interest therein, all assets, properties,
rights and business of Sellers set forth on any Schedule or Exhibit to
this Agreement as relating to the Music Business, except in each case
for (a) Inventory sold or otherwise disposed of and Receivables
collected prior to the Closing Date in the ordinary course of business
or otherwise in accordance with this Agreement and (b) the Excluded
Assets. To the extent that any assets, property, rights or business
of Sellers are intended to be transferred to Buyer pursuant to the
general language of this Agreement but do not appear on the applicable
Schedules or Exhibits to this Agreement, the general language shall
govern and such assets, property, rights and business shall
nonetheless be deemed transferred to Buyer.
(g) "A/V Works" means works owned in whole or in part
by any Seller and directly related to the Music 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 Material A/V Works designated in Schedule 1.1(g).
(h) "A/V Work Agreements" means all agreements
related to the production, manufacture and distribution or other
exploitation of A/V Works, including, without limitation, those
Material A/V Work Agreements designated in Schedule 1.1(h).
(i) "Balance Sheet Date" means June 30, 1996.
(j) "Catalogue" means Sellers' catalogue of current
Compositions, Records and related products attached hereto as Schedule
1.1(j).
(k) "Children's Products" means materials including,
but not limited to, literary works, musical works and/or sound
recordings containing words, whether written or spoken, pictures,
graphics, computer-generated images, sounds and/or music, fixed in any
tangible medium of expression from which they can be perceived,
reproduced or otherwise communicated, either directly or with the aid
of a machine, primarily intended to be marketed, sold and/or
distributed for use by persons under eighteen years of age.
(l) "Closing Statement" means, as the context
requires, the Estimated Closing Statement (as defined in Section 3.3),
the Preliminary Post-Closing Statement (as defined in Section 3.4) or
the Definitive Post-Closing Statement (as defined in Section 3.6).
(m) "Code" means the Internal Revenue Code of 1986,
as amended.
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(n) "Commingled Receivables" means those accounts
receivable of Sellers in respect of the Music Business which are
commingled with accounts receivable of Sellers in respect of
operations other than the Music Business calculated on a basis
consistent with the basis upon which such receivables were calculated
in the Interim Statement of Assets and Liabilities.
(o) "Compositions" means all right, title and
interest in all musical compositions owned in whole or in part by
Sellers or in which Sellers own an interest and directly related to
the Music 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 and demands
accrued or to accrue with respect thereto, and the copyrights and the
future contingent renewal and extended terms of copyrights therein and
thereto, and all rights to secure renewals and extensions of
copyright, throughout the world, including, without limitation those
musical compositions set forth on Schedule 1.1(o) attached hereto and
incorporated by this reference.
(p) "Contracts" means the I/P Contracts and the Other
Contracts.
(q) "Direct Marketing Assets" means (i) all customer
lists owned by any Seller or an Affiliate thereof and used at any time
within the last five years to solicit the sale of any finished goods
Inventory, (ii) Sellers' catalogues and other mail pieces used for
mail and telemarketing of any finished goods Inventory, (iii) Sellers'
"800" toll-free number used in direct marketing and telemarketing in
connection with the Music Business and (iv) all other assets used by
Sellers in the direct marketing and telemarketing of finished goods
Inventory.
(r) "Distributed Label Agreements" means all
contracts, including all amendments thereto, directly related to the
Music Business, pursuant to which Seller 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 Material Distributed Label
Agreements set forth on Schedule 1.1(r).
(s) "Distribution Agreements" shall mean all
contracts, including all amendments thereto, granting others the right
to use or exploit in any way the Masters, A/V Works, Printed Works,
Trademarks, or Artwork, including, without limitation, granting others
the right to manufacture, distribute and sell Records manufactured
from the Masters, including, without limitation, those Material
Distribution Agreements set forth on Schedule 1.1(s).
(t) "Environmental Laws" means all federal, state,
local and foreign environmental, health and safety laws, codes and
ordinances and all rules and regulations
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promulgated thereunder, including, without limitation laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without
limitation, a, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of pollutants, contaminants, chemicals or industrial, solid, toxic or
hazardous substances or wastes. As used in this Agreement, the term
"hazardous substances or wastes" includes, without limitation, (i) all
substances which are designated pursuant to Section 311(b)(2)(A) of the
Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C Section 1251
et seq.; (ii) any element, compound, mixture, solution, or substance
which is designated pursuant to Section 102 of the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. Section 9601 et seq.; (iii) any hazardous waste having the
characteristics which are identified under or listed pursuant to
Section 3001 of the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et seq.; (iv) any toxic pollutant listed under
Section 307(a) of the FWPCA; (v) any hazardous air pollutant which is
listed under Section 112 of the Clean Air Act, 42 U.S.C. Section 7401
et seq.; (vi) any imminently hazardous chemical substance or mixture
with respect to which action has been taken pursuant to Section 7 of
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; and
(vii) waste oil.
(u) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder.
(v) "Excluded Assets" means (i) any and all assets,
properties, rights and business of every kind and description,
wherever located, whether tangible or intangible, personal or mixed,
owned in whole or in part by any Seller or in which any Seller has any
interest and relating primarily to the operation of any business of
Sellers other than the Music Business; (ii) the corporate seal,
articles of incorporation, minute books and stock books of Sellers and
the Subsidiaries; (iii) the rights of Sellers under this Agreement;
(iv) proceeds from the Actions listed on Schedule 5.11 attached
hereto; (v) stock and equity interests in the Subsidiaries and any
other Affiliates; (vi) any right, title or interest in or to any of
the rights, properties and assets of Sellers relating to the Music
Business which are listed on Schedule 1.1(v); (vii) all of Sellers'
rights in and to the trademark logos and designs set forth on Schedule
1.1(v); (viii) the Commingled Receivables; and (ix) real property
owned by Sellers wherever located.
(w) "Foreign Assets" means those Assets in which Word
Canada or Word U.K. have an interest which directly relate to the
Music Business, to the extent of any such interest.
(x) "Foreign Liabilities" means those Assumed
Liabilities of Word Canada or Word U.K. which directly relate to the
Music Business.
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(y) "GAAP" means generally accepted United States
accounting principles applied on a basis consistent with the basis
upon which the Financial Statements were prepared.
(z) "Governmental Authority" means any government or
any agency, instrumentality, department, commission, public authority,
court, tribunal or board of any government, whether foreign or
domestic and whether national, federal, state, provincial or local.
(aa) "Home Page Assets" means all of Sellers' "home
pages" or "web sites" identified as "xxx.xxxxxxxxxxx.xxx" web site on
the Internet and all related tangible and intangible property
(including, without limitation, software programs and Internet
addresses).
(bb) "Inventory" means all Sellers' inventories
directly related to the Music Business, including supplies, raw
materials, work-in-progress, and finished goods, including, without
limitation, all Records, Print Music and related packaging.
(cc) "I/P Assets" means the Masters, the Compositions,
the Print Music, the Artwork, the A/V Works and the Trademarks.
(dd) "I/P Contracts" means the Acquisition Agreements,
the Artist Agreements, the Producer Agreements, the Writer Agreements,
the A/V Work Agreements, the Licenses, the Distribution Agreements,
the Distributed Label Agreements, the Unison Music Agreements, all
amendments thereto and all other contracts directly related to the
use, exploitation or ownership of the I/P Assets, or Seller's or
Buyer's ability to collect any income derived therefrom anywhere in
the world including: (i) any exclusive contracts (other than
Acquisition Agreements); (ii) any subpublishing agreements; (iii) any
co-publishing, administration, collection or participation agreement;
(iv) any print music agreement; (v) any performing rights society
agreements; and (vi) any blanket licenses.
(ee) "Laws" mean laws, rules, regulations, codes,
orders, ordinances, judgments, injunctions, decrees and policies.
(ff) "Leased Real Estate" means the real estate listed
on Schedule 5.16(b) and all fixed assets, including fixtures,
furniture, furnishings, office equipment and other tangible property
attached or relating thereto.
(gg) "Liabilities" means debts, liabilities,
obligations, royalty payments, duties and responsibilities of any kind
and description, whether absolute or contingent, monetary or
nonmonetary, direct or indirect, known or unknown or matured or
unmatured, or of any other nature.
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(hh) "Licenses" means and include individually and
collectively each and every license, subpublishing agreement,
administration agreement, participation, licensing or collection
agreement, mechanical or public performance society agreement directly
related to the Music Business and all other contracts and agreements
relating to the use or exploitation of the Compositions, the Print
Music, the Masters or the A/V Works and any and all rights and
benefits thereunder.
(ii) "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.
(jj) "Masters" shall mean all original media directly
related to the Music Business in which sounds of a performance of an
artist are fixed by any method now known and from which songs can be
perceived, reproduced or otherwise communicated, either directly or
with aid of a machine, device or process, as well as outtakes, demos,
alternative versions of same, and alternative mixes, together with all
intangible and/or incorporeal rights attached thereto or in the sound
recording, including, without limitation, to the extent same are
extant, all copyrights, renewal copyrights, copyright registrations
and copyright applications and similar rights, including, without
limitation, the sound recordings specified on Schedule 1.1(aj)
attached hereto and incorporated by this reference.
(kk) "Material" shall mean, when used to modify the
word "Contracts," "A/V Works" or a particular type of Contract, (vii)
in the case of the Artist Agreements, the Producer Agreements, the
Writer Agreements, the A/V Work Agreements, the A/V Works, the
Licenses, the Unison Music Agreements or any I/P Contracts, each such
agreement with each recording artist, producer, songwriter, licensor
or other contributor who has been paid by Sellers net royalties and/or
advances exceeding $50,000 in the aggregate during the current
calendar year or any one of the preceding two calendar years relating
to the creation, production, distribution or the exploitation of
musical compositions or sound recordings; (viii) in the case of the
Distributed Label Agreements, each agreement to distribute the
products of any entity which has been paid by Sellers during the
current calendar year or any one of the two preceding calendar years
an amount in excess of $50,000; (ix) in the case of the Distribution
Agreements, each agreement with any entity with which Sellers
contracted to distribute Sellers' products and which has paid to
Sellers during the current calendar year or any one of the preceding
two calendar years an amount in excess of $50,000; (x) any Other
Contract pursuant to which Sellers are required to pay, have paid, or
entitled to receive or have received an amount in excess of $50,000
during the current calendar year or any one of the two preceding
calendar years of such Other Contract; and (xi) any Acquisition
Agreement by Sellers of any rights in any I/P Asset pursuant to which
Sellers, individually or collectively, have received royalties,
advances and/or other payments exceeding $50,000 during the current
calendar year or in any one of the preceding two calendar years.
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(ll) "Music Business" means the music division of
Sellers, including 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.
(mm) "Operating Information" means all operating data
and records of Sellers directly related to the Music Business,
including books, records, sales and sales promotional data,
advertising materials, customer lists, including all consumer direct
marketing and record club lists and information, credit information,
cost and pricing information, supplier lists, business plans,
reference catalogs, and all data in computer readable form related to
any of the foregoing items.
(nn) "Other Contracts" means all of Sellers' rights in
and under leases, contracts, know-how licenses, purchase and sale
orders, and other agreements, commitments, arrangements and
understandings directly relating to the Music Business.
(oo) "Person" means any natural person, corporation,
limited liability company, business trust, joint venture, association,
company, firm, partnership or other entity or Governmental Authority.
(pp) "Print Music" means any Sellers' interest in and
to all print music works directly related to the Music Business,
reproducing the music and/or lyrics of one or more musical works of
authorship, all artwork related thereto and all photographic or
engraving plates embodying all or part thereof.
(qq) "Producer Agreements" means any agreement with
any individual producer of any of the Masters or A/V Works.
(rr) "Receivables" means all accounts and notes
receivable and the right to receive royalties and other income payable
to either Seller in connection with the Music Business other than
Commingled Receivables.
(ss) "Records" shall mean any reproduction of a
Master, which reproduction is in any form now known and in which
reproductions of sounds, with or without visual images, are fixed by
any method now known, and from which sounds, with or without visual
images, can be perceived, reproduced 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, including, but not limited to, disc records, soundtracks, film,
tape, tape cartridges and cassette tape, digital audio tape, compact
disc and all "sight and sound devices" including "audiovisual" devices
(as such term is used in the 1976 Copyright Act, as amended).
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(tt) "Returns" mean 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.
(uu) "Royalties" shall mean all royalties, shares of
profits and/or other consideration due and payable to writers,
co-publishers, artists, producers or any other royalty participants in
connection with any I/P Asset.
(vv) "Seller" when used herein shall be deemed to
include Word Canada and Word U.K., except where such reference would
be inappropriate.
(ww) "Song Files" shall mean the copyright assignments
and documents, royalty records, correspondence, books, files and
records, original documents, and the like relating to the Compositions
necessary to administer the Compositions and to collect the monies
earned thereby throughout the world. Song Files shall also mean and
include, all printed editions, folios, sheet music, or other printed
material containing the Compositions and the photographic or engraving
plates, if any, from which they are derived, and any publicity
materials relating to the Compositions or the songwriters including,
without limitation, photographs, posters, biographical materials and
awards as well as all demonstration recordings, phonograph records and
other embodiments of the Compositions.
(xx) "Subsidiaries" means Word Canada, Word U.K., Word
Direct Marketing Services, Inc., Word Direct, Inc., and Word Direct.
(yy) "Taxes" mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross
receipts, excise, real and personal property, sales, transfer,
withholding, license, payroll and franchise taxes, imposed by any
Governmental Authority and shall include any interest, penalties or
additions to tax attributable to any of the foregoing.
(zz) "Trademarks" shall mean all trademarks, trademark
registrations, if any, trademark registration applications, if any,
tradenames and logos which are owned, have been used, or are used, by
or on behalf of Seller in connection with the Music Business, together
with the goodwill associated therewith, including, without limitation,
the trademarks set forth on Schedule 1.1(az), but excluding those
trademarks set forth on Schedule 1.1(v) to the extent such trademarks
are Excluded Assets.
(aaa) "Unison Music Agreements" means all licenses and
other agreements related to the component of the Music Business owned
by Xxxxxx and conducted as "Unison Music" ("Unison") consisting of the
production and distribution and other exploitation of budget-priced
Records through mass market retail outlets, including, without
limitation the Material Unison Music Agreements designated in Schedule
1.1(ba).
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(bbb) "Unrecouped Advances" mean advances and other
recoupable costs and expenses relating to the Assets paid by Seller to
any third Person or incurred by Seller on behalf of a third Person
which are unrecouped as of the Balance Sheet Date, substantially all
of which are set forth on Schedule 1.1(bb).
(ccc) "Writer Agreements" shall mean and include
individually and collectively each of the songwriter, co-publishing,
administration and other agreements between any Seller on the one hand
and any songwriter or arranger on the other and directly related to
the Music Business, including, without limitation, the Material Writer
Agreements identified on Schedule 1.1(bc).
ARTICLE 2.
PURCHASE AND SALE OF ASSETS
2.1. Purchase and Sale of Assets. Subject to the terms and
conditions of this Agreement, at the Closing, Sellers shall sell, transfer,
convey, assign and deliver the Assets to Buyer and Buyer shall purchase,
acquire and accept the Assets from Sellers; provided that the Foreign Assets
shall be purchased, acquired and accepted from Sellers pursuant to the
Subsidiary Asset Purchase Agreements (as defined in Section 7.5(b)).
2.2. Assumption of Liabilities. As additional consideration
hereunder, from and after the Closing Date, Buyer shall assume and discharge
the Liabilities of Sellers (xii) existing on and arising subsequent to the
Closing Date under the Contracts and under all purchase and sales commitments
and orders existing on the Closing Date (the "Assumed Contracts"), (xiii) all
accounts payable, accrued expenses and other Liabilities reflected on the
Closing Statement, and (xiv) pending claims for audit of accountings and
payments owed by Seller to parties to the Contracts in respect of the Music
Business set forth on Schedule 2.2 and any other such claims made after the
date of this Agreement to the extent such claims relate to periods prior to the
Closing Date (collectively, the "Audit Claims") (the Liabilities referred to in
clauses (i), (ii) and (iii) of this sentence being hereinafter collectively
called the "Assumed Liabilities"). Except as provided in the preceding
sentence, and notwithstanding anything else to the contrary contained herein,
Buyer is not assuming and shall not be liable for any Liabilities of Sellers
other than the Assumed Liabilities, including, without limitation, any
Liabilities (a) for indebtedness for borrowed money or overdrafts; (b) relating
to or in any way arising out of the Excluded Assets; (c) for fees and
disbursements referred to in Section 14.2 hereof; (d) to any shareholder or
Affiliate of Sellers or to any current or former employee, officer or director
of Sellers, including, without limitation, any severance pay, post retirement
medical benefits, COBRA benefits or other pension compensation or benefits
whether by operation of Law or otherwise, other than with respect to employees
of the Music Business actually engaged by Buyer after the Closing as expressly
provided in Section 8.3, and only in respect of Liabilities to such employees
arising after the Closing Date or accrued on the Closing Statement; (e)
relating to the execution, delivery and consummation of this Agreement by the
Sellers and the transactions contemplated hereby,
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including, without limitation, any and all Taxes incurred as a result of the
sale contemplated by this Agreement; (f) for any Taxes accrued or incurred
prior to the Closing Date or relating to any period (or portion of a period)
prior thereto; (g) relating to or arising out of any environmental matter,
including, without limitation, any violation of any Environmental Law or any
other Law relating to health and safety of the public or the employees of any
Seller; (h) relating to vacations, sick days and similar benefits accrued prior
to the Closing Date in respect of employees of the Music Business who become
employees of Buyer or its Affiliate after the Closing and not reflected on the
Closing Statement; and (i) of Sellers arising under or pursuant to this
Agreement. Buyer shall not assume or be bound by any Liabilities of Sellers,
except as expressly assumed by it pursuant to this Agreement.
ARTICLE 3.
CONSIDERATION
3.1. Purchase Price. Subject to adjustment as hereinafter
provided in this Article 3, the purchase price for the Assets shall be
$110,000,000 plus the Assumed Liabilities (such price, as adjusted pursuant to
this Article 3 being herein referred to as the "Purchase Price").
3.2. Payment of Purchase Price. At the Closing, Buyer shall
deliver to Sellers a wire transfer of Federal or other immediately available
funds for the cash portion of the Purchase Price to such bank account(s) as
Sellers shall designate.
3.3. Pre-Closing Adjustment.
(a) Three business days prior to the Closing Date,
Sellers shall prepare and furnish to Buyer an estimated balance sheet
reflecting the Assets, Commingled Receivables and Assumed Liabilities as of the
Closing Date (the "Estimated Closing Statement"), which shall be prepared in
accordance with GAAP. The GAAP principles used in preparation of the Estimated
Closing Statement (including those with respect to revenue recognition,
reserves for returns and doubtful Receivables, valuation of Inventories, and
Royalty and production advances) are as set forth on Schedule 3.3(a). Based on
the Estimated Closing Statement, the chief accounting officer of Xxxxxx shall
provide Buyer with a certificate setting forth the Estimated Closing Book
Value. For the purposes of this Section 3.3, the "Estimated Closing Book
Value" means the Assets plus the Commingled Receivables less the Assumed
Liabilities reflected on the Estimated Closing Statement and the "June 30 Book
Value" means the Assets plus the Commingled Receivables less the Liabilities of
the Music Business reflected in the Interim Statement of Assets and Liabilities
(as defined in Section 5.5).
(b) On the Closing Date, the Purchase Price shall be
reduced on a dollar-for-dollar basis to the extent the Estimated Closing Book
Value is less than the June 30 Book Value, or the Purchase Price shall be
increased on a dollar-for-dollar basis to the extent that the Estimated Closing
Book Value is more than the June 30 Book Value, as the case may be.
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3.4. Preliminary Post-Closing Adjustment.
(a) Immediately following the Closing,
representatives of Buyer and Sellers shall conduct a physical count of the
Inventory. Buyer and Sellers shall use such physical inventory to prepare a
report on Inventory as of the Closing (the "Inventory Report"), which report
shall reflect the value of Inventory, net of applicable obsolescence reserves
and other adjustments required, in accordance with GAAP (including the
accounting principles set forth on Schedule 3.3(a) hereto) (the "Inventory
Balance"). The Inventory Report shall be finalized not later than twenty-five
days after the Closing. The dollar amount assigned to Inventory on the
Preliminary Post-Closing Statement (as hereinafter defined) shall be the amount
set forth in the Inventory Report.
(b) Not later than thirty days following the Closing,
Sellers shall deliver a definitive balance sheet (the "Preliminary Post-Closing
Statement") reflecting the Assets, Commingled Receivables and Assumed
Liabilities as of the Closing Date and prepared in the same manner as the
Estimated Closing Statement but containing such adjustments thereto as Sellers
consider required for such statement to fairly present the Assets and Assumed
Liabilities as of the Closing in accordance with Section 3.3(a).
(c) Within three business days following completion
of the Preliminary Post-Closing Statement, the chief accounting officer of
Xxxxxx shall provide Buyer with a certificate setting forth the Assets plus
Commingled Receivables less the Assumed Liabilities reflected on the
Preliminary Post-Closing Statement (the "Preliminary Post- Closing Book
Value"). On the date of delivery of such certificate, the Purchase Price shall
be reduced on a dollar-for-dollar basis to the extent that the Preliminary
Post-Closing Book Value is exceeded by the Estimated Closing Book Value (and,
in such event, Sellers shall make a payment to the Buyer in the amount of such
excess by wire transfer of immediately available funds to an account designated
by Buyer), or the Purchase Price shall be increased on a dollar-for dollar
basis to the extent that the Preliminary Post-Closing Book Value exceeds the
Estimated Closing Book Value (and, in such event, Buyer shall make a payment to
Sellers in the amount of such excess by wire transfer of immediately available
funds to an account designated by Sellers).
3.5. Collection of Commingled Receivables.
(a) Contemporaneous with the determination of the
Preliminary Post-Closing Book Value, Sellers shall prepare and deliver to Buyer
a statement (which statement shall have been prepared on a basis consistent
with that of the Interim Statement of Assets and Liabilities) setting forth the
dollar amount of the Commingled Receivables (the "Statement of Commingled
Receivables").
(b) On or before the tenth day of each of the first
four full months following delivery of the Statement of Commingled Receivables,
Sellers shall pay to Buyer by wire transfer of immediately available funds an
amount equal to one-fourth of the Commingled Receivables less
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(i) in the case of the first such payment, the amount of actual returns of
products credited to customer's accounts applicable to the Commingled
Receivables between the Closing Date and the end of the calendar month
immediately preceding such payment and (ii) in the case of the second, third
and fourth such payments, the amount of actual returns of products credited to
customer's accounts applicable to the Commingled Receivables during the
calendar month immediately preceding such payment until 120 days of returns
credits have been issued.
3.6. Definitive Post-Closing Adjustment.
(a) Not later than 150 days following the Closing
Date, Buyer shall deliver a definitive balance sheet (the "Definitive
Post-Closing Statement") reflecting the Assets, Commingled Receivables and
Assumed Liabilities as of the Closing Date and prepared in the same manner as
the Estimated Closing Statement; provided that all credits issued for returns
of products during the first 120 days after the Closing shall be the reserve
for returns on the Definitive Post-Closing Statement less applicable Inventory
costs and Royalty costs determined in the same manner as in the Preliminary
Post-Closing Statement.
(b) Unless Sellers deliver to Buyer, within fifteen
days of completion and delivery of the Definitive Post-Closing Statement, a
letter specifying in reasonable detail any objections to any item set forth in
the Definitive Post-Closing Statement (a "Dispute Letter"), the Definitive
Post-Closing Statement shall be deemed conclusive and binding on the parties
hereto. If Sellers deliver to Buyer a Dispute Letter setting forth any such
objections within such fifteen day period, Buyer and Sellers shall promptly
attempt to resolve the matters set forth in such Dispute Letter. If Buyer and
Sellers fail to reach an agreement with respect to such matters on or before
the fifteenth day after receipt by Buyer of a Dispute Letter, then as to any
matter(s) in dispute, Buyer or Sellers may submit any matter(s) in dispute set
forth in the Dispute Letter to a mutually acceptable certified public
accountant at a "Big 6" accounting firm located in Nashville, Tennessee for
resolution. Such accountant shall review such materials and conduct such
procedures as shall be necessary to make a determination of such matters as to
which disagreement remains and shall deliver his written opinion thereon to
Buyer and Sellers within thirty days of submission of the dispute to him, which
determination, or any determination of such matters mutually agreed to by Buyer
and Sellers, shall be conclusive and binding on Buyer and Sellers (the "Final
Determination"). In connection therewith, each party will furnish to the
accountant such work papers and schedules and other information relating to the
disputed matter(s) as the accountant may request and will be afforded an
opportunity to present to the accountant any material relating to the disputed
matter(s) and to discuss the disputed matter(s) with the accountant. The costs
and expenses of the accountant incurred with respect to the Final Determination
shall be shared equally by Buyer and Sellers. The Definitive Post-Closing
Statement shall be modified to reflect the Final Determination.
(c) During the period following the issuance of the
Definitive Post-Closing Statement and until the issuance of the Final
Determination, Buyer and Sellers and their respective representatives shall
have the right to communicate with, and to review the work papers and
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schedules prepared or reviewed by, Sellers, Buyer or their respective
accounting advisors in connection therewith, and shall have access to such
employees of Sellers or Buyer and to all relevant books and records of Sellers
or Buyer to the extent reasonably required to complete their review.
(d) Within three business days following completion
of the Definitive Post-Closing Statement and any Final Determination with
respect thereto, the Purchase Price shall be reduced on a dollar-for-dollar
basis to the extent that the Assets plus the Commingled Receivables less the
Assumed Liabilities reflected on the Definitive Post-Closing Statement (the
"Definitive Post-Closing Book Value") is exceeded by the Preliminary
Post-Closing Book Value (and, in such event, Sellers shall make a payment to
the Buyer in the amount of such excess by wire transfer of immediately
available funds to an account designated by Buyer), or the Purchase Price shall
be increased on a dollar-for-dollar basis to the extent that the Definitive
Post-Closing Book Value exceeds the Preliminary Post-Closing Book Value (and,
in such event, Buyer shall make a payment to the Sellers in the amount of such
excess by wire transfer of immediately available funds to an account designated
by Sellers).
(e) All Receivables determined to be uncollectible in
preparing the valuation of Receivables on the Definitive Post-Closing Statement
shall be assigned to Sellers to the extent such uncollectible Receivables in
the aggregate exceed the reserve for doubtful accounts in the Preliminary
Post-Closing Statement.
ARTICLE 4.
CLOSING; OBLIGATIONS OF THE PARTIES
4.1. Closing Date. The Closing (the "Closing") shall take
place at 10:00 a.m., local time, on January 2, 1997 at the offices of Bass,
Xxxxx & Xxxx PLC, 2700 First American Center, Nashville, Tennessee, or at such
other time and place as the parties hereto mutually agree (the "Closing Date").
4.2. Obligations of the Parties at the Closing.
(a) At the Closing, Buyer shall deliver to Sellers
(or Sellers' agent):
(i) the consideration as specified in
Section 3.1;
(ii) a copy of resolutions of the Board
of Directors of Buyer, certified by Buyer's Secretary,
authorizing the execution, delivery and performance of
this Agreement and the other documents referred to herein
to be executed by Buyer, and the consummation of the
transactions contemplated hereby;
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(iii) a certificate of a duly authorized
officer of Buyer certifying as to the accuracy in all
material respects of Buyer's representations and
warranties at and as of the Closing and that Buyer has
performed or complied in all material respects with all of
the covenants, agreements, terms, provisions and
conditions to be performed or complied with by Buyer at or
before the Closing;
(iv) the opinion of Loeb & Loeb, LLP,
legal counsel for Buyer, in accordance with Section 10.4;
(v) such instruments of assumption, in
form and substance reasonably satisfactory to Sellers, as
shall be necessary for Buyer to assume as of the Closing
Date and agree to pay, perform and discharge the Assumed
Liabilities;
(vi) the Transition Services Agreement
(as hereinafter defined in Section 7.5), duly executed by
Buyer; and
(vii) the License Agreement (as defined
in Section 7.5), duly executed by Buyer.
(b) At the Closing, Sellers will deliver to Buyer:
(i) such bills of sale, endorsements,
assignments, and other good and sufficient instruments of
conveyance and transfer, in form and substance reasonably
satisfactory to Buyer, as shall be effective to vest in
Buyer all of Sellers' title to and interest in the Assets;
(ii) copy of resolutions of the
Board of Directors of each Seller, certified by each
Seller's Secretary, authorizing the execution, delivery and
performance of this Agreement and the other documents
referred to herein to be executed by such Seller, and the
consummation of the transactions contemplated hereby;
(ii) a certificate of the duly authorized
officer of each of the Sellers certifying as to the
accuracy in all material respects of Sellers'
representations and warranties at and as of the Closing,
and that they have performed or complied in all material
respects with all of the covenants, agreements, terms,
provisions and conditions to be performed or complied with
by each of them at or before the Closing;
(iv) the opinion of Bass, Xxxxx & Xxxx
PLC, legal counsel for the Sellers, in accordance with
Section 9.4;
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(v) the Transition Services Agreement,
duly executed by Xxxxxx and Word;
(vi) a duly executed change of name
certificate for Word and each Affiliate of Sellers using
"Word" in its name, in each case in form suitable for
filing in all appropriate jurisdictions, in the case of
Word, changing the name to a name, which may include
"Word" in conjunction with the word "Publishing," "Books"
or any similar word, and, in the case of any other Sellers
using "Word" in its name, to a name not containing and not
confusingly similar to the word "Word";
(vii) all consents required in connection
with the execution and delivery of this Agreement and the
transactions contemplated hereby;
(viii) the License Agreement, duly
executed by Sellers; and
(ix) appropriate instruments authorizing
Buyer to endorse in the name of Sellers on all checks,
drafts, notes and other instruments for the payment of
money and to receive for the account of Buyer all proceeds
thereof to which Buyer is entitled under this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES BY SELLERS
Sellers jointly and severally hereby represent and warrant as follows:
5.1. Authorization. Sellers have full corporate power and
authority to enter into this Agreement and perform their respective obligations
hereunder and carry out the transactions contemplated hereby. The Board of
Directors of each Seller has taken all action required by law, its Articles of
Incorporation, its Bylaws and otherwise to authorize the execution and delivery
by such Seller of this Agreement and the consummation by such Seller of the
transactions contemplated hereby. Assuming the due execution and delivery by
Buyer, this Agreement constitutes the valid and binding agreement of each
Seller, enforceable against each such Seller in accordance with its terms.
5.2. Organization, Good Standing and Qualification. Each
Seller is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. Each Seller has full
corporate power and authority to carry on its business as now conducted and
possesses all governmental and other permits, licenses and other authorizations
to own, lease or operate the Assets and to carry on the Music Business as
presently conducted.
5.3. Subsidiaries.
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(a) Xxxxxx is the sole record and beneficial owner of
all of the issued and outstanding shares of capital stock of Word.
Word and/or Xxxxxx is the sole record and beneficial owner of all
issued and outstanding shares of capital stock of Word Canada, Word
U.K. and Word Direct Marketing Services, Inc. ("WDMS"). All of the
shares of capital stock of Word Direct, Inc. ("WDI") are owned by
WDMS. All of the outstanding partnership interests in Word Direct are
owned by WDMS and WDI.
(b) Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
5.4. No Violation. The execution and delivery of this
Agreement by Sellers does not, and the consummation of the transactions
contemplated hereby will not, (f) violate, conflict with, or require the
consent under, any provision of any agreement, indenture, instrument, lease,
security agreement, mortgage or lien to which any of the Sellers is subject or
by which any of them is bound (including, without limitation, any Assumed
Contract), except for such consents as are set forth on Schedule 5.4 and which
shall have been obtained prior to the Closing Date, or as otherwise permitted
pursuant to Section 7.9 hereof; (g) violate or conflict with any provision of
the Articles of Incorporation or Bylaws of any of the Sellers; or (h) violate
any order, arbitration award, judgment, writ, injunction, decree, statute, rule
or regulation applicable to any of the Sellers.
5.5. Financial Statements. (a) Sellers have delivered to Buyer
an unaudited statement of assets and liabilities of the Music Business as at
March 31, 1996, and the related statement of operations of the Music Business
for the fiscal year then ended, and (b) attached hereto as Schedule 5.5 is the
unaudited statement of assets and liabilities of the Music Business as at the
Balance Sheet Date (the "Interim Statement of Assets and Liabilities") which
was previously delivered to Buyer together with the related unaudited statement
of operations of the Music Business for the three months then ended (the
"Interim Financial Statements" and together with the annual financial
statements described in subsection (a) hereof, the "Financial Statements").
The Financial Statements fairly present the assets and liabilities, and
revenues and expenses attributable to the Music Business as at the respective
dates thereof and for the periods therein referred to, in accordance with GAAP,
subject, in the case of the Interim Financial Statements, to normal recurring
year-end adjustments.
5.6. Records and Books of Account. Since the Balance Sheet
Date, the records and books of account of Sellers have been regularly kept and
maintained in conformity with GAAP.
5.7. Liabilities. There are no Liabilities of Seller relating
to the Music Business (including, but not limited to, Liabilities for Taxes
relating to any prior period) other than (i) those Liabilities as are required
by GAAP to be, and which are, disclosed or reserved for on the Interim
Statement of Assets and Liabilities; (ii) those incurred since the Balance
Sheet Date, in the ordinary course of the Music Business, and not in violation
of or in conflict with any of the terms, agreements, warranties,
representations and conditions of Sellers contained in this Agreement; and
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(iii) those arising under Contracts set forth in Schedule 5.7 hereto. There
are no advances (which, alone or in the aggregate are material) which have been
made by any third Persons to any Seller which are recoupable by such third
Persons from income derived from the Assets which will not be reflected on the
Definitive Closing Statement. All Royalties, advances, obligations or
contractual obligations of any kind payable by Sellers to third Persons (such
as recording artists and record companies) prior to the Closing Date will have
been paid or will be accrued on the Estimated Closing Statement.
5.8. Title to Assets; Encumbrances.
(a) Except as set forth on Schedule 5.8, as of the
Closing Date, Sellers will be the owners of and will have good and
marketable title to the Assets, including all of the properties and
Assets reflected in the Interim Statement of Assets and Liabilities
(except for personal property sold since the date of the Interim
Statement of Assets and Liabilities in the ordinary course of
business). As of the Closing, none of the Assets will be subject to
any Lien, except (a) Liens shown on the Financial Statements as
securing specified liabilities, (b) Liens for current Taxes not yet
due and payable, and (c) imperfections of title and Liens, if any,
which do not materially detract from the value of the property subject
thereto or materially impair the use of the property subject thereto.
Except as aforesaid or as set forth on Schedule 5.8, upon the Closing
Buyer shall acquire good and marketable title to all of the Assets,
free and clear of all Liens. All Liens listed on Schedule 5.8
represent Liens on Royalties payable by the Sellers to third parties.
(b) Sellers own and are conveying all of the Assets
that are necessary to conduct the Music Business as conducted prior to
the date hereof, including, without limitation, all rights, assets and
properties from which the products contained in the Catalogue are
derived, other than the Excluded Assets and those services to be
performed under the Transition Services Agreement.
5.9. Intellectual Property.
(a) All rights in I/P Assets are valid and
enforceable, are free and clear of any Liens, and, with the sole
exception of Buyer's Assumed Liabilities, no Royalties, advances or
other payments are or will be payable by Buyer with respect to any of
them. Except with respect to such matters which, alone or in the
aggregate, would not have a material adverse effect on the Assets or
the Music Business (a "Material Adverse Effect"), no Person other than
Seller has or may validly claim a reversionary interest in the
ownership of any I/P Asset (other than Artwork with respect to
products not in the Catalogue) or the income derived therefrom arising
or enforceable at any time prior to the expiration of the maximum term
of copyright throughout the universe other than by virtue of Seller's
failure to exploit the I/P Asset in question. None of the rights of
Seller to any Asset and any licenses or other agreements relating
thereto will be impaired in any way
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by the transactions contemplated by this Agreement except to the
extent that the same would not, alone or in the aggregate, have a
Material Adverse Effect.
(b) Sellers are not infringing upon, or otherwise
acting in conflict with, any rights of any Person with respect to the
use or exploitation of any of the Assets, and during the four years
prior to the date hereof neither Seller nor any Affiliate of Seller
has received written notice of any such claim, nor is Seller aware of
any such claim of which any other Person has received written notice
which was not without merit or which has not been satisfactorily
resolved. The I/P Assets are original works of authorship and do not
infringe upon or violate any rights of privacy or publicity,
copyright, trademark or any other legal or equitable rights of any
Person.
(c) Except to the extent the same would not, alone or
in the aggregate, have a Material Adverse Effect, certificates of
copyright registration and, where the original term of copyright has
expired, certificates of renewal copyright registration, in respect of
the Masters, Compositions, Print Music and Artwork have been issued by
the United States Register of Copyrights with respect to no less than
each of said works that has been published (as defined in the United
States Copyright Act, as amended) and said copyright and renewal
copyright certificates were duly and timely applied for and remain in
full force and effect. No action by or with the authority or consent
of Seller has been taken or omitted which would destroy or impair
protection of any of the I/P Assets under the United States Copyright
Act or the copyright laws of any other territory of the world.
Sellers have received no notices terminating any of Sellers' rights
under Section 304 of the United States Copyright Act.
(d) Other than the Trademarks, there are no
trademarks, trademark registrations, trademark registration
applications, tradenames or logos which are owned, or currently used
by Sellers in connection with the Music Business anywhere in the
world. In the past four years, Sellers have received no written
notice from any person alleging that any Trademark infringes upon the
rights of any other person which was not without merit or which has
not been satisfactorily resolved, and Sellers have no knowledge of any
facts which could reasonably be expected to give rise to such a claim.
(e) Except as specifically set forth in Artist
Agreements, I/P Agreements relating to Masters and Producer Agreements
and with the exception of so-called "mechanical royalties", no
Royalties based on sales are payable by Seller to any party in
connection with any Master.
(f) Except as set forth on Schedule 5.9(f) or to the
extent the same would not have a Material Adverse Effect, each of the
Contracts included in the Assets between any of the Sellers on the one
hand, and any writer, author, artist, producer, grantor, assignor,
assignee, licensor or licensee (or other contributor, creator, owner
or user) on the other hand, and which relates to any I/P Asset is in
full force and effect as of the date
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hereof and enforceable in accordance with its terms (except that such
enforcement may be subject to bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium (whether general or specific) or other
laws now or hereafter in effect relating to creditor's rights
generally and the remedy of specific enforcement and injunctive or
other forms of equitable relief may be subject to equitable defense
and to the discretion of the court before which any proceeding
therefor may be brought); and the Sellers have performed their
obligations thereunder and are not in default with respect to any such
agreements, except where such failure to perform or such default would
not have a Material Adverse Effect.
(g) Except to the extent the same would not have a
Material Adverse Effect, the grant of copyright in each Composition
which was afforded statutory copyright protection under U.S. law as of
January 1, 1978 from the writer(s) thereof to Sellers extends to all
of Sellers' rights to the original term of copyright, the renewal term
and all extensions of such copyright in each country of the world.
(h) Except to the extent the same would not have a
Material Adverse Effect, all of Sellers' rights in each Master, A/V
Work and Print Music will extend for the full duration of copyright
protection in each country of the world.
(i) Schedule 1.1(o) sets forth all Compositions owned
in whole or in part by Sellers contained in Sellers' electronic data
base and includes all Compositions which have generated revenue since
January 1, 1994.
5.10. Tax Matters. There are no Liens for Taxes (other than
Liens for current Taxes not yet due and payable) upon any of the Assets.
5.11. Litigation. Except as set forth in Schedule 5.11, there
are no outstanding Actions pending, or to the knowledge of Sellers, threatened
by or against or affecting the Sellers or any of their properties or rights, in
respect of the Music Business. Sellers are not in default with respect to any
order, writ, injunction or decree of any Governmental Authority. None of the
Actions referred to on Schedule 5.11 hereto is reasonably likely to have a
Material Adverse Effect on the Music Business or the financial condition,
Assets, liabilities or results of operations thereof.
5.12. Orders, Decrees, Etc. There are no orders, decrees,
injunctions, rulings, publications, decisions, directives, or pronouncements of
any court or any Governmental Authority issued against, or binding on, Sellers
which adversely affect the conduct of the Music Business as presently
conducted.
5.13. Compliance With Law; Permits and Licenses.
(a) Sellers have complied and are in compliance with
all Laws of any Governmental Authority applicable to the Music
Business or the Assets including, without limitation, Environmental
Laws, Laws relating to zoning, building codes, antitrust,
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occupational safety and health, consumer product safety, product
liability, hiring, wages, hours, employee benefit plans and programs,
collective bargaining and withholding and social security taxes.
(b) Each Seller holds all the permits, licenses and
franchises which are necessary for or material to its use, occupancy
or operation of the Assets or the conduct of the Music Business; and
no notice of violation of any applicable Law binding on any of Sellers
with respect to the Assets or the Music Business has been received.
5.14. Other Contracts and Commitments. Schedule 5.14 sets forth
a complete and accurate list of all Material Other Contracts. Other than with
respect to such matters which, alone or in the aggregate, would not have a
Material Adverse Effect, (i) each of the Other Contracts is a valid and
subsisting contract of all the parties thereto in full force and effect without
modification, (ii) Sellers are not in default under any of the Other Contracts
and have performed all obligations required to be performed by them thereunder,
and (iii) all of the Other Contracts are legal, valid and binding obligations
and are in full force and effect as of the date hereof and enforceable in
accordance with their terms (except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
(whether general or specific) or other laws now or hereafter in effect relating
to creditor's rights generally and the remedy of specific enforcement and
injunctive or other forms of equitable relief may be subject to equitable
defense and to the discretion of the court before which any proceeding therefor
may be brought). The Other Contracts include every contract, written or oral,
to which any of Sellers is a party, that is directly related to the Music
Business. Sellers have disclosed and delivered, prior to the date hereof,
copies of all Other Contracts.
5.15. Broker's and Finder's Fees. Except for X.X. Xxxxxxxx &
Co., no agent, broker, investment banker, person or firm acting on behalf of
Sellers or under their authority is or will be entitled to any broker's or
finder's fee or any other commission or similar fee directly in connection with
any of the transactions contemplated hereby. Any fee to which X. X. Xxxxxxxx &
Co. is entitled shall be the sole responsibility of Sellers.
5.16. Fixed Assets; Leased Premises.
(a) Schedule 5.16(a) hereto sets forth a list and
description as at October 31, 1996 of all equipment, machinery, motor
vehicles, fixtures and other fixed assets relating to the Music
Business owned or used by any Seller, indicating the owner and
location thereof and the cost applicable thereto. Each of the fixed
assets owned or used by Sellers in relation to the Music Business is
in good repair and operating condition, normal wear and tear excepted.
The dollar amount of the fixed assets owned by Sellers as shown on the
Interim Statement of Assets and Liabilities does not exceed Sellers'
cost of the same.
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(b) Schedule 5.16(b) sets forth a list of each lease
of premises used in relation to the Music Business executed by or
binding upon any of Sellers as lessee, sub-lessee, tenant or assignee
(the "Leased Real Estate") setting forth in each case a brief
description of the premises covered thereby, the rental payable
thereunder and the term (including any extensions available)
thereunder. Each such lease is in full force and effect without any
default or breach thereof by the applicable Seller or any other party
thereto. Except as set forth on Schedule 5.16(b), no consent of any
landlord or any other party is required under any such lease in order
to assign each such lease to Buyer and to keep such lease in full
force and effect after the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby. True
and complete copies of all leases required to be listed on
Schedule 5.16(b), including all amendments, addenda, waivers and all
other binding documents affecting the tenant's rights thereunder, have
heretofore been delivered to Buyer.
5.17. Supplemental Schedule of Purchase and Sales Commitments
and Orders. At the Closing, Sellers shall deliver Schedule 5.17 which shall
set forth a list of all purchase commitments and orders of Seller relating to
the Music Business as of a date within three days of the Closing Date involving
more than $5,000 and the aggregate dollar amount of all sales orders (whether
for the sale of products or the rendering of services) of Sellers as of a date
within three days of the Closing Date. Sellers have not from the Balance Sheet
Date to the date hereof, and will not, from the date hereof to the Closing
Date, enter into any purchase or sales commitment or order relating to the
Music Business except in the ordinary course of business consistent with past
practices.
5.18. Labor Relations. There are no labor strikes, disputes,
slow downs, work stoppages or other labor troubles or grievances pending or, to
Sellers' knowledge, threatened against or involving Sellers in respect of the
Music Business. No unfair labor practice complaint before the National Labor
Relations Board, no discharge or grievance before the Equal Employment
Opportunity Commission and no complaint, charge or grievance of any nature
before any similar or comparable state, local or foreign agency, in any case
relating to Sellers in the conduct of the Music Business is pending or, to
Sellers' knowledge, threatened. None of Sellers have received notice, and
Sellers have no knowledge, of the intent of any Governmental Authority
responsible for the enforcement of labor or employment laws to conduct any
investigation of or relating to Seller in respect of the Music Business.
Schedule 5.18 lists each Contract binding on any Seller with respect to the
Music Business with any consultant, labor union or other collective bargaining
organization (each a "Labor Agreement"). Each Labor Agreement is in full force
and effect and no Seller is or, with the giving of notice or, lapse of time, or
both, would be in default thereunder. To the knowledge of Seller, no officer
or key employee of Seller in respect of the Music Business has any plans to
terminate his or her employment with Seller prior to the Closing Date.
5.19. Actions Not in Ordinary Course. Since the Balance Sheet
Date, and other than with respect to such matters which, alone or in the
aggregate, would not have a Material Adverse
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Effect, the Sellers have not, and prior to the Closing Date Sellers will not
have, (i) incurred any Liability directly relating to the Music Business,
except Liabilities incurred in the ordinary course of business and Liabilities
incurred under contracts entered into in the ordinary course of business; (ii)
discharged or satisfied any Lien or paid any Liability directly relating to the
Music Business, other than Liabilities shown on the Interim Statement of Assets
and Liabilities and Liabilities incurred since the Balance Sheet Date in the
ordinary course of business consistent with past practices; (iii) sold or
transferred any assets or written off any Receivables or Commingled
Receivables, except for the sale of Inventory and the collection and write off
of Receivables in the ordinary course of business consistent with past
practices or in connection with the consummation of the transactions
contemplated herein; (iv) granted any Liens; (v) suffered any losses or waived
any rights of substantial value; (vi) granted any bonuses or commissions or
increased the compensation payable to any of its employees, directors or
officers in the music division of Sellers or increased the aggregate payment of
any fees to any such Person except in the ordinary course of business
consistent with past practice or as previously disclosed to Buyer and granted
in connection with the consummation of the transactions contemplated herein;
(vii) made any loans to any individuals, firms, corporations or other entities
in the music division of Seller; (viii) made any change in any method of
accounting or auditing practice relating to the Music Business; or (ix) entered
into any transaction relating to the Music Business other than as contemplated
herein or other than in the ordinary course of business or agreed (whether or
not in writing) to do any of the foregoing.
5.20. No Changes. Since the Balance Sheet Date, except as set
forth in Schedule 5.20, Sellers have conducted the Music Business only in the
ordinary course consistent with past practice, and there has not been:
(a) any material adverse change in the business,
operations, or financial condition of the Music Business;
(b) any sale, transfer or other disposition of any
Assets and no Seller has entered into any contract or commitment
relating to the Music Business, other than in the ordinary course of
business consistent with past practices;
(c) any incurrence of any debt, guarantee,
capitalized lease or contingent obligation other than in the ordinary
course of business consistent with past practices;
(d) any disposition or lapse of any of any of
Sellers' I/P Assets that are material to the Music Business;
(e) any acquisition of any assets, raw materials or
properties in respect of the Music Business, and no Seller has entered
into any other transaction relating to the Music Business other than
in the ordinary course of business consistent with past practices;
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(f) any incurrence or commitment to incur capital
expenditures in relation to the Music Business in the aggregate in
excess of $50,000;
(g) any failure to keep in full force and effect
insurance comparable in amount and scope to coverage maintained by or
on behalf of Sellers in respect of the Music Business on the Balance
Sheet Date;
(h) damage, destruction or casualty loss, whether
covered by insurance or not, affecting the Music Business in the
aggregate in excess of $50,000;
(i) any other action taken that would cause any
representation or and warranty made by it in this Agreement not to
remain true and correct;
(j) any settlement, release or forgiveness of any
claim or litigation or waiver of any right with respect to the Music
Business; or
(k) any commitment by any of Sellers to do any of the
foregoing.
5.21. Compensation. Schedule 5.21 hereto lists the names, title
or job description, and total annual salary of all U.S. employees, officers and
directors of Sellers whose primary responsibilities are related to the Music
Business who, as of the date hereof, are or will be entitled to receive
compensation from Seller at an annualized rate in excess of $25,000 per year.
5.22. Employee Benefits.
(a) None of the Sellers nor any of their ERISA
Affiliates, as hereinafter defined, has incurred (nor has any event
occurred or a claim been threatened which reasonably can be
anticipated to result in a Seller or any of its ERISA Affiliates
incurring) any material loss or Liability in connection with any
existing or previously existing employee benefit plan which could
become, on or after the Closing Date, an obligation or Liability of
Buyer or any of its Affiliates or which has or could give rise to any
Liens on any of the Assets. Without limiting the foregoing, none of
the Sellers has ever contributed to any "multiemployer plan" as such
term is defined in Section 3(37) of ERISA. For purposes hereof, the
term "ERISA Affiliate" means a person or entity which, together with a
Seller, are treated as a single employer under Section 414 of the
Code.
(b) Each Plan that is a group health plan, as such
term is defined in Section 5000(b)(1) of the Code, has been operated
in compliance with the requirements of Section 4980(B) of the Code and
Sections 601 through 608 of ERISA ("COBRA").
(c) Sellers do not maintain or contribute to any
"employee welfare benefit plan" (as such term is defined in Section
3(1) of ERISA) which provides retiree health or other post-termination
employment welfare benefits, other than as required under COBRA.
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5.23. Governmental Approvals. Except as set forth in Section
7.3 hereof, no governmental authorization, approval, order, license, permit,
franchise, or consent and no registration, declaration or filing by Sellers
with any Governmental Authority is required in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
5.24. Secrecy and Noncompetition Agreements. Sellers have
entered into secrecy and noncompetition agreements in the forms set forth on
Schedule 5.24 hereto with the employees listed on such Schedule 5.24, which
persons are all of the persons with whom any of the Sellers has entered into
such agreements in respect of the Music Business. To the knowledge of Sellers,
no employee of the Music Business is subject to any secrecy or noncompetition
agreement with anyone other than Sellers.
5.25. Insurance Policies. All insurance policies which insure
Assets or relate to the Music Business are in amounts customarily deemed to be
adequate, and cover all risks customarily insured against in businesses like
the Music Business, and all premiums due to the date hereof on such policies
have been paid in full. Sellers have not failed to give any notice or present
any claim in respect of the Music Business under any such policy in a timely
fashion. Such insurance to the date hereof has, and to the Closing Date will
have, (a) been maintained in full force and effect and (b) not been canceled or
changed except to extend the maturity dates thereof.
5.26. No Omissions. Sellers do not know of any facts or
circumstances not disclosed to Buyer which indicate that the Assets or the
operations or prospects of Sellers relating to the Music Business may be
adversely affected or which otherwise should be disclosed to Buyer in order to
make any of the representations or warranties made herein on the part of the
Sellers not misleading. To the best knowledge of Sellers, no representation or
warranty by Sellers contained in this Agreement, and no statement contained in
any Schedule, Exhibit, or any certificate required to be furnished to Buyer
under this Agreement, contains any untrue statement of any material fact, or
omits to state any material fact necessary in order to make the statements
contained herein or therein not misleading.
5.27. Sellers Representations and Warranties. The
representations and warranties of Sellers contained in this Agreement, or
otherwise made in writing in connection with the transactions contemplated
hereby, will be true and correct on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made-on
and as of the Closing Date.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer hereby represents and warrants to Sellers as follows:
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6.1. Authorization. Buyer has full corporate power and
authority to enter into this Agreement and perform its obligations hereunder
and carry out the transactions contemplated hereby. The Board of Directors of
Buyer has taken all action required by law, its Articles of Incorporation, its
Bylaws and otherwise to authorize the execution and delivery by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated
hereby. Assuming the due execution and delivery by Sellers, this Agreement
constitutes the valid and binding agreement of Buyer, enforceable against Buyer
in accordance with its terms.
6.2. Organization and Good Standing. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to own, operate
and lease its properties and carry on its business as now conducted. Buyer is
duly qualified to transact business as a foreign corporation and is in good
standing in all jurisdictions where the failure to so qualify would have an
adverse impact on Buyer or on Buyer's operations in such jurisdiction.
6.3. No Violation. The execution and delivery of this
Agreement by Buyer does not, and the consummation of the transactions
contemplated hereby will not, (a) violate, conflict with or require the consent
thereunder any provision of any agreement, indenture, instrument, lease,
security agreement, mortgage or lien to which Buyer is a party or by which it
is bound; (b) violate or conflict with any provision of Buyer's Articles of
Incorporation or Bylaws; (c) violate any order, arbitration award, judgment,
writ, injunction, decree, statute, rule or regulation applicable to Buyer; or
(d) violate any other contractual or legal obligation or restriction to which
Buyer is subject.
6.4. Sufficient Funds. Buyer has and will continue to have
sufficient funds to consummate the transactions contemplated hereby, including,
without limitation, to pay the consideration set forth in Article 3 hereof in
accordance with the terms of this Agreement, and has all requisite power and
authority to make payment of such funds in the manner described herein and such
funds are and will be at the Closing Date free and clear of all Liens.
6.5. Certain Proceedings. There is no pending, or to the
knowledge of Buyer, threatened Actions at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
agency, instrumentality or authority that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with the
consummation of the transactions contemplated hereby.
6.6. Broker's and Finder's Fees. No agent, broker, investment
banker, person or firm acting on behalf of Buyer or under its authority is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly in connection with any of the transactions
contemplated herein.
6.7. Sellers' Representations and Warranties. The Buyer is not
aware that the Sellers' representations and warranties in Article 5 are untrue
in any material respect on the date
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hereof. As used herein, Buyer's "awareness" for purposes of this Section 6.7
is limited to the actual knowledge of Buyer's Chief Financial Officer, General
Counsel, Director of Internal Audit, Senior Vice President, and Vice President
of Finance and Operations of Opryland Music Group Inc. (together, the "Buyer
Representatives").
ARTICLE 7.
COVENANTS AND AGREEMENTS OF SELLERS
Sellers, jointly and severally, agree that, from the date hereof until
the Closing, and thereafter if so specified, they will, and will cause the
Subsidiaries to, fulfill the following covenants and agreements unless
otherwise consented to by Buyer in writing:
7.1. Conduct of Business Pending the Closing.
(a) Sellers, in respect of the Music Business,
the Assets and the Assumed Liabilities, will:
(i) preserve the existence, rights,
business organization and franchises of the Music
Business, keep available to Buyer Sellers' officers and
employees engaged in the Music Business, and use their
best efforts to preserve for Buyer the present
relationships of Sellers in respect of the Music Business
with their songwriters, artists suppliers and customers
and others having business relationships with them; and
(ii) conduct the Music Business in the
ordinary course of business consistent with past practices
and shall not, without the prior written consent of Buyer,
purchase, sell, lease, encumber or otherwise dispose of
any Assets except Inventories in the ordinary course of
business and consistent with past practice or make any
change in the Music Business, operations or the manner of
conducting the Music Business.
(b) Seller in respect of the Music Business will not,
without the prior written consent of Buyer:
(i) make or obligate themselves to make
any increase in the rate or terms of compensation payable
to any officer, director, or employee engaged primarily in
the Music Business, hire or discharge any officer,
director or employee or otherwise incur any further
employment obligations or commitments other than annual
salary increases in the ordinary course of business
consistent with past practices;
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(ii) enter into any Contract or cancel or
renegotiate or amend any existing Contract except for
Contracts in the ordinary course of business consistent
with past practices of less than $25,000 in each instance;
(iii) permit any renewal option under any
Contract to lapse, or exercise any option to renew any
Contract without the prior consultation with and written
consent of Buyer;
(iv) make or commit to make any capital
expenditure in relation to the Music Business other than
in the ordinary course of business consistent with past
practices in excess thereof in an amount equal to $25,000
or more in the aggregate;
(v) waive any rights of substantial
value;
(vi) dispose of, permit to lapse, or
otherwise fail to preserve any of its rights under I/P
Assets, I/P Contracts or other similar rights, dispose of
or permit to lapse any license, permit or other form of
authorization, or dispose of or disclose to any person,
other than an authorized representative of Buyer, any
customer list, trade secret, or know-how;
(vii) make any change in any method of
accounting or accounting practice or in the application of
such method of accounting or accounting practice or make
any change in accounting estimate;
(viii) pay, loan or advance any amount to
or in respect of, or sell, transfer or lease any assets
(whether real, personal or mixed, tangible or intangible)
to, or enter into any agreement, arrangement or
transaction with, any of its officers or directors, any of
its Affiliates or associates or any Person in which it or
any of its officers, directors, Affiliates or associates,
has any direct or indirect interest, except for (A)
directors, fees and compensation to its officers and
employees at rates not exceeding the rates of compensation
in effect on the Balance Sheet Date and (B) advances made
to employees for travel and other business expenses in
reasonable amounts consistent with past practice;
(ix) without limiting any of the
foregoing, take or refrain from taking any action the
result of which would render any representation or
warranty made to Buyer in or in connection with this
Agreement inaccurate when deemed made on and as of the
Closing Date; or
(x) agree, whether in writing or
otherwise, to take any action prohibited in this Section
7.1.
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7.2. Access. Subject to the terms of the Confidentiality
Agreement between Xxxxxx and Buyer (the "Confidentiality Agreement"), after the
execution of this Agreement and continuing until the Closing, Sellers shall
permit Buyer and its counsel, accountants and other representatives reasonable
access during normal business hours and upon reasonable notice, access to the
properties, books, contracts, commitments, records, employees, representatives
and advisors of Sellers in respect of the Music Business and will furnish Buyer
and its representatives during such period with all such information concerning
Sellers' affairs in respect of the Music Business and such copies of such
documents relating thereto, as Buyer or its representatives may reasonably
request. Sellers agree to permit Buyer and its authorized representatives to
visit, together with representatives of Sellers, suppliers, customers,
recording artists, producers, authors, composers, distributors or others having
business relations with Sellers relating to the Music Business. In the event
that this Agreement is terminated, Buyer shall return all nonpublic documents
furnished hereunder, shall destroy all documents or portions thereof prepared
by Buyer or its representatives that contain nonpublic information furnished by
Sellers pursuant hereto, and, in any event, shall hold all nonpublic
information received pursuant hereto 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.
Notwithstanding any other provision hereof, the parties hereto shall continue
to be bound by the terms and conditions of the Confidentiality Agreement.
7.3. Government Consents and Approvals. Sellers shall take all
necessary corporate and other action and use all reasonable efforts to obtain
promptly all consents, approvals, permits, licenses, authorizations,
exemptions, waivers from Governmental Authorities or third parties under
agreements which are not Contracts required of Sellers to carry out the
transactions contemplated in this Agreement, including but not limited to (i)
filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"); (ii) filings required under the Investment
Canada Act (the "Investment Canada Act"); (iii) the Canada Competition Act (the
"Competition Act"); and (iv) filings required under the United Kingdom Fair
Trading Act of 1973 (the "U.K. Fair Trading Act"), and shall provide to Buyer
such information as Buyer may reasonably require to make such filings and
prepare such applications as may be required for the consummation by Buyer of
the transactions contemplated by this Agreement.
7.4. Bulk Sales Compliance. Buyer hereby waives compliance by
Sellers with the provisions of the bulk sales or similar laws of any and all
states (the "Bulk Sales Laws"), and Sellers covenant and agree to pay and
discharge when due all claims, liabilities and related expenses which may be
asserted against Buyer by reason of such noncompliance.
7.5. Other Agreements.
(a) Sellers shall enter into with Buyer an agreement,
in form and substance reasonably satisfactory to Sellers and Buyer,
whereby Sellers will provide, and Buyer will compensate Sellers for,
certain administrative support services to the Music Business
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during a transition period extending not more than 12 months following
the Closing Date (the "Transition Services Agreement").
(b) Each Subsidiary and a direct or indirect
subsidiary of Buyer designated by Buyer (each, a "Foreign Buyer")
shall enter into an agreement, in form and substance reasonably
satisfactory to Sellers and Buyer (the "Subsidiary Asset Purchase
Agreements"). Each Subsidiary Asset Purchase Agreement shall contain
such terms as are necessary and appropriate to effectuate the sale of
the Foreign Assets to the designated Foreign Buyer, on substantially
the terms and conditions provided herein and in accordance with the
intent of Sellers and Buyer herein; provided, however, that any
provisions relating to penalties and other Liabilities which may be
assessed in excess of severance pay (which severance pay shall be the
obligation of Sellers) which arise by operation of Law in respect of
severance of employees of the Music Business of Foreign Subsidiaries
which are not engaged as employees by a Foreign Buyer after the
Closing Date because of the failure of a Foreign Buyer to employ
substantially all such employees shall be subject to mutual agreement
of the parties based on the facts and circumstances at the time the
Subsidiary Asset Purchase Agreements are entered into. The Subsidiary
Asset Purchase Agreements shall be entered into prior to the Closing
Date and provide for closings thereunder on the Closing Date.
(c) On the Closing Date, Xxxxxx and Buyer shall enter
into an agreement, in form and substance reasonably satisfactory to
Xxxxxx and Buyer whereby Buyer will grant to Xxxxxx a license to use
the tradename "Word" and certain related trademarks as set forth on
Schedule 7.5(c) hereto for a period of five years in connection
with certain aspects of Xxxxxx'x book publishing business and with
respect to certain video recordings (other than video recordings
consisting primarily of musical performances) which constitute
Children's Products published by Xxxxxx (the "License Agreement").
7.6. Other Transactions. Until the Closing or the termination
of this Agreement in accordance with Article 12, Sellers will not, and will
cause their directors, officers, employees, agents and Affiliates not to,
directly or indirectly, solicit or initiate the submission of proposals from,
or solicit, encourage, entertain or enter into any arrangement, agreement or
understanding with, or engage in any discussions with, or furnish any
information to, any Person, other than Buyer or a representative thereof, with
respect to the acquisition of all or any part of the Assets other than in the
ordinary course of business. Should Sellers or any of their Affiliates or
representatives, during such period, receive any offer relating to such
acquisition, they will provide Buyer with immediate notice thereof, which
notice will include the identity of the prospective offeror and the price and
terms of any offer.
7.7. Notification. Sellers shall give Buyer prompt written
notice of (i) the existence of any fact or the occurrence of any event which
constitutes, or with the giving of notice or the passage of time or both would
constitute, a breach of any representation or warranty by Sellers made herein
or pursuant hereto and (ii) the taking of any action by Sellers that would
breach or
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violate, or constitute a default under, any agreement or covenant of Sellers
made herein or pursuant hereto. The giving of any such notice shall not
affect, modify or limit in any way any representation, warranty, agreement or
covenant of Sellers made herein or pursuant hereto or Buyer's right to rely
thereon.
7.8. Supplemental Disclosure. Sellers agree that, with respect
to its representations and warranties made in this Agreement, they will have a
continuing obligation to supplement or amend the Schedules hereto with respect
to any matter hereafter arising or discovered which, if existing or known at
the date of this Agreement, would have been required to be set forth or
described in the Schedules hereto; provided, however, that neither the
supplementing or amending of any Schedules by Sellers, nor the availability or
other actual delivery of information to, or the discovery of any matters by
Buyer in the course of its investigations, shall affect any covenants or be
deemed to cure any breach of any representation or warranty made in this
Agreement or to have been disclosed as of the date of this Agreement.
7.9. Consents Under Agreements. Prior to the Closing Date, the
Sellers shall obtain the consent or approval of each third party required for
the sale, transfer, conveyance, assignment and delivery to Buyer of each
Assumed Contract selected by Buyer and listed on Schedule 7.9, to the extent
necessary to enable Buyer to enjoy the full rights and benefits in such
Contracts enjoyed by Sellers on the date hereof without breach thereof. In
addition to and not in limitation of the foregoing, Sellers shall obtain the
consent or approval of each third party required for the sale, transfer,
conveyance, assignment and delivery of each Assumed Contract not listed in
Schedule 7.9 and each claim, right or benefit arising thereunder the absence of
which, alone or in the aggregate, would have a Material Adverse Effect.
7.10. Supplemental Schedule of Compositions. Prior to Closing,
Sellers shall supplement Schedule 1.1(o) to include all Compositions owned in
whole or in part by Sellers.
ARTICLE 8.
COVENANTS AND AGREEMENTS OF BUYER
Buyer agrees that from the date hereof until the Closing, and
thereafter if so specified, it will fulfill the following covenants and
agreements unless otherwise consented to by Sellers in writing:
8.1. Consents and Approvals. From the date hereof and prior to
the Closing, Buyer shall take all necessary corporate and other action and use
all reasonable efforts to obtain promptly all consents, approvals, permits,
licenses, authorizations, exemptions, waivers from third parties and amendments
of agreements required of Buyer (including pursuant to the HSR Act, the
Investment Canada Act, the Competition Act or the U.K. Fair Trading Act) to
carry out the transactions contemplated in this Agreement and shall provide to
Sellers such information as
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Sellers shall reasonably require to make such filings and prepare such
applications as may be required for the consummation by Sellers of the
transactions contemplated by this Agreement.
8.2. Books and Records; Personnel. For a period of five years
with respect to Tax related books and records, and three years with respect to
all other books and records, from and after the Closing Date:
(a) Buyer shall not dispose of or destroy any of the
books and records relating to the Music Business for periods prior to
the Closing ("Books and Records") without first offering to turn over
possession thereof to Sellers by written notice to Sellers at least
thirty (30) days prior to the proposed date of such disposition or
destruction.
(b) Buyer shall upon reasonable notice and at
reasonable times allow Sellers and their agents reasonable access to
all Books and Records during normal working hours at Buyer's principal
place of business or at any location where any Books and Records are
stored, and Sellers shall have the right, at their expense, to make
copies of any Books and Records.
(c) Buyer shall make available to Sellers upon
written request (i) copies of any Books and Records, (ii) Buyer's
personnel to assist Sellers in locating and obtaining any Books and
Records, and (iii) any of Buyer's personnel whose assistance or
participation is reasonably required by Sellers in anticipation of, or
preparation for, existing or future litigation, Returns, or other
matters in which Sellers or any of their affiliates are involved.
Sellers shall reimburse Buyer for the reasonable out-of-pocket
expenses incurred by it in performing the covenants contained in this
Section 8.2.
8.3. Employee Matters.
(a) Buyer shall be under no obligation to offer
employment to any employee of the Music Business. Prior to the
Closing Date, Buyer will present Seller with a list of employees of
the Music Business which it (or the appropriate Foreign Buyer)
proposes to hire as of the Closing Date. Such employees shall be
offered employment by Buyer and its Affiliates on such terms as Buyer
shall determine in its sole discretion.
(b) Notwithstanding the operation of any Law, any
Action or any agreement, contract, commitment or understanding binding
upon any Seller, neither Buyer nor any Foreign Buyer, nor any of their
Affiliates, shall have any Liability, whether in respect of present or
future salary, benefits, severance, or otherwise, in respect of any
employee of the Music Business which Buyer does not actually engage as
an employee of Buyer or such Foreign Subsidiary and neither Buyer, any
Foreign Buyer nor any of their Affiliates shall have any Liability,
whether in respect of any salary, benefits, severance or otherwise,
accrued on or prior to the Closing Date with respect to any employee
actually engaged as an employee of Buyer or such Foreign Subsidiary on
the Closing Date except
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to the extent that Buyer refuses to hire any such employee for
discriminatory reasons in violation of federal or state Law. The
Subsidiary Asset Purchase Agreements shall contain such agreements,
covenants and indemnities which may be necessary under applicable Law
to effectuate the foregoing.
(c) To the extent permitted by applicable Law, Buyer
shall offer to each U.S. employee of the Music Business who continues
as an employee of Buyer after the Closing Date the option of making a
direct rollover of such employee's account balance in the Xxxxxx
Xxxxxx Stock Ownership Plan to Buyer's defined contribution plan
maintained under Section 401(k) of the Code.
8.4. Buyer's Disclosure. In the event that any Buyer
Representative becomes aware at any time prior to the Closing Date that any
representation or warranty of Sellers set forth in Article 5 is not true and
correct in any material respect on and as of such date and such facts have not
been disclosed by Sellers in any certificate, supplemental disclosure schedule
or notice required hereunder, Buyer shall use its best efforts to disclose such
fact to Sellers as promptly as reasonably practicable. The parties agree that
the disclosure or failure to disclose any matter required to be disclosed under
this Section 8.4 shall not affect, modify or limit any representation or
warranty of Sellers or Buyer's right to rely thereon.
ARTICLE 9.
CONDITIONS TO BUYER'S OBLIGATIONS
All obligations of Buyer hereunder are subject to the fulfillment or
the waiver in writing thereof, prior to or at the Closing, of each of the
following conditions:
9.1. Representations and Warranties. The representations and
warranties made by Sellers in this Agreement and the statements contained in
the Schedules attached hereto as supplemented through the Closing Date shall be
true in all material respects when made and at and as of the time of the
Closing as though such representations and warranties were made at and as of
such date.
9.2. Performance by Sellers. Sellers shall have performed and
complied in all material respects with all covenants, agreements, obligations
and conditions required by this Agreement to be so complied with or performed.
9.3. Certificates of Sellers. Sellers shall have delivered to
Buyer a Certificate of Sellers, dated the Closing Date, certifying as to the
fulfillment of the conditions specified in Sections 9.1 and 9.2 hereof.
9.4. Opinion of Counsel for Sellers. Buyer shall have received
a written opinion of the Sellers' counsel, Bass, Xxxxx & Xxxx PLC, dated the
Closing Date, in form and substance
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reasonably satisfactory to it, as to certain matters agreed upon by legal
counsel of Sellers and Buyer. Such opinion may rely upon the opinion of the
Vice President and General Counsel of Xxxxxx as to such questions of fact and
law as Sellers' counsel deems appropriate.
9.5. Consents and Approvals. Buyer shall have received from
Sellers executed counterparts of the consents referred to in Sections 7.3 and
7.9, all of which consents shall be in form and substance reasonably
satisfactory to Buyer. Without limiting the generality of the foregoing, all
applicable waiting periods under the HSR Act, the Investment Canada Act, the
Competition Act, or the U.K. Fair Trading Act shall have expired or been
terminated.
9.6. Litigation. On the date of the Closing, none of the
Sellers shall be a party to, nor will there otherwise be pending or threatened
in writing any judicial, administrative, or other action, proceeding or
investigation seeking to enjoin, prohibit, restrain or otherwise prevent the
transactions contemplated hereby.
9.7. Other Agreements. Buyer shall have received from Sellers
an executed counterpart of the Transition Services Agreement and the Subsidiary
Asset Purchase Agreements.
9.8. Assignments and Notices. Buyer shall have received the
following documents:
(a) Assignments of copyright with respect to the I/P
Assets and I/P Contracts in the form and substance reasonably
satisfactory to Buyer executed, delivered and notarized by Sellers.
(b) Notices in the form and substance reasonably
satisfactory to Buyer herein by reference, advising the applicable
performing rights societies, The Xxxxx Xxx Agency, licensees and other
third parties that Sellers have assigned to Buyer all of Sellers'
right, title and interest in the I/P Assets and I/P Contracts and all
rights to receive royalties and other monies payable by such parties
in respect of the I/P Assets and I/P Contracts from and after the
Closing Date.
(c) Assignments of trademark with respect to the
Trademarks in the form and substance reasonably satisfactory to Buyer
executed, delivered and notarized by Sellers.
9.9. Subsidiary Asset Purchase Agreements. The Subsidiary
Asset Purchase Agreements shall have been executed and delivered by the Foreign
Subsidiaries. Consummation of the transactions contemplated by the Subsidiary
Asset Purchase Agreements shall occur simultaneously with the Closing.
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ARTICLE 10.
CONDITIONS TO SELLERS' OBLIGATIONS
All obligations of Sellers under this Agreement are subject to the
fulfillment or the waiver in writing thereof, prior to or at the Closing, of
each of the following conditions:
10.1. Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall be true in all material
respects when made and at and as of the time of the Closing as though such
representations and warranties were made at and as of such date.
10.2. Performance by Buyer. Buyer shall have performed and
complied in all material respects with all covenants agreements, obligations
and conditions required by this Agreement to be so complied with or performed.
10.3. Certificates of Buyer. Buyer shall have delivered to
Sellers a Certificate of Buyer, dated the Closing Date, certifying as to the
fulfillment of the conditions specified in Sections 10.1 and 10.2 hereof.
10.4. Opinion of Counsel for Buyer. Sellers shall have received
a written opinion of Buyer's counsel, Loeb & Loeb LLP, dated the Closing Date,
in form and substance reasonably satisfactory to them, as to certain matters
agreed upon by legal counsel of Sellers and Buyer. Such opinion may rely upon
the opinion of the Senior Vice President, Legal Counsel and Secretary of Buyer
as to such questions of fact and law as Buyer's counsel deems appropriate.
10.5. Consents and Approvals. Sellers shall have received from
the Buyer executed counterparts of the consents referred to in Sections 7.3 and
7.9, all of which consents shall be in form and substance reasonably
satisfactory to Sellers. Without limiting the generality of the foregoing, all
applicable waiting periods under the HSR Act, the Investment Canada Act and the
U.K. Fair Trade Act shall have expired or been terminated.
10.6. Litigation. On the date of the Closing, Buyer shall not
be a party to, nor will there otherwise be pending or threatened in writing,
any judicial, administrative, or other action, proceeding or investigation
seeking to enjoin, prohibit, restrain or otherwise prevent the transactions
contemplated hereby.
10.7. License Agreement. Xxxxxx shall have received from Buyer
an executed counterpart of the License Agreement.
10.8. Subsidiary Asset Purchase Agreements. The Subsidiary
Asset Purchase Agreements shall have been executed and delivered by the Foreign
Buyer. Consummation of the transactions contemplated by the Subsidiary Asset
Purchase Agreements shall occur simultaneously with the Closing.
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ARTICLE 11.
INDEMNIFICATION
11.1. Indemnification by Sellers. Subject to the limitations of
this Article 11, Sellers hereby jointly and severally agree to defend,
indemnify and hold harmless Buyer, and shall reimburse Buyer for, from and
against each claim, loss, Liability, cost and expense (including reasonable
attorneys' fees) (collectively, "Losses") resulting from or arising out of:
(a) any untrue representation, misrepresentation,
breach of warranty or nonfulfillment of any covenant, agreement or
other obligation by or of any Seller contained herein, or in any
Schedule or Exhibit hereto or any certificate required to be
delivered pursuant hereto;
(b) any Liability or claim of Sellers, whether
arising before or after the Closing, not included in the Assumed
Liabilities;
(c) any Liability or claim arising in any way from
Sellers' failure to perform any Contract prior to the Closing Date
whether or not such Liability is an Assumed Liability, other than
Liabilities in respect of Audit Claims;
(d) any Liability or claim under any Environmental
Laws relating to any event, action or failure to act in respect of the
Leased Real Estate which occurred prior to the Closing Date;
(e) any Liability or claim in respect of any employee
of the Music Business who is not offered and does not become an
employee of Buyer or a Foreign Buyer on or after the Closing other
than any Liability or claim against Buyer for discrimination in the
selection of employees of the Music Business to become employees of
Buyer after the Closing Date in violation of any federal or state Law;
(f) any Liability or claim in respect of Audit
Claims, to the extent all Losses in respect of Audit Claims exceed the
reserve therefore expressly set forth on the Closing Statement;
(g) the failure to obtain the consent or approval of
any third party required for the sale, transfer, assignment and
delivery of any Assumed Contract or any right or benefit arising
thereunder; or
(h) any other Loss incidental to any of the
foregoing.
11.2. Indemnification by Buyer. Buyer hereby agrees to defend,
indemnify and hold harmless Sellers, and shall reimburse Sellers for, from and
against Losses resulting from or arising out of:
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(a) any untrue representation, misrepresentation,
breach of warranty or nonfulfillment of any covenant, agreement or
other obligation by Buyer contained herein or in any certificate,
document or instrument delivered to Sellers pursuant hereto;
(b) Buyer's failure to pay, perform or discharge any
Assumed Liability; and
(c) any other Loss incidental to the foregoing.
11.3. Procedure.
(a) Other than with respect to Audit Claims (which shall
be governed by Section 11.3(b)), the indemnified party shall promptly
notify the indemnifying party of any Action for which indemnification
will be sought under Sections 11.1 or 11.2 of this Agreement and, if
such Action is a third party claim, demand, action or proceeding, the
indemnifying party will have the right at its expense to join in the
defense of said claim, action or proceeding and, if the indemnifying
party agrees in writing to be bound by and promptly pay the full
amount of any final judgment from which no appeal may be taken, then,
at the option of the indemnifying party, the indemnifying party may
assume the defense thereof using counsel reasonably acceptable to the
indemnified party. The indemnified party shall have the right to
participate, at its own expense, with respect to any such third party
claim, demand, action or proceeding. In connection with any such
third party Action, Buyer and the Sellers shall cooperate with each
other and provide each other with access to relevant books and records
in their possession. The indemnifying party shall not, without
written consent of such indemnified party, settle or compromise or
consent to entry of any judgment with respect to any such claim,
investigation, action, suit, hearing or proceeding (a) in which any
relief other than the payment of money damages for which the
indemnified party is fully indemnified hereunder is or may be sought
against such indemnified party or (b) which does not include as an
unconditional term thereof the giving by the claimant, Person
conducting such investigation or initiating such hearing, plaintiff or
petitioner to such indemnified party of a release from all liability
with respect to such claim, investigation, action, suit or proceeding
and all other claims or causes of action (known or unknown) arising or
which might arise out of the same facts. If, in connection with any
Liability or claim for which no relief other than money damages is
sought and which includes an unconditional release from Liability
thereunder, the indemnified party refuses to consent to any
settlement, compromise or consent to entry of any judgment, the
maximum Liability of the indemnifying party relating thereto shall be
the amount of the proposed settlement if the amount thereafter
recovered from the indemnified party on such claim, demand, action or
proceeding is greater than the amount of the proposed settlement.
(b) From and after the Closing Date, Buyer shall be
entitled to assume the defense of all Audit Claims, whether or not
Sellers shall have any Liability in respect thereof pursuant to this
Article 11. Buyer shall not, however, without the written consent of
Xxxxxx (which consent shall not be unreasonably withheld or delayed),
settle,
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compromise or consent to entry of judgment with respect to any Audit
Claim in an amount which would result in a Loss for which Sellers
would be obligated to make an indemnification payment pursuant to this
Article 11; provided, however, that if Xxxxxx'x refusal to consent to
any such settlement, compromise or entry of judgment would have a
Material Adverse Effect on Buyer's and its Affiliates' ongoing
operations, Buyer may agree to such settlement, compromise or entry of
judgment notwithstanding Sellers' refusal to consent thereto and
Sellers shall nonetheless be liable for Losses related thereto in
accordance with this Article 11.
11.4. Limitations; Exclusive Remedy.
(a) If the Closing occurs, (i) Sellers will have no
liability for indemnification pursuant to this Article 11 unless, on
or before the third anniversary of the Closing Date, Buyer notifies
Sellers of a claim specifying the factual basis of that claim in
reasonable detail; and (ii) Buyer will have no Liability to Sellers
for indemnification pursuant to Section 11.2(a) (and Section 11.2(c)
to the extent incidental to 11.2(a)) unless, on or before the third
anniversary of the Closing Date, Sellers notify Buyer of a claim
specifying the factual basis of that claim in reasonable detail.
(b) Sellers will have no Liability with respect to
individual claims pursuant to this Article 11, and Buyer shall have no
Liability with respect to individual claims pursuant to Section
11.2(a) and Section 11.2(c) as it relates to Section 11.2(a) that
involve Losses of less than $5,000.
(c) Sellers will have no Liability for Losses
pursuant to this Article 11 until the aggregate of all Losses exceeds
$800,000, in which event only the amount that Buyer is entitled to
recover in respect of any such claims in excess of $800,000 shall be
payable; provided, that, the maximum amount recoverable by Buyer for
indemnification claims under this Article 11 shall in the aggregate be
equal to the Purchase Price.
(d) The indemnities set forth in this Article 11
shall be the exclusive remedy of Buyer or Seller for any
misrepresentation, breach of warranty, or nonfulfillment or failure to
be performed of any covenant or agreement contained in this Agreement;
provided that, (i) the indemnities set forth in this Article 11 shall
not preclude the purchase price adjustments and other payments
required pursuant to Article 3 and (ii) nothing in this Article 11
shall limit any right of any party hereto to any non-monetary remedy
for any breach of this Agreement or to any monetary remedy for breach
of any covenant or agreement in Section 7.4, Section 8.2, Section
8.3(b) or Article 13 of another party to be performed on or after the
Closing.
(e) Notwithstanding anything in this Agreement to the
contrary, Sellers shall be responsible in accordance with this Article
11 for any Losses incurred by Buyer as a result of Buyer's failure to
comply with any applicable law during the first twelve months
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after the Closing due to the ownership of Assets or operation of the
Music Business after the Closing in the same manner Sellers owned or
operated the Assets prior to the Closing; provided, however, that
Sellers shall not be responsible for any Losses incurred after Buyer
obtains actual knowledge of any failure to comply with applicable law
and has a reasonable opportunity to effect such compliance.
(f) Upon making any payment to an indemnified party
for any indemnification claim pursuant to this Article 11, the
indemnifying party shall be subrogated, to the extent of such payment,
to any rights that the indemnified party may have against any other
parties with respect to the subject matter underlying such
indemnification claim.
(g) Notwithstanding anything herein to the contrary,
Buyer shall have no right to any indemnification under this Article 11
for any matter if the Purchase Price was reduced for such matter as a
result of an adjustment thereto in accordance with Article 3 hereof.
ARTICLE 12.
TERMINATION OF AGREEMENT
12.1. Termination Events. This Agreement may be terminated at
any time prior to the Closing:
(a) By mutual agreement of Sellers and Buyer.
(b) By Buyer, (i) if Sellers have violated or
breached in any material respect any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing and Sellers have not cured such violation
or breach within thirty business days after Buyer delivers written
notice thereof, or (ii) if any of the conditions set forth in Article
9 hereof have not been satisfied in all material respects by the
Closing or have not been waived in writing by Buyer.
(c) By Sellers, (i) if Buyer has violated or breached
in any material respect any of the agreements, representations or
warranties contained in this Agreement which has not been waived in
writing and Buyer has not cured such violation or breach within thirty
business days after Sellers deliver written notice thereof, or (ii) if
any of the conditions set forth in Article 10 hereof have not been
satisfied in all material respects by the Closing or have not been
waived in writing by Sellers.
(d) By either Buyer or Sellers if the transactions
contemplated by this Agreement shall not have been consummated on or
before March 31, 1997, provided that such right of termination shall
not be available to any party whose failure to fulfill any
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obligation or condition under this Agreement has been the cause of, or
resulted in, the failure of the transactions contemplated hereby to be
consummated on or before that date.
(e) By either Buyer or Sellers if the other makes an
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy or seeks or consents to any reorganization or similar
relief under any present or future bankruptcy act or similar law, or
is adjudicated a bankrupt or insolvent, or if a third party commences
any bankruptcy, insolvency, reorganization or similar proceeding
involving the other.
12.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 12.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations of Buyer in
Section 7.2, and the obligations in Sections 14.2 and 14.9 will survive.
Nothing in this Section 12.2 shall relieve any party to this Agreement of
Liability for breach of this Agreement or for breach of the Confidentiality
Agreement.
ARTICLE 13.
NONCOMPETE AND CONFIDENTIALITY
13.1. Confidentiality. Sellers jointly and severally agree not
to, directly or indirectly, without the prior written consent of Buyer, use or
disclose to any Person, any information, trade secrets, confidential customer
information, technical data or know-how which constitute or relate to the
Assets, Assumed Liabilities, processes, methods, equipment or business
practices of the Music Business.
13.2. Noncompete.
(a) Sellers jointly and severally agree that, for a
period of five years after the Closing Date, Sellers and their
Affiliates will not, directly or indirectly, in the United States, the
United Kingdom and Canada (the "Territory"), (i) engage in the
production or distribution of religious recorded music and related
products, the domestic and international distribution of recordings of
religious music for other companies or music publishing, including
songwriter development, print music, publishing and copyright
administration with respect to religious music (other than the
production of recorded music incidental to any Sellers' and their
Affiliates' audiovisual business) (the "Company Business"); or (ii)
have any interest, as a shareholder, member, partner, owner, agent,
consultant, lender or guarantor, in any other Person engaged in the
Company Business.
(b) Buyer represents and warrants that (i) the Music
Business and Sellers' religious book publishing business have been
operated as an integrated business for purposes of accounting, legal,
production, distribution, sales, promotion, fulfillment and in other
respects since at least 1993, (ii) by acquiring the Assets and
succeeding to the Music Business, Buyer will acquire, directly and
indirectly, Sellers' know-how, access to
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distribution systems and other proprietary information (collectively,
the "Religious Book Publishing Assets") which would enable Buyer to
compete with Seller in the religious book publishing business, and
(iii) the Religious Book Publishing Assets would not otherwise be
available to the Buyer and could not otherwise be developed or
acquired without the Buyer incurring substantial expense. In light of
the foregoing, to preserve for Sellers the value in Sellers' religious
book publishing business and to prevent Buyer from securing Sellers'
Religious Book Publishing Assets without compensating Sellers
therefore, Buyer agrees that, for a period of five years after the
Closing Date ("Buyer's Noncompete Period"), Buyer and its Affiliates
will not, directly or indirectly, in the Territory, (x) engage in the
creation, publication or distribution of religious literary works (the
"Religious Publishing Business"); or (y) have any interest, as a
shareholder, member, partner, owner, agent, consultant, lender or
guarantor, in any other Person engaged in the Religious Publishing
Business. Buyer further agrees that, for an additional period of two
years commencing on the expiration of Buyer's Noncompete Period, Buyer
and its Affiliates will not, directly or indirectly, in the Territory,
engage in the publication or distribution of any literary work under
the Trademark "Word" or any trademark confusingly similar to "Word."
(c) For purposes of this Article 13, ownership of 1%
or less of any class of outstanding securities of a company the
securities of which are listed on a national securities exchange or
which has 1,000 or more shareholders, shall not be deemed to
constitute ownership or participation in the ownership of the business
of such company.
(d) Neither any Seller nor any Affiliate of any
Seller, for a period of five years after the Closing Date, shall (i)
directly or indirectly, hire, entice away, retain, employ or solicit
or attempt to solicit (either for itself or as agent for another or
through the use of an agent or intermediary) for employment or induce,
persuade or encourage any person to leave Buyer's employ who, prior to
the Closing Date was, or during such five year period will be,
employed or retained by Buyer as a department manager of Buyer or a
position senior to department manager of Buyer, (ii) hire or directly
solicit for employment or induce, persuade or encourage a person to
leave Buyer's employ (which direct solicitation, inducement,
persuasion or encouragement shall not include generalized
advertisement for employment or other engagement) who is, at the time
of hiring or solicitation, employed or retained by Buyer as a
consultant, agent, author, producer, songwriter, artist, contributor,
employee or otherwise in the Company Business or (iii) directly or
indirectly, divert or attempt to divert from Buyer any Company
Business whatsoever by influencing or attempting to influence any
consultant, agent, author, producer, songwriter, artist, contributor,
customer, supplier, distributor or other Person providing products
and/or services to Buyer.
(e) Neither Buyer nor any Affiliate of Buyer, for a
period of five years after the Closing Date, shall (i) directly or
indirectly, hire, entice away, retain, employ or solicit or attempt to
solicit (either for itself or as agent for another or through the use
of
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an agent or intermediary) for employment or induce, persuade or
encourage any person to leave a Seller's employ who, prior to the
Closing Date was, or during such five year period will be, employed or
retained by a Seller as a department manager of Xxxxxx or Word (other
than employees of the Music Business selected by Buyer to become
employees pursuant to Section 8.3(a)) or a position senior to
department manager of Xxxxxx or Word, (ii) except as aforesaid hire or
directly solicit for employment or induce, persuade or encourage a
person to leave a Seller's employ (which direct solicitation,
inducement, persuasion or encouragement shall not include generalized
advertisement for employment or other engagement) who is, at the time
of hiring or solicitation, employed or retained by Seller as a
consultant, agent, author, producer, publisher, writer, contributor,
employee or otherwise in the Religious Publishing Business or (iii)
directly or indirectly, divert or attempt to divert from a Seller any
Religious Publishing Business whatsoever by influencing or attempting
to influence any consultant, agent, author, producer, publisher,
writer, contributor, customer, supplier, distributor or other person
or entity providing products and/or services to a Seller.
(f) Notwithstanding any other provision in this
Article 13, nothing shall prevent the Sellers and their Affiliates
from engaging in any activities enumerated in Section 13.2(a)(i) or
(ii) (collectively, as they relate to Sellers and their Affiliates,
"Restricted Activities") or Buyer and its Affiliates from engaging in
any activity enumerated in Section 13(b)(x) or (y) (collectively, as
they relate to Buyer and its Affiliates, also "Restricted Activities")
which meet any of the following requirements:
(i) Any party can engage in Restricted
Activities which relate to Children's Products, only if the business
related to Children's Products which otherwise would be a Restricted
Activity for such party is ancillary to, or an extension of,
Children's Products which are part of a business of such party which
is not a Restricted Activity.
(ii) in connection with the acquisition of any
Person which conducts incidental Restricted Activities. For purposes
hereof, the term "incidental Restricted Activities" shall mean any
Restricted Activities which represent less than twenty-five percent
(25%) of the annual revenues of the acquired Person at the time of the
acquisition of such Person by the acquiring party; provided, however,
that in the event of an acquisition by a party of any Person of which
more than ten percent (10%) but less than twenty-five percent (25%) of
such Person's annual revenues is derived from Restricted Activities,
the acquiring party agrees to divest all ownership of such Restricted
Activities within nine months of the date of such acquisition.
(g) The rights and obligations of the parties under
this Section 13.2 shall terminate immediately notwithstanding the
provisions of Sections 13.2(a) and (b) in the event that any Person
who is engaged in any Restricted Activities acquires Xxxxxx or Buyer,
as the case may be, in a Change in Control. As used herein, "Change
in Control" shall mean an event in which any person or persons (as
such term is used in Sections 13(d)
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and 14(d) of the Securities Exchange Act of 1934, as amended) (other
than an Affiliate of Xxxxxx or Buyer, as applicable, or any Person
engaged in a "going private" transaction involving Buyer or Xxxxxx, as
applicable) acquires (i) beneficial ownership of, or acquires the
right to vote, through acquisition, tender offer, proxy solicitation,
merger or consolidation, fifty percent (50%) or more of the then
issued and outstanding shares of voting common stock of a party or
securities representing fifty percent (50%) or more of the combined
voting power of the then issued and outstanding securities of such
party or (ii) all or substantially all of a party's assets.
13.3. Remedy. Buyer and Sellers acknowledge and agree that any
breach of this Article 13 is likely to result in irreparable injury to Sellers
or Buyer, that monetary damages will be an inadequate remedy of such breach and
that, accordingly, in addition to any other remedy that Seller or Buyer may
have, Seller or Buyer shall be entitled to enforce the specific performance of
this Article 13 and to seek both permanent and temporary relief in the event of
any breach hereof.
13.4. Enforceability. The parties acknowledge that the time,
scope, geographic area and other provisions of this Article 13 have been
specifically negotiated by sophisticated commercial parties and agree that all
such provisions are reasonable under the circumstances of the transactions
contemplated by this Agreement. If any portion of this Article 13 shall be
determined to be invalid and unenforceable as written, each such portion shall
be enforced to the extent reasonable under the circumstances and such
determination shall not affect the validity or enforceability of the balance
hereof, and such balance shall remain in full force and effect. It is
understood that Sellers and Buyer are entering into this non-competition
agreement in order to induce Buyer and Sellers to enter into this Agreement.
13.5. Geographic Scope. The parties acknowledge that the
Company Business and the Religious Publishing Business are each currently
conducted throughout the Territory. In view of the statements made in Section
13.4, the parties agree that the Territory is reasonable in scope.
ARTICLE 14.
MISCELLANEOUS
14.1. Survival of Representations. The parties hereto agree
that, all representations, warranties, covenants, conditions and agreements
contained herein or in any instrument or other document delivered pursuant to
this Agreement or in connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and any investigation or audit made by any
party hereto and that such representations and warranties shall expire on the
third anniversary of the Closing Date.
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14.2. Expenses. All fees and expenses incurred by Sellers,
including without limitation, legal fees and expenses and the fees and expenses
of X.X. Xxxxxxxx & Co., in connection with this Agreement, will be borne by
Sellers and all fees and expenses incurred by Buyer, including without
limitation legal fees and expenses in connection with this Agreement, will be
borne by Buyer.
14.3. Assignability; Parties in Interest.
(a) This Agreement may not be assigned by Seller
without the prior written consent of Buyer. Buyer may assign any or
all of their respective rights hereunder to any of its direct or
indirect majority-owned subsidiaries provided that Buyer shall
continue to remain obligated for the performance of its obligations
hereunder. Buyer shall advise Xxxxxx of any such assignment and shall
designate the assignee and transferee of the assets purchased. Any
such assignee shall assume all duties, obligations and undertakings of
its assignor hereunder, but the assignor shall remain liable
thereunder.
(b) All the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors, assigns and legal
representatives of the parties hereto.
14.4. Allocation of Purchase Price. The Purchase Price for the
Assets shall be allocated as agreed in writing by the parties prior to Closing.
The parties hereto agree to follow such allocation for Federal and State income
tax purposes.
14.5. Entire Agreement; Amendments. This Agreement, including
the Exhibits, Schedules referred to herein or delivered pursuant hereto, which
form a part hereof, together with the Confidentiality Agreement, contain the
entire understanding of the parties with respect to their subject matter.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings other than those expressly set forth herein or therein. Except as
otherwise specifically provided herein, this Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter. This Agreement may be amended only by a written instrument duly
executed by Xxxxxx, Word and Buyer or their respective successors, assigns or
legal representatives. Any condition to a party's obligations hereunder may be
waived but only by a written instrument signed by the party entitled to the
benefits thereof. The failure or delay of any party at any time or times to
require performance of any provision or to exercise its rights with respect to
any provision hereof, shall in no manner operate as a waiver of or affect such
party's right at a later time to enforce the same.
14.6. Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretations of this Agreement.
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14.7. Severability. The invalidity of any term or terms of this
Agreement shall not affect any other term of this Agreement, which shall remain
in full force and effect.
14.8. 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 Sellers:
Xxxxxx Xxxxxx, Inc.
Xxxxxx Place at Xxx Xxxx Xxxx
X.X. Xxx 00000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxx X. Xxxxxx, Executive Vice President and
Chief Financial Officer
Telecopy 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.
Telecopy Number: (000) 000-0000
and
Bass, Xxxxx & Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, III, Esq.
Telecopy Number: (000) 000-0000
If to Buyer:
Xxxxxxx Entertainment Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: X. X. Xxxxxxxxx, Xx., Esq.
Telecopy Number: (000) 000-0000
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with a copy to:
Loeb & Loeb LLP
00 Xxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Xx., Esq.
Telecopy Number: (000) 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.
14.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Tennessee applicable
to agreements made and to be performed wholly within that jurisdiction. Each
of the parties hereto hereby irrevocably and unconditionally consents to submit
to the exclusive jurisdiction of the courts of the State of Tennessee and of
the United States of America, in each case located in Davidson County, for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto
except in such courts), and further agrees that service of any process,
summons, notice, or document by U.S. registered mail to its respective address
set forth in Section 14.8 shall be effective service of process for any
litigation brought against it in any court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of Tennessee or the United States of America,
in each case located in Davidson County, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such litigation brought in any such court has been brought in an
inconvenient forum.
14.10. Public Announcements. Neither Sellers nor Buyer shall
make any public statements, including, without limitation, any press releases,
with respect to this Agreement and the transactions contemplated hereby without
the prior written consent of the other party (which consent shall not be
unreasonably withheld) except as may be required by law. If a public statement
is required to be made by law, the parties shall consult with each other in
advance as to the contents and timing thereof.
14.11. No Third Party Beneficiaries. This Agreement is intended
and agreed to be solely for the benefit of the parties hereto and no other
party shall accrue any benefit, claim or right of any kind whatsoever pursuant
to, under, by or through this Agreement.
14.12. Interpretive Provisions. Whenever used in this Agreement,
"to Sellers' knowledge" or "to the knowledge of Sellers" shall mean the actual
knowledge of the corporate officers of either Seller.
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14.13. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, with the same effect as if the
signatories executing the several counterparts had executed one counterpart.
All such executed counterparts shall together constitute one and the same
instrument.
14.14. Best Efforts to Resolve Discrepancies. The parties agree
that, in the event that any event or condition occurs under this Agreement,
whether pursuant to Section 8.4 or otherwise, which would give rise to a
failure of Sellers to meet Buyer's conditions to closing pursuant to Article 8
or, in the event of a Closing, a right of indemnification by Buyer against
Sellers pursuant to Article 11, the parties hereto agree to negotiate in good
faith to find a mutually satisfactory basis for proceeding with the
transactions contemplated hereby, in order that the Closing may occur prior to
the occurrence of a termination event in Article 12(d).
THIS SPACE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Buyer and by each of Sellers on
the date first above written.
BUYER:
XXXXXXX ENTERTAINMENT COMPANY
By: /s/ Xxxxx X. London
----------------------------------------------
Title: Chief Financial and Administrative Officer
------------------------------------------
SELLERS:
XXXXXX XXXXXX, INC.
By: /s/ Xxx X. Xxxxxx
------------------------------------------
Title: Executive Vice President and Secretary
---------------------------------------
WORD, INCORPORATED
By: /s/ Xxx X. Xxxxxx
------------------------------------------
Title: Executive Vice President and Secretary
---------------------------------------
WORD DIRECT PARTNERS, L.P.
By Word Direct, Inc., as general partner
By: /s/ Xxx X. Xxxxxx
------------------------------------------
Title: Treasurer and Secretary
---------------------------------------
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