EXECUTION COPY
EXHIBIT 10.3
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇-▇▇▇▇ MUSIC PUBLISHING, INC.,
▇▇▇▇▇-▇▇▇▇ MUSIC, INC.,
MILENE MUSIC, INC.,
SPRINGHOUSE MUSIC, INC.
AND
HICKORY RECORDS, INC.
ON THE ONE HAND
AND
SONY/ATV MUSIC PUBLISHING LLC
ON THE OTHER HAND
DATED: JULY 1, 2002
TABLE OF CONTENTS
PAGE NO.
ARTICLE 1. DEFINITIONS.................................................................................. 1
ARTICLE 2. PURCHASE AND SALE OF ASSETS.................................................................. 10
2.1 Sale And Purchase Of Assets...................................................................... 10
2.2 Assumption Of Certain Liabilities By Buyer....................................................... 12
2.3 Purchase Price................................................................................... 13
2.4 Pre-Closing Receipts; Expense Reimbursement...................................................... 13
2.5 The Closing...................................................................................... 14
2.6 Deliveries at the Closing........................................................................ 14
2.7 Assumed Contracts................................................................................ 16
2.8 Allocation of Purchase Price..................................................................... 16
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER...................................................... 16
3.1 Organization of Buyer............................................................................ 17
3.2 Authorization of Transaction..................................................................... 17
3.3 Noncontravention................................................................................. 17
3.4 Brokers' Fees.................................................................................... 17
3.5 Sufficient Funds................................................................................. 17
ARTICLE 4. REPRESENTATIONS AND WARRANTIES CONCERNING SELLERS AND SUBSIDIARIES........................... 17
4.1 Organization, Qualification, and Corporate Power................................................. 17
4.2 Authorization of Transaction..................................................................... 18
4.3 Capitalization................................................................................... 18
4.4 Noncontravention................................................................................. 18
4.5 Brokers' Fees.................................................................................... 19
4.6 Title to Tangible Assets......................................................................... 19
4.7 Legal Compliance................................................................................. 19
4.8 Subsidiary Liabilities........................................................................... 19
4.9 Real Property.................................................................................... 19
4.10 Tangible Assets.................................................................................. 20
4.11 Contracts........................................................................................ 20
4.12 Litigation....................................................................................... 21
4.13 Employees........................................................................................ 21
4.14 Environmental, Health, and Safety Matters........................................................ 21
4.15 Performance Rights Societies; Agents............................................................. 22
4.16 Compositions; Masters............................................................................ 22
4.17 Unrecouped Advances to Sellers................................................................... 23
4.18 Limitation of Payments........................................................................... 23
4.19 Licenses and Subpublishing Agreements............................................................ 23
4.20 Historical NPS and NRR........................................................................... 23
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4.21 Names............................................................................................ 24
4.22 Top 120 Songs.................................................................................... 24
4.23 Renewal Rights................................................................................... 24
4.24 Notice of Termination............................................................................ 24
4.25 Schedule of Compositions and Masters............................................................. 24
4.26 Songwriter Agreements............................................................................ 24
4.27 Trademarks and Domain Names...................................................................... 24
ARTICLE 5. PRE-CLOSING COVENANTS........................................................................ 25
5.1 General.......................................................................................... 25
5.2 Notices and Consents............................................................................. 25
5.3 Operation of Business............................................................................ 25
5.4 Preservation of Business......................................................................... 25
5.5 Full Access...................................................................................... 25
5.6 Notice of Developments........................................................................... 26
5.7 Acquisition Proposals............................................................................ 26
5.8 HSR Filings...................................................................................... 26
ARTICLE 6. POST-CLOSING COVENANTS....................................................................... 26
6.1 General.......................................................................................... 26
6.2 Litigation Support............................................................................... 27
6.3 Transition....................................................................................... 27
6.4 Confidentiality.................................................................................. 27
6.5 Employee Benefits Matters........................................................................ 27
6.6 Bulk Sales....................................................................................... 27
ARTICLE 7. CONDITIONS TO OBLIGATION TO CLOSE............................................................ 28
7.1 Conditions to Obligation of Buyer................................................................ 28
7.2 Conditions to Obligation of Sellers and the Subsidiaries......................................... 28
ARTICLE 8. INDEMNIFICATION.............................................................................. 29
8.1 Survival of Representations and Warranties....................................................... 29
8.2 Indemnification Provisions for Benefit of Buyer.................................................. 29
8.3 Indemnification Provisions for Benefit of Sellers................................................ 29
8.4 Procedure for Matters Involving Third Parties.................................................... 30
8.5 Limitations on Sellers' Indemnification Liability................................................ 31
8.6 Limitations on Buyer's Indemnification Liability................................................. 31
8.7 Determination of Adverse Consequences............................................................ 32
8.8 Breach of Representations or Warranties of Copyright Ownership by Sellers; Damage Calculation.... 32
8.9 Exclusive Remedy................................................................................. 33
ARTICLE 9. TAX MATTERS.................................................................................. 33
9.1 Tax Periods...................................................................................... 33
9.2 Refunds and Tax Benefits......................................................................... 33
9.3 Certain Taxes.................................................................................... 33
9.4 Cooperation on Tax Matters....................................................................... 34
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9.5 Tax Audits....................................................................................... 34
ARTICLE 10. TERMINATION.................................................................................. 34
10.1 Termination of Agreement......................................................................... 34
10.2 Effect of Termination; Specific Performance...................................................... 35
ARTICLE 11. MISCELLANEOUS................................................................................ 35
11.1 Press Releases and Public Announcements.......................................................... 35
11.2 No Third-Party Beneficiaries..................................................................... 36
11.3 Entire Agreement................................................................................. 36
11.4 Succession and Assignment........................................................................ 36
11.5 Counterparts..................................................................................... 36
11.6 Headings......................................................................................... 36
11.7 Notices.......................................................................................... 36
11.8 Governing Law.................................................................................... 37
11.9 Amendments and Waivers........................................................................... 37
11.10 Severability..................................................................................... 37
11.11 Expenses......................................................................................... 37
11.12 Construction..................................................................................... 38
11.13 Incorporation of Exhibits and Schedules.......................................................... 38
ATTACHMENTS
Exhibit A - Assignment/Assumption Agreement
Exhibit B - ▇▇▇▇ of Sale
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made the 1st day of
July, 2002, by and between ▇▇▇▇▇-▇▇▇▇ Music Publishing, Inc., a Tennessee
corporation ("▇▇▇▇▇-▇▇▇▇"), ▇▇▇▇▇-▇▇▇▇ Music, Inc., a Tennessee corporation
("▇▇▇▇▇-▇▇▇▇ Music"), Milene Music, Inc., a Tennessee corporation ("Milene"),
Springhouse Music, Inc., a Tennessee corporation ("Springhouse"), and Hickory
Records, Inc., a Tennessee corporation ("Hickory", and, together with
▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇-▇▇▇▇ Music, Milene and Springhouse, the "Sellers") on the one
hand, and Sony/ATV Music Publishing LLC, a Delaware limited liability company
("Buyer").
RECITALS:
WHEREAS, Sellers are in the business, either directly and/or indirectly
through the operation of agreement(s) with any Person, of acquiring, publishing
and exploiting musical compositions and producing, distributing and exploiting
sound recordings (the "Business"); and
WHEREAS, Sellers desire to sell, and Buyer desires to purchase,
substantially all the assets of Sellers (with certain exceptions) used in
connection with the Business and to assume certain of the liabilities and
obligations of Sellers relating thereto, all upon the terms and subject to the
conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, Buyer and Sellers (collectively, the "Parties")
agree as follows:
ARTICLE 1
DEFINITIONS
"Accounts Receivable" means all claims, choses in action, debts,
receivables, accounts, royalties, advances, fees, monies, and all other rights
to receive monies or other property from any and all sources (including without
limitation all sums realized after the Cut-off Date from audit examinations of
Sellers' licensees for any period prior to or after the Cut-off Date) which are:
(a) owing to the Sellers or the Subsidiaries; (b) as a result of the
exploitation of the Compositions, the Masters or any other Asset, anywhere in
the world; and (c) have not been actually received by Sellers or the
Subsidiaries prior to or on the Cut-off Date, regardless of when earned, accrued
or due. Accounts Receivable includes a note receivable by ▇▇▇▇ ▇▇▇▇▇▇ effective
July 1, 1997.
"▇▇▇▇▇-▇▇▇▇" has the meaning set forth in the preface to this Agreement.
"▇▇▇▇▇-▇▇▇▇ Music" has the meaning set forth in the preface to this
Agreement.
"Acquisition Documents" means all contracts, agreements, assignments and
other instruments of the Business, whereby the Sellers or their
Subsidiaries or any of Sellers' or their Subsidiaries' predecessors-in-interest
acquired proprietary rights or rights of control in or to the Assets (including
without limitation the Songwriter Agreements).
"Acquisition Proposal" has the meaning set forth in Section 5.7.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages (other than consequential or punitive
damages), dues, penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, Taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Applicable Rate" means the corporate base rate of interest published from
time to time in the Wall Street Journal.
"Artist" means the featured vocalists or instrumentalists performing on a
Master.
"Artist/Producer Agreements" means all contracts, agreements or other
instruments of transfer between Sellers and recording Artists, Producers or
other parties to whom royalties are due or who furnished services in connection
with the creation, delivery and/or transfer of Masters and Videos or any entity
furnishing the services of such persons.
"Artwork" means all artwork, photographs, liner notes and other graphic
and textual material created for use in packaging phonorecords derived from the
Masters and in packaging Videos, together with the copyrights therein and all
renewals, extensions, continuations, and restorations and reversions of such
copyrights owned or controlled by Sellers, in all countries of the world or
otherwise throughout the universe (subject to any third party termination
rights), as well as all causes of action with respect thereto.
"Assets" has the meaning set forth in Section 2.1.
"Assignment/Assumption Agreement" has the meaning set forth in Section
2.6.
"Assumed Contracts" has the meaning set forth in Section 2.7.
"Assumed Liabilities" has the meaning set forth in Section 2.2.
"▇▇▇▇ of Sale" has the meaning set forth in Section 2.6.
"Business" has the meaning set forth in the recitals to this Agreement.
"Buyer" has the meaning set forth in the preface to this Agreement.
"Buyer Closing Documents" has the meaning set forth in Section 2.6.
"Claim Notice" has the meaning set forth in Section 8.4.
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"Closing" has the meaning set forth in Section 2.5.
"Closing Date" has the meaning set forth in Section 2.5.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Compositions" means: (a) all musical compositions, or portions thereof,
owned or controlled, in whole or in part, by Sellers (to the extent of Sellers'
interest therein) as of the Effective Date, including but not limited to the
musical works identified on Schedule 4.25(a); as well as (b) all musical
compositions that Sellers have the right to acquire at any time after the
Effective Date pursuant to any of the Acquisition Documents (to the extent of
Sellers' interest therein). The musical compositions described in subsections
(a) and (b) shall include: musical compositions whether the same were originally
claimed or registered as a musical composition or as a musical part of a
dramatico-musical work and shall also include, but shall not be limited to, any
music, lyrics, titles and/or cues, whether domestic or foreign, and any
arrangement, adaptation, edition, translation into a foreign language or
derivative work based thereon and all right, title and interest in and to such
musical compositions and the Copyright Interest therein.
"Copyright Interest" shall mean, with respect to the Compositions, the
Masters, and all other copyrightable subject matter to be acquired by Buyer
hereunder, all copyrights therein and all renewals, extensions, continuations
and restorations and reversions of such copyrights (whether vested, contingent
or inchoate and whether such renewals, extensions, continuations, restorations
and reversions are now in existence or come into existence as a result of future
legislation or the interpretation thereof) in all countries of the world or
otherwise throughout the universe (subject to any third party termination
rights), as well as all causes of action, including those for infringement,
arising from the date of creation of each such musical composition, whether now
known or unknown to Buyer or Sellers in all events.
"Confidential Information" means any information concerning the businesses
and affairs of Sellers and their Affiliates, as the case may be, that is not
generally available to the public, including all proprietary information
concerning the operations of the Business and the financial condition thereof,
information constituting trade secrets or know-how, business plans, and notes,
summaries, analyses and other material prepared by Buyer based on the
information provided by Sellers.
"Contract Consents" has the meaning set forth in Section 2.7.
"Cut-off Date" means June 30, 2002.
"Effective Date" means July 1, 2002, and, after the Closing, the
conveyance of Assets hereunder shall be effective as of 12:01 a.m. on such date.
"Environmental, Health, and Safety Requirements" means all federal, state,
local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning public health and safety, worker
health and safety, or pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation,
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handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup
of any Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Equipment" has the meaning set forth in Section 2.1.
"Excluded Assets" has the meaning set forth in Section 2.1.
"Excluded Liabilities" has the meaning set forth in Section 2.2.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Hazardous Materials" means (i) any substance, contaminant, material,
element, compound, mixture, solution, waste, chemical or pollutant that is now
or hereafter listed, defined, characterized or regulated as hazardous, toxic, or
dangerous pursuant to any Environmental, Health and Safety Requirements, (ii)
petroleum, petroleum derivatives or by-products, and other hydrocarbons, (iii)
polychlorinated biphenyls, asbestos, radon and urea formaldehyde, and (iv)
radioactive substances, materials or wastes.
"Hickory" has the meaning set forth in the preface to this agreement.
"HSR Act" has the meaning set forth in Section 5.8.
"Indemnified Party" has the meaning set forth in Section 8.4.
"Indemnifying Party" has the meaning set forth in Section 8.4.
"Intellectual Property" means rights in the following Assets owned or
controlled by Sellers or the Subsidiaries: (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications (including for the
▇▇▇▇▇-▇▇▇▇ publishing administration system (PAS)), and patent disclosures,
together with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations relating thereto, (b) all trademarks, service
marks, trade dress, logos, trade names, corporate names, slogans, internet
domain names, telephone numbers, and all goodwill associated therewith, together
with all translations, adaptations, derivations, combinations, applications,
registrations, and renewals relating thereto, (c) all copyrightable works, all
copyrights, and all applications, registrations, and renewals relating thereto,
(d) all computer software (including data and related documentation), (e) all
advertising and promotional materials, (f) all other proprietary rights, and (g)
all copies and tangible embodiments of the foregoing (in whatever form or
medium); provided that Intellectual Property does not include the Compositions
or the Masters.
"IP Assignments" has the meaning set forth in Section 2.6.
"IRS" means the Internal Revenue Service.
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"Knowledge" means actual knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ and the officers of the Sellers listed on Schedule 4.1, or matters
that would reasonably be expected to come to their attention in the Ordinary
Course of Business, and shall include the results of any investigation conducted
by such persons prior to the Closing Date, but shall not be construed as
imposing any obligation on such persons to conduct any additional investigation.
"Licenses" means all mechanical licenses, synchronization licenses, print
licenses, Subpublishing Agreements, licenses to foreign publishers and other
licenses to which the Sellers or any of the Subsidiaries is a party, or which
were issued by any other Person on Sellers' behalf or any of Sellers'
Affiliates' behalf, granting to any Person the right to exploit, administer or
otherwise utilize any of the Compositions, the Record Assets or any portion
thereof (including, but not limited to, Sellers' and the Writers' affiliation
agreements with the applicable performing rights societies).
"Masters" means all master sound recordings, owned or controlled, in whole
or in part, by Sellers, including, without limitation, tape masters, reference
lacquers, work parts and out-takes and phonorecords derived from such master
recordings, including but not limited to, those listed on Schedule 4.25(b),
together with the Copyright Interest therein.
"Milene" has the meaning set forth in the preface to this Agreement.
"Miscellaneous Assets" means the following tangible assets of the Business
wherever located: (A) microfilm and microfiche; (B) "demo" recordings and other
sound recordings; (C) lead sheets, cue sheets, musical scores, artwork, paper,
plates, blocks, folios and arrangements; (D) records, documents, including,
without limitation, copyright certificates, and files, regardless of medium of
storage; (E) accounting and bookkeeping records related inter alia to receipts
and royalty activities including, but not limited to the ▇▇▇▇▇-▇▇▇▇ publishing
administration system (PAS) and the File Net imaging system and Sellers' rights
in all software and hardware relating thereto, rate cards, computer records
(excluding "Right Trade" or other computer programs or computer software
licensed to Sellers by a third party) and files necessary for the day-to-day
administration of the Business and royalty statements prepared by Sellers for
prior accounting periods; (F) all recordings and brochures, catalogues and the
like; (G) all correspondence files relating to the Compositions or the Business;
and (H) any other documents, recordings or things owned by Sellers and used in
the Ordinary Course of Business.
"Names" means the Publishing Names and the Record Name.
"Net Publisher's Share" or "NPS" means all gross fees, payments and
royalty revenues actually received by Sellers as to Compositions in the United
States (from sources throughout the world) derived as a result of the
exploitation of any of the Compositions (collectively, "Gross Revenues"), less
any amounts of any nature relating to such Gross Revenues which are actually
paid or are payable by Sellers or the Subsidiaries (or which are credited by
Sellers against advances previously paid by Sellers or the Subsidiaries or its
predecessors-in-interest) to any Writer, joint owners of the Compositions or any
rights therein, holders of Outside Interests and any other Persons, including,
without limitation, co-publishers and administrators of the Compositions (unless
such third-party administrators deduct their fees and charges prior to payment
to Sellers or the Subsidiaries or affording credit to Sellers or the
Subsidiaries, in which
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event such fees and charges will not be deducted for a second time) or other
royalty or income participants, but foreign subpublishing fees shall not be
deducted. For purposes of computing Net Publisher's Share there shall be no
acceleration of payment of any Gross Revenues to a time earlier than the time at
which such payment otherwise would have been made so as to prematurely include
such payments in an accounting period with a view toward distorting Net
Publisher's Share for such period. Notwithstanding the foregoing, the following
items shall not be included in the computation of Net Publisher's Share: (a)
income not specifically attributable to the exploitation of the Compositions
(including, but not limited to, interest accrued or accruing on deposits); (b)
Unrecouped Seller Advance Balances; or (c) amounts utilized to recoup advances
paid by Sellers or the Subsidiaries or their predecessors-in-interest to third
parties. Calculation of NPS shall include "black box income" which has been
received during the period presented in respect of the Compositions including
from foreign sources from previously unallocated royalty funds.
"Net Recording Receipts" or "NRR" means the gross amounts received by
Sellers from the exploitation of the Masters, less (i) royalties payable to
Artists, Producers and any other royalty recipients; and (ii) any amounts which
Sellers are obligated to pay to other third parties in connection therewith
(such as, without limitation, mechanical copyright payments, AFM and other union
fund payments).
"Ordinary Course of Business" means the Sellers' ordinary course of
business consistent with past custom and practice.
"Outside Interest" means any interest in any of the Compositions (other
than the undivided interests in the Compositions that are being assigned to
Buyer pursuant to the terms of this Agreement) which is owned by any Person,
whether such interest is an undivided interest in the copyrights in any
Composition or the right to receive royalties or other payments as a result of
the use or exploitation of any Composition or a combination thereof.
Notwithstanding the foregoing, no Writer shall be deemed to be a holder of
Outside Interests for the purposes of this Agreement, unless the Writer also
owns an undivided interest in the copyright in and to any Composition.
"Party" has the meaning set forth in the preface to this Agreement.
"Permitted Encumbrances" means (a) liens for Taxes not yet due and
payable, (b) purchase money liens and liens securing rental payments under
capital lease arrangements that constitute Assumed Contracts, and (c) recorded
easements, covenants and other restrictions, building and zoning restrictions
and other encumbrances, covenants, rights of way, easements and restrictions and
other title matters affecting and related to the Property none of which
unreasonably interfere with the current use, enjoyment or occupancy of the
Property by Sellers, or which are disclosed in Schedule 2.1(a)(ii). There are no
Permitted Encumbrances on the Publishing Assets or the Record Assets.
"Person" means any natural person, legal entity, association or other
organized group of natural persons or entities, or the successors, assigns and
representatives of the foregoing.
"Prepaid Expenses" has the meaning set forth in Section 2.1.
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"Producer" means the individual who performed the services of a producer
in connection with any Master or Video.
"Property" has the meaning set forth in Section 2.1.
"Publishing Assets" means the following:
(a) The Compositions;
(b) Acquisition Documents;
(c) Accounts Receivable;
(d) Miscellaneous Assets;
(e) Licenses;
(f) Rights of Administration;
(g) Recoupment Rights;
(h) The Publishing Names; and
(i) Songwriter Agreements.
"Publishing Names" means the trademarks and trade names "▇▇▇▇▇-▇▇▇▇
Music," "Milene Music," and "Springhouse Music," along with the goodwill
appurtenant thereto, and any state or federal registrations or pending
applications for state or federal registration of any of said trademarks and/or
trade names.
"Purchase Price" has the meaning set forth in Section 2.3.
"Real Estate Conveyances" has the meaning set forth in Section 2.6.
"Record Acquisition Documents" means all contracts, agreements,
assignments and other instruments of the Business whereby Sellers or the
Subsidiaries or any of Sellers' or the Subsidiaries' predecessors-in-interest
acquired proprietary rights or rights of control in or to the Record Assets,
including Artist/Producer Agreements.
"Record Assets" means the following recording interests of Sellers or its
Affiliates:
(a) The Masters;
(b) The Videos;
(c) The Artwork;
(d) The Record Acquisition Documents;
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(e) The Record Name; and
(f) The Artist/Producer Agreements.
"Record Name" means the trademark and trade name "Hickory Records," along
with the goodwill appurtenant thereto, and any state or federal registrations or
pending applications for state or federal registration of said trademark and/or
trade name.
"Recoupment Rights" means the right to recoup the balance of all advances
paid by Sellers or any of the Subsidiaries (or which were paid by Sellers' or
any of the Subsidiaries' predecessors-in-interest and acquired by Sellers or any
of the Subsidiaries) on or before the Closing Date to Writers, co-publishers,
income participants, holders of Outside Interests, Artists, Producers, and other
Persons to the extent such advances have not been recouped on or before the
Cut-off Date.
"Restrictions" means any agreements, judgments, orders or awards of any
nature limiting or restricting Sellers' rights as of the Closing Date to publish
or administer any of the Compositions or any other Publishing Asset or to
exercise the Rights of Administration. Restrictions also include: (i) any
agreement which grants to any Person, including, but not limited to, Seller and
the Subsidiaries, the right to claim a reversion or a reversionary interest in
any Publishing Asset upon the transfer thereof to Buyer or otherwise; (ii) the
right of any Person, other than any Writer or any holder of an Outside Interest,
to participate in the income derived from the exploitation of the Compositions
or any of them; and (iii) any agreement of any nature which would reduce the
right of Buyer to collect or otherwise prevent or delay Buyer from collecting
all income derived from the use or exploitation of the Publishing Assets or any
of them (other than the Writer's Performance Income Share). For purposes of
clarification, it is understood and agreed that the term "Restrictions," as used
in this Agreement shall not include any rights of approval granted to Writers
with respect to changes in or the exploitation of any Composition as expressly
set forth in the Songwriter Agreements or other Acquisition Documents.
"Rights of Administration" means all rights of whatsoever nature in the
Publishing Assets, including, but not limited to, the rights to publish,
administer, exploit in any and all media of whatsoever nature, whether now known
or hereafter devised, deal in, transfer or otherwise dispose of the Compositions
or any of them or any right therein throughout the world, and to collect all
income, compensation or consideration of whatsoever nature arising out of the
exercise of such Rights of Administration (except only the Writer's Performance
Income Share); the right to institute, pursue and compromise all claims and
choses in action existing at the Cut-off Date no matter when the same arose or
arising at any time after the Cut-off Date; the right to undertake audit
examinations of licensees (including for periods prior to the Cut-off Date) and
other users of the Compositions or of any Person who deals in or controls any
rights in and to any of the Publishing Assets and to retain the results thereof.
Included within the Rights of Administration are the non-exclusive, perpetual
rights to use the name, image and likeness of, and biographical information
concerning, the Writers and to reproduce, print, publish or disseminate the same
in any medium or by any method, now or hereafter known, for the purpose of
exploiting, administering and otherwise dealing with the Compositions or any of
them and to
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authorize others to exercise any of the foregoing rights, subject to any
approval rights or Restrictions contained in the Acquisition Documents or the
Songwriter Agreements.
"Schedules" has the meaning set forth in Article 4.
"Section 338 Election" has the meaning set forth in Section 2.8.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Security Interest" means any mortgage, pledge, lien, charge, or other
security interest, other than (a) mechanic's, materialmen's, and similar liens,
(b) liens for Taxes not yet due and payable, (c) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money, and (d) encumbrances, covenants, easements and restrictions affecting the
Real Property other than Permitted Encumbrances.
"Sellers" has the meaning set forth in the preface to this Agreement.
"Sellers' Material Adverse Effect" has the meaning set forth in Section
4.1.
"Sellers' Closing Documents" has the meaning set forth in Section 2.6.
"Songwriter Agreements" means all agreements whereby Sellers or the
Subsidiaries or their predecessors-in-interest acquired rights in the
Compositions from the Writers thereof. Songwriter Agreements include those
agreements whereby Sellers or the Subsidiaries have acquired the rights to the
products of the exclusive services of Writers to be created in the future.
"Springhouse" has the meaning set forth in the preface to this Agreement.
"Subpublishing Agreements" means all agreements whereby Sellers or any of
the Subsidiaries authorized any Person to administer and act as a publisher of
one or more of the Compositions on a general basis and to grant rights in such
Composition(s) to users or other Persons in a particular country or group of
countries outside the United States or Canada. Notwithstanding the foregoing,
any agreements whereby Sellers or any of the Subsidiaries authorized any Person
to administer only a particular right in one or more Compositions (such as
agreements with performing rights and mechanical rights licensing organizations,
agencies and societies), and whereby any Person does not assume general
responsibility for exploiting the Composition(s) concerned, are not
Subpublishing Agreements for the purposes of this Agreement.
"Subsidiaries" has the meaning set forth in Section 2.1(a).
"Tax" or "Taxes" means all past, present and future taxes, levies, duties,
imposts, deductions, charges, assessments, fees, liens or withholdings and all
liabilities (including, without limitation, all interest, penalties and
additions to tax) with respect thereto imposed on Sellers or any member of any
Seller, any Subsidiary, the Acquired Assets, this Agreement or any activity in
relation thereto.
9
"Taxing Authority" means any governmental or regulatory organization which
has the right and/or authority to impose or levy any Taxes.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8.4.
"Unrecouped Seller Advance Balances" means advances with respect to the
Assets paid, at any time prior to the Cut-off Date, to Sellers by any Person
which advances remain unrecouped as of the semi-annual accounting period ending
on June 30, 2002.
"Videos" means any and all audiovisual works in all configurations and
versions, owned or controlled, in whole or in part, by Sellers, together with
the copyrights therein and all renewals, extensions, continuations and
restorations and reversions of such copyrights owned or controlled by Sellers,
in all countries of the world or otherwise throughout the universe, as well as
all causes of action with respect thereto, subject to any third party
termination rights.
"Writer" and "Writers" means the authors, composers and lyricists who
wrote and/or composed the Compositions or any of them.
"Writer's Performance Income Share" means royalties, fees or other income
payable to any Writer (as the author/composer of any of the Compositions) by the
American Society of Composers, Authors and Publishers ("ASCAP"), Broadcast
Music, Inc. ("BMI"), SESAC, Inc. ("SESAC") or any other applicable performing
rights society which may succeed to the rights of ASCAP, BMI and/or SESAC, as
compensation for the exploitation of non-dramatic public performance rights in
the Compositions. The Writer's Performance Income Share shall not include any
portion of the royalties, fees or other income payable to Buyer or Buyer's
Affiliates, licensees or subpublishers, as a result of the nondramatic public
performance of the Compositions, which is denominated as the so-called
"publisher's share".
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 SALE AND PURCHASE OF ASSETS.
(a) Sale of Assets. Subject to the terms and conditions of this
Agreement, at the Closing, effective as of the Effective Date, Sellers
shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall
purchase, receive and accept from Sellers all of the assets of Sellers
used in the operation of the Business, as the same shall exist on the
Closing Date, other than the Excluded Assets (collectively, the "Assets").
Without limiting the generality of the foregoing, the term "Assets" shall
include the following:
(i) All office machinery and equipment, furniture and fixtures
and all other items of personal property owned or leased by Sellers,
the principal items of which are listed on Schedule 2.1(a)(i)
annexed hereto (the "Equipment");
10
(ii) All interests in real property (including all buildings
and fixtures thereon) owned by Sellers at 65 Music Square West, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and
described in Schedule 2.1(a)(ii) (the "Property");
(iii) All of Sellers' rights in and to the Assumed Contracts;
(iv) All of Sellers' rights in the Publishing Assets, the
Record Assets and the Intellectual Property;
(v) Sellers' Accounts Receivable, other than intercompany
receivables;
(vi) All of Sellers' deposits, prepaid rent and other expenses
relating to the Business (other than Sellers' prepaid corporate
charge allocation for insurance and benefits) (the "Prepaid
Expenses");
(vii) All of Sellers' books, records and files related to
operations of the Business;
(viii) All of Sellers' inventory used in connection with the
Business;
(ix) All of the outstanding capital stock of ▇▇▇▇▇-▇▇▇▇ Music
Limited, ▇▇▇▇▇-▇▇▇▇ Musikverlag GmbH, Editions ▇▇▇▇▇ ▇▇▇▇ France
SavL and ▇▇▇▇▇ ▇▇▇▇ Scandia, A.B. (the "Subsidiaries"); and
(x) All of the goodwill of Sellers relating to the Business.
(b) Excluded Assets. There shall be excluded from the Assets to be
transferred to Buyer hereunder the following assets of Sellers (the
"Excluded Assets"):
(i) Cash, cash equivalents and securities of Sellers (other
than the Capital Stock of the Subsidiaries) as of the Cut-off Date;
(ii) Books and records which may be necessary for Sellers to
retain for the purposes of any statute, rule, regulation or
ordinance or for Tax Returns or for other tax purposes or to verify
payment of royalty obligations (copies of which will be provided to
Buyer);
(iii) All claims for, rights to, and payments of, Tax credits,
abatements and refunds of previously paid Taxes, and all other Tax
benefits of Sellers, relating to federal, state, local or foreign
income, franchise, sales, use, payroll, withholding and similar
Taxes and charges in respect of income or operations of the Business
on or prior to the Cut-off Date;
(iv) All insurance contracts (including life insurance
policies on the lives of past or present management) and rights of
Sellers thereunder, including premium refunds and settlements
relating thereto;
11
(v) All rights in and to the assets of any Employee Benefit
Plan;
(vi) Sellers' prepaid corporate charge allocation for
insurance and benefits and other expenses;
(vii) Those Assumed Contracts for which a required Contract
Consent has not been obtained;
(viii) Accounts Receivable from intercompany accounts
including Accounts Receivable of the Subsidiaries;
(ix) All of the outstanding shares of capital stock of each of
▇▇▇▇▇-▇▇▇▇ Music, Milene, Springhouse and Hickory; and
(x) Those additional assets identified on Schedule 2.1(b)
hereto.
(c) Sale and Transfer of Assets. Sellers covenant that the sale and
transfer of the Assets by Sellers to Buyer as of the Closing Date shall be
made free and clear of all liabilities, Security Interests, liens, claims
and encumbrances, except (i) Assumed Liabilities; (ii) Permitted
Encumbrances on the Property; and (iii) as otherwise specifically provided
in this Agreement.
2.2 ASSUMPTION OF CERTAIN LIABILITIES BY BUYER.
(a) Assumed Liabilities. On the Closing Date, effective as of the
Effective Date, Buyer shall assume and thereafter shall pay and perform,
satisfy and otherwise discharge only the following liabilities and
obligations of Sellers that arise from the Business (the "Assumed
Liabilities"):
(i) All obligations and liabilities arising or accruing under
the Assumed Contracts after the Cut-off Date;
(ii) All liabilities of the Subsidiaries arising or accruing
under the contracts of Subsidiaries after the Cut-off Date subject
to Section 4.8 hereof; and
(iii) All liabilities with respect to audit claims or other
entitlements of third parties for royalties or payments (including
interest) under the Assumed Contracts, whether or not pending or
notified on the date of this Agreement, for royalty periods prior
to, on or after the Cut-off Date; but the aggregate amount of such
liability hereby assumed shall not exceed $1,000,000 with respect to
periods ending on or prior to the Cut-off Date, and after Buyer has
paid such amounts up to $1,000,000, Sellers will be responsible for
such amounts in excess of $1,000,000 with respect to such periods,
irrespective of when the claim for such amounts is made; and
(iv) All liabilities listed on Schedule 2.2(a).
12
(b) Excluded Liabilities. Except as otherwise specifically provided
in Section 2.2(a) and elsewhere in this Agreement, Buyer shall not assume
and shall in no event be liable for any liabilities, debts or obligations
of Sellers, whether accrued, absolute, matured, known or unknown,
liquidated or unliquidated, contingent or otherwise, including without
limitation:
(i) Any liabilities of Sellers or the Subsidiaries for
federal, state, local or foreign Taxes (except as provided in
Section 9.3 for periods prior to the Cut-off Date;
(ii) Any indebtedness of ▇▇▇▇▇-▇▇▇▇ or its Affiliates,
including without limitation, loans, advances, Tax sharing
agreement obligations and intercompany accounts and guarantees or
agreements with Deutsche Bank;
(iii) Any severance liabilities in favor of the employees of
Sellers or the Subsidiaries;
(iv) Any liabilities and obligations relating to the Excluded
Assets;
(v) Any pension liabilities or obligations to current or
former employees of Sellers or the Subsidiaries;
(vi) liabilities of Subsidiaries existing as of the Cut-off
Date;
(vii) liability for payment of royalties to Songwriters for
the royalty period ended June 30, 2002 (except as to audit claims
specified in Section 2.2(a)(iii) above);
(viii) liabilities of Sellers arising out of or in connection
with this Agreement or contracts of Sellers not assumed hereby; and
(ix) lessee's liabilities with respect to the Subsidiary's
▇▇▇▇▇ Street London lease or other leases.
The foregoing obligations and liabilities not assumed by Buyer and described in
this Section 2.2(b) are hereinafter called the "Excluded Liabilities".
2.3 PURCHASE PRICE. Buyer agrees to pay to Seller at the Closing One
Hundred Fifty-Seven Million Dollars ($157,000,000) (the "Purchase Price"), by
federal funds wire or interbank transfer in immediately available funds, to the
bank account(s) designated by Sellers in writing to Buyer prior to the Closing.
2.4 PRE-CLOSING RECEIPTS; EXPENSE REIMBURSEMENT. All sums of whatsoever
nature received by (or on behalf of) Sellers in respect of the Business during
the period after June 30, 2002 and prior to the Closing pursuant to accounting
statements received by (or on behalf of) Sellers and during the period after
June 30, 2002 and prior to the Closing (hereinafter, collectively, "Pre-Closing
Receipts") with respect to the Compositions and the Record Assets will be turned
over to Buyer at the Closing together with any and all royalty or other
statements
13
which evidence the nature and source of all Pre-Closing Receipts sufficient to
prepare royalty statements. Buyer will be responsible for the payment of all
royalties to Writers, Artists and Producers and for all sums actually payable to
third-party income participants and holders of Outside Interests which result
from the Pre-Closing Receipts and for Writer advances required by the Songwriter
Agreements, and the Pre-Closing Receipts will be reduced by any amount Sellers
have expended therefor. Buyer recognizes that Sellers may pay royalty advances
to Writers for royalties already received by the Business (but do not anticipate
paying other royalties) and required Writer advances. On the Closing Date,
Sellers shall pay to Buyer the net amount of all Pre-Closing Receipts, net of
the reductions described above, by cashier's check, bank wire transfer or other
form approved by Buyer (the "Pre-Closing Receipt Payment"), and Sellers shall
certify that the Pre-Closing Receipt Payment equals the net amount of all
Pre-Closing Receipts by setting forth in reasonable detail the amount of
receipts, reduced by any royalty payments or other payments to third parties
made by Sellers as permitted hereunder. In addition, as a reimbursement of a
portion of Sellers' expenses incurred in respect of the Business after the
Cut-off Date, Buyer shall pay to Sellers at Closing $40,000 per week (pro-rated
for any partial weeks) beginning on the Cut-off Date and ending on the Closing
Date), limited to eight weeks (not including employee costs relating to
processing of royalty payments for periods prior to and including the Cut-off
Date). At Closing, Sellers shall pay to Buyer $300,000 for cash due to Writers
and third parties for amounts received by the Business prior to the Cut-off Date
in settlement of the MP3 action.
2.5 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Sellers in
Nashville, Tennessee commencing at 9:00 a.m., local time, on the third business
day following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as Buyer and Sellers may mutually determine
(the "Closing Date").
2.6 DELIVERIES AT THE CLOSING.
(a) Documents to be Delivered by Sellers. At the Closing, Sellers
shall deliver to Buyer the following:
(i) An Assignment/Assumption Agreement (the "Assignment/
Assumption Agreement") in the form attached hereto as Exhibit A and
a ▇▇▇▇ of Sale and Assignment (the "▇▇▇▇ of Sale") in the form
attached hereto as Exhibit B;
(ii) For each interest in real property owned by Sellers and
identified on Schedule 2.1(a)(ii), a recordable special warranty
deed, but subject to the Permitted Encumbrances, and for each
interest in real property leased by Sellers and identified on
Schedule 2.1(a)(ii), an Assignment and Assumption of Lease or such
other appropriate document or instrument of transfer, executed by
the applicable Seller (the "Real Estate Conveyances");
(iii) All assignments of the Intellectual Property, the
Publishing Assets and the Record Assets, letters of direction and
all such other reasonable necessary instruments of transfer and
conveyance (the "IP Assignments") that Buyer may
14
request at or prior to the Closing; provided that such instruments
shall not contain any representations and warranties or indemnities
other than those contained in this Agreement, or otherwise alter or
expand upon such representations and warranties;
(iv) Stock certificates or other appropriate evidence of
ownership of the Subsidiaries duly endorsed to Buyer (collectively,
with the Assignment/ Assumption Agreement, the IP Assignments and
the Real Estate Conveyances, "Sellers' Closing Documents");
(v) The certificates and other documents required to be
delivered by Seller on or before the Closing Date pursuant to
Section 7.1 hereof or any other provision of this Agreement;
(vi) Resignations of officers and directors of the
Subsidiaries;
(vii) The release of the Guaranty of Sellers referenced on
Schedule 4.4; and
(viii) Sellers shall make available any tangible item of the
Artwork and the Masters that may be stored at premises other than
the Property for pick-up by Buyer.
(b) Documents to be Delivered by Buyer. At the Closing, Buyer shall
deliver to Sellers the following:
(i) The Purchase Price;
(ii) The Assignment/Assumption Agreement;
(iii) The Real Estate Conveyances;
(iv) All such other reasonably necessary documents or
agreements reflecting the assumption of the Assumed Liabilities as
Sellers may request at or prior to the Closing (collectively, with
the Assignment/Assumption Agreement and the Real Estate Conveyances,
the "Buyer Closing Documents"); and
(v) The certificates and other documents required to be
delivered by Buyer on or before the Closing Date pursuant to Section
7.2 hereof or any other provision of this Agreement.
(c) Other Actions. On the Closing Date, Sellers and Buyer shall take
all such other steps in their reasonable control as may be necessary to
fulfill the conditions to Closing set forth in Section 7.1 and 7.2 hereof.
15
2.7 ASSUMED CONTRACTS.
(a) Assumed Contracts. Buyer shall assume at the Closing, effective
as of the Effective Date, the obligations of Sellers under all the
contracts and agreements of Sellers relating to the Business, including
those listed on Schedule 2.7(a) hereto (the "Assumed Contracts").
(b) Consents. Each Seller shall promptly request and use its
reasonable efforts to obtain consent to the assignment to Buyer of
material Assumed Contracts requiring consent (collectively, the "Contract
Consents"). If any Contract Consent is not obtained, such Assumed Contract
shall not be assigned to Buyer. Sellers shall, to the extent practicable,
keep the relevant Assumed Contract in effect and give Buyer the benefit of
such Assumed Contract to the same extent as if it had not been excluded
from the Assets, and Buyer shall perform the obligations under such
Assumed Contract on behalf of Sellers to the extent that such obligations
would have existed if such Assumed Contract had been assigned to Buyer. If
after the Closing Date such Contract Consent is obtained, Buyer shall
assume such Assumed Contract as of the date of such Contract Consent.
Nothing in this Agreement shall be construed as an attempt to assign any
agreement or other instrument that is by its terms nonassignable without
the consent of the other party thereto.
2.8 ALLOCATION OF PURCHASE PRICE. For federal Tax purposes, the Purchase
Price and the Assumed Liabilities shall be allocated to the Assets in a manner
to be agreed upon by Buyer and Sellers within sixty (60) days after the Closing
consistent with the Treasury Regulations under Section 1060 of the Code. Sellers
and Buyer further agree to cooperate in preparing and filing Form 8594 to be
filed with the IRS reflecting the agreed-upon allocation and acknowledge and
agree that such allocation was determined by arm's length negotiations and that
none of them will take a position on any Tax Return, before any governmental
agency charged with the collections of any Tax, or in any judicial proceeding,
that is inconsistent with such allocation. Sellers will cooperate with Buyer in
filing an election under Section 338(a) of the Code (a "Section 338 Election")
relating to the acquisition of the shares of the Subsidiaries; provided, that
notwithstanding anything else in the Agreement to the contrary, that (i) all
Taxes that result from the 338 Election shall be paid by the Buyer, and the
threshold set forth in Section 8.6(b) shall not apply, and (ii) Sellers' Tax
liability attributable to the transactions contemplated by this Agreement shall
not be greater if such 338 Election is made than if such 338 Election were not
made. Sellers shall have no obligation to cooperate in the filing of an election
under Section 338(h)(10) of the Code.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that the statements contained in
this Article 3 are correct and complete as of the date of this Agreement and
will be correct and complete of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article 3).
16
3.1 ORGANIZATION OF BUYER. Buyer is a limited liability company duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization.
3.2 AUTHORIZATION OF TRANSACTION. Buyer has full corporate power and
authority to execute and deliver this Agreement and the Buyer Closing Documents
and to perform its obligations under this Agreement and the Buyer Closing
Documents. Each of this Agreement and the Buyer Closing Documents constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions. Except as required by the HSR Act, Buyer need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
3.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement nor the consummation of the transactions contemplated by this
Agreement or the Buyer Closing Documents will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Buyer is subject or any provision of its articles or certificate of
incorporation or bylaws or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Buyer is a party or by which it is bound or to which any of its assets is
subject.
3.4 BROKERS' FEES. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Sellers could become liable or
obligated.
3.5 SUFFICIENT FUNDS. Buyer has and will continue to have sufficient funds
to consummate the transactions contemplated hereby, including, without
limitation, to pay the Purchase Price 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 time
of the consummation of the transactions hereby contemplated free and clear of
all claims, liens and encumbrances.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING SELLERS AND SUBSIDIARIES
Sellers represent and warrant to Buyer that the statements contained in
this Article 4 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article 4), including the disclosure schedules delivered by
Sellers to Buyer on the date hereof, which constitute a part of this Agreement
(the "Schedules").
4.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of Sellers and
the Subsidiaries is a corporation duly incorporated, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each of
Sellers and the Subsidiaries is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where
17
such qualification is required, except where the lack of such qualification
would not have a material adverse effect on the business, financial condition,
operations or results of operations of Sellers and the Subsidiaries taken as a
whole (a "Sellers' Material Adverse Effect"). Each of the Sellers and the
Subsidiaries has full power and authority to carry on the businesses in which it
is engaged and to own and use the Assets owned and used by it. Schedule 4.1
lists the jurisdictions of incorporation of Sellers and the Subsidiaries, the
jurisdictions in which each is qualified to do business, and officers of each of
the Sellers.
4.2 AUTHORIZATION OF TRANSACTION. Each of the Sellers has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of Sellers, enforceable in accordance with its terms and conditions.
4.3 CAPITALIZATION. The authorized and issued capital stock of each
Subsidiary is set forth on Schedule 4.3. All of the issued and outstanding
shares of capital stock of each Subsidiary have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record by
▇▇▇▇▇-▇▇▇▇. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require any Subsidiary to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Subsidiaries. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Subsidiaries. ▇▇▇▇▇-▇▇▇▇ holds of record
and owns beneficially all issued and outstanding shares of capital stock of the
Subsidiaries.
4.4 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement or the Sellers' Closing Documents by Sellers will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which any of Sellers or the Subsidiaries is subject or any provision of
the charter, certificate of incorporation, articles of incorporation, or
articles of conversion as applicable, or bylaws or operating agreement of any of
Sellers or the Subsidiaries or (b) except as set forth on Schedule 4.4, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which any of Sellers or the Subsidiaries is
a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets), as
applicable, except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Sellers' Material Adverse Effect or a material adverse
effect on the ability of the Parties to consummate the transactions contemplated
by this Agreement. Except as required by the HSR Act, none of Sellers or the
Subsidiaries needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a Sellers' Material Adverse
Effect or a material adverse effect on the ability of the Parties to consummate
the transactions contemplated by this Agreement.
18
4.5 BROKERS' FEES. None of Sellers or the Subsidiaries has any liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement.
4.6 TITLE TO TANGIBLE ASSETS. Sellers and the Subsidiaries have, or will
have, good title to, or a valid leasehold interest in, the tangible properties
included in the Assets as of the Closing Date free and clear of all Security
Interests but subject to the Permitted Encumbrances, except for properties and
Assets disposed of in the Ordinary Course of Business since the date hereof.
4.7 LEGAL COMPLIANCE. Except as set forth on Schedule 4.7, each of Sellers
and the Subsidiaries has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure to so comply, except where the failure to
comply would not have a Sellers' Material Adverse Effect.
4.8 SUBSIDIARY LIABILITIES. To Sellers' Knowledge, there are no material
liabilities of the Subsidiaries except under affiliation agreements, songwriter
agreements for which no advance payments will become due for periods after the
Cut-off Date, one lease agreement for space at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
all of which is subleased to a third party and the agreements listed on Schedule
4.8.
4.9 REAL PROPERTY.
(a) Schedule 2.1(a)(ii) lists all real property owned by Seller. The
Subsidiaries own no real property. With respect to each such parcel of
owned Property, except as set forth on Schedule 4.9:
(i) the identified owner has good and marketable title to the
parcel of Property, free and clear of any Security Interest, except
the Permitted Encumbrances;
(ii) there are no pending or, to the Knowledge of Sellers,
threatened condemnation proceedings, lawsuits, or administrative
actions relating to Property or other matters affecting materially
and adversely the current use, occupancy, or value thereof;
(iii) the buildings and improvements located on such parcel
are located within the boundary lines of such parcel, are not in
material violation of applicable setback requirements, zoning laws,
and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted non-conforming use"
or "permitted nonconforming structure" classifications), and do not
encroach on any easement which may burden the land, except where the
failure to be located within such boundary lines, such violations or
such encroachments would not have a material adverse effect on the
operations of the Business as currently conducted.
19
(iv) all facilities have received all approvals of
governmental authorities (including material licenses and permits)
required in connection with the ownership, construction, occupancy
or operation thereof, and have been operated and maintained in
accordance with applicable laws, rules, and regulations in all
material respects;
(v) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties
the right of use or occupancy of any portion of the parcel of
Property;
(vi) to the Knowledge of Sellers, the Property located at ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ is in compliance in all material respects with the
applicable provisions of Title III of the Americans with
Disabilities Act; and
(vii) there are no outstanding options or rights of first
refusal to purchase the parcel of Property, or any portion thereof
or interest therein.
4.10 TANGIBLE ASSETS. The Property and Equipment, and other tangible
assets that Sellers and the Subsidiaries own and lease are free from material
defects, have been maintained in accordance with normal industry practice, and
are in good operating condition and repair (subject to normal wear and tear)
(except no representation is made with respect to the File Net Imaging System).
4.11 CONTRACTS. Schedule 4.11 lists the following contracts and other
agreements to which any Seller and any Subsidiary is a party:
(a) INTENTIONALLY OMITTED.
(b) INTENTIONALLY OMITTED.
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $100,000
or under which it has imposed a Security Interest on any of its assets,
tangible or intangible;
(e) any material agreement concerning confidentiality or
noncompetition;
(f) any agreement under which the consequences of a default or
termination could have a Sellers' Material Adverse Effect; or
(g) any other agreement (or group of related agreements) the
performance of which by Sellers or the Subsidiaries involves guaranteed
aggregate payments following the Cut-off Date in excess of $100,000.
With respect to each such agreement: (x) the agreement is legal, valid,
binding, enforceable, and in full force and effect in all material respects; (y)
to the Knowledge of Sellers,
20
no party is in material breach or default, and no event has occurred which with
notice or lapse of time would constitute a material breach or default, or permit
termination, modification, or acceleration, under the agreement; and (z) to the
Knowledge of Sellers, no party has repudiated any material provision of the
agreement.
4.12 LITIGATION. Schedule 4.12 sets forth each instance in which any of
Sellers and the Subsidiaries (a) is subject to any material outstanding
injunction, judgment, order, decree, ruling, or charge with respect to the
Business; (b) is a party or, to the Knowledge of Sellers, is threatened to be
made a party to any material action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator or
mediator; or (c) has received any notice of claims by third parties.
4.13 EMPLOYEES. To the Knowledge of Sellers, no executive, key employee,
or significant group of employees plans to terminate employment with any Seller
or any Subsidiaries. There will be no employees of the Subsidiaries as of the
Closing Date. None of the Sellers or the Subsidiaries is a party to or bound by
any collective bargaining agreement, nor has any of them experienced any strike
or material grievance, claim of unfair labor practices, or other collective
bargaining dispute within the past three years. None of the Sellers have any
Knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to employees of any of Sellers or the
Subsidiaries.
4.14 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(a) Each of the Sellers and the Subsidiaries is in compliance, in
all material respects, with all Environmental, Health, and Safety
Requirements.
(b) Without limiting the generality of Section 4.14(a), each of
Sellers, the Subsidiaries, and their respective Affiliates, has obtained
and is in compliance with, in all material respects, all material permits,
licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the operation of its
business.
(c) Except as set forth in Schedule 4.14(c) none of the Sellers, the
Subsidiaries, or their respective Affiliates has received any written
notice from any federal, state, local or foreign governmental authority
regarding any actual or alleged material violation of Environmental,
Health, and Safety Requirements, or any material liabilities or potential
material liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise), including any material investigatory, remedial or
corrective obligations, relating to any of them or their facilities
arising under Environmental, Health, and Safety Requirements.
(d) Except as set forth in Schedule 4.14(d), to the Knowledge of
Sellers and the Subsidiaries, none of the following exists at any Property
or facility owned or operated by Sellers or the Subsidiaries: (i)
underground storage tanks, (ii) asbestos containing material in any
friable and damaged form or condition, or (iii) landfills, surface
impoundments, or Hazardous Material disposal areas.
21
(e) None of the Sellers or the Subsidiaries has treated, stored,
disposed of, arranged for the disposal of, transported, handled, or
released any Hazardous Materials in or upon the Property in a manner that
has given or is likely to give rise to material liabilities, including any
material liability for response costs, corrective action costs, personal
injury, property damage, or natural resources damages, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or the Solid Waste Disposal Act, as amended, or any
other Environmental, Health, and Safety Requirements.
(f) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any material
obligations for site investigation or cleanup, or notification to or
consent of government agencies or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
4.15 PERFORMANCE RIGHTS SOCIETIES; AGENTS. Sellers and the Subsidiaries
are affiliated publisher members of all appropriate performing rights societies
and have certain agents for licensing rights in and to the Compositions as set
forth on Schedule 4.15. Said Schedule lists all membership agreements with said
performing rights societies and other agents, the date(s) thereof and the
periods governed thereby. Sellers have properly registered all material
commercially exploited and/or publicly performed Compositions with all such
appropriate performing rights societies and agents.
4.16 COMPOSITIONS; MASTERS.
To the Knowledge of Sellers:
(a) Each of the Compositions is an original creation of the Writer
and protectable under the copyright laws of the United States, is subject
to protection of the Universal Copyright Convention and the Beme Union,
where applicable, and does not infringe the copyrights of any musical
composition or other work the rights to which are owned by any other
Person. No Composition is defamatory or violates the civil rights of any
Person or any right of privacy or publicity.
(b) Each of the Record Assets is the original work of its author
and, except for Masters first fixed before February 15, 1972, protectable
under the copyright laws of the United States and does not infringe the
copyrights of any other works the rights to which are owned by any other
person.
(c) To the extent that any Composition or Record Assets was acquired
from any Person, such Persons have warranted and represented to Sellers
(and have agreed to indemnify Sellers as a result of any breach of such
warranty or representation), in writing, that such Compositions or Record
Assets are original and do not infringe upon any other works or violate
the rights of any other Person; such representations and warranties,
indemnities and all underlying agreements are assignable and the benefits
and enforcement of such representations, warranties, indemnities and
agreements shall inure to Buyer and its Affiliates hereunder.
22
(d) Sellers have not received any notice of infringement or conflict
with the asserted rights of any other Person in respect of any of the
Compositions or Record Assets.
(e) Sellers administer, own or co-own each of the Compositions and
the Record Assets.
(f) All of Sellers' and the Subsidiaries' Copyright Interests in the
Compositions and the Masters are fully assignable.
(g) At Closing, there will be no Security Interests in, liabilities,
claims or encumbrances or liens on the Publishing Assets or Record Assets.
(h) Sellers have not received any material advances for use of the
Compositions or the Masters before they would otherwise have become due,
outside of the Ordinary Course of Business.
4.17 UNRECOUPED ADVANCES TO SELLERS. Except as set forth on Schedule 4.17,
as of the date of such schedule there are no advances paid or payable to Sellers
which are recoupable from or chargeable against income derived from the
Compositions.
4.18 LIMITATION OF PAYMENTS. The execution hereof and the consummation of
the transaction contemplated hereby shall not cause Buyer to be required to make
any payments of any nature to acquire the Compositions or other Assets except as
specifically provided for in this Agreement, or as set forth on Schedule 4.18.
4.19 LICENSES AND SUBPUBLISHING AGREEMENTS. Except as so indicated on
Schedule 4.19, none of Sellers has issued any material Licenses in respect of
any of the Publishing Assets which: (a) provide for no consideration to be paid
to Sellers or their assigns; or (b) grant exclusive rights to any user of the
Publishing Assets; or (c) purport to govern all or a substantial number of the
Compositions or, in the case of Sellers or Sellers' Affiliates, purport to
govern a substantial number of their respective Compositions; or (d) was issued
other than in the Ordinary Course of Business. Schedule 4.19(c) constitutes true
and correct copies of all material Subpublishing Agreements to which Sellers or
the Subsidiaries are a party.
4.20 HISTORICAL NPS AND NRR. The aggregate NPS and NRR for the period
commencing on January 1, 1999 and ending on March 31, 2002 (set forth on
Schedule 4.20 attached hereto) is $27,396,818, and Sellers warrant and represent
that the Compositions and Record Assets generated all of the aggregate NPS and
NRR specified on such Schedule, except as designated on such Schedule. The NPS
and NRR does not include any payments of Gross Revenues which have been
accelerated to a time earlier than the time at which such payment otherwise
would have been made so as to prematurely include such payments in an accounting
period with a view toward distorting the NPS for such period. The books and
records of the Business reflecting the revenues from the Compositions and the
Record Assets for the period beginning January 1, 2002, up to and including the
Closing Date, are and will be complete and correct in all material respects, and
have been and will be prepared on an accrual basis pursuant to GAAP consistently
applied and in the Ordinary Course of Business. The aggregate NPS and NRR set
forth on Schedule 4.20 reflects all revenues earned from the exploitation of the
23
Compositions and Record Assets as well as all royalties, obligations and
contractual benefits of whatsoever kind or nature which have been paid (or
provided for) to the Writers, holders of any Outside Interest or other Persons
during that period and said statement of aggregate NPS and NRR is true and
accurate in all material respects. There are no revenues reflected on the
statement of aggregate NPS and NRR annexed hereto as Schedule 4.20 (except as
set forth thereon) which were derived from any assets of Sellers, of whatsoever
nature, other than the Compositions and Record Assets.
4.21 NAMES. Sellers own all rights in and to the Names. Sellers covenant
that, following the Closing Date, neither Sellers nor any successor-in interest
of Sellers, or any Person owned or controlled, in whole or in part, by Sellers
or any successor-in-interest of Sellers, will use any of the Names or any
confusingly similar derivation of the Names in connection with the exploitation
of musical compositions or sound recordings anywhere in the world.
4.22 TOP 120 SONGS. The Top 120 Songs and/or revenue interests based on
NPS and NRR for the five year and one quarter period ended March 31, 2002
provided during due diligence and listed on Schedule 4.22 (the "Top 120 Songs")
attached hereto represent approximately 62.79 percent of the average annual
aggregate NPS and NRR, net of foreign subpublishers fees, for the period from
January 1, 1999 to March 31, 2002. The figures for Sellers' Publisher's
Copyright Interest, Publisher's Performance Collection Percentage, Publisher's
Performance Retention Percentage, Publisher's Non-performance Collection
Percentage and Publisher's Non-Performance Retention Percentage interest set
forth on such schedule are true and correct in all material respects.
4.23 RENEWAL RIGHTS. Sellers have acquired the renewal term copyright
rights in and to the Top 120 Songs, except as listed on Schedule 4.23 attached
hereto.
4.24 NOTICE OF TERMINATION. Sellers have received no notices of
termination of transfers for the Top 120 Songs pursuant to Sections 203(a) and
304(c) of 17 U.S.C., other than notices received from ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. with
respect to the extended renewal term of copyright in compositions authored by
his late father, ▇▇▇▇▇▇ "▇▇▇▇" ▇▇▇▇▇▇▇▇.
4.25 SCHEDULE OF COMPOSITIONS AND MASTERS. Schedule 4.25 contains a true
and correct list of all Compositions, including the title, authors, copyright
owner(s) and percentage ownership interests, and Masters. Since January 1, 2001,
there have been no assignments of Compositions or Masters other than in the
Ordinary Course of Business.
4.26 SONGWRITER AGREEMENTS. Schedule 4.26 contains true and complete
copies of the Songwriter Agreement or Acquisition Document pursuant to which
Seller acquired its rights in each of the Top 120 Songs.
4.27 TRADEMARKS AND DOMAIN NAMES. Attached hereto as Schedule 4.27 is a
complete list of registered trademarks, pending patent applications and, to
Sellers' Knowledge, domain names included in the Assets.
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ARTICLE 5.
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
5.1 GENERAL. Each of the Parties will use their reasonable best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Article 7).
5.2 NOTICES AND CONSENTS. Sellers shall give any notices to third parties,
and will use their reasonable best efforts to obtain any Contract Consents that
Buyer reasonably may request in connection with the matters referred to in
Section 4.4. Each of the Parties will give any notices to, make any filings
with, and use their reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Section 4.4.
5.3 OPERATION OF BUSINESS. Sellers will not, and will not cause or permit
any of the Subsidiaries to, engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business. Sellers will not
enter into any exclusive Licenses relating to the exploitation of the
Compositions or Masters including Licenses granting product exclusivity. Sellers
shall perform all material obligations of Sellers under all Songwriter
Agreements, Artist/Producer Agreements and Acquisition Documents in the Ordinary
Course of Business. Without limiting the generality of the foregoing, without
the prior written consent of Buyer, Sellers will not, and will not cause or
permit any of the Subsidiaries, except in the Ordinary Course of Business to
declare, set aside, or pay any dividend or make any distribution with respect to
its capital stock or redeem, purchase, or otherwise acquire any of its capital
stock, incur indebtedness to third parties or dispose of any of its assets.
Notwithstanding the foregoing, Sellers may take actions to dividend cash to
Affiliates, or take other corporate actions to convert intercompany receivables
into equity of subsidiaries or owned entities or otherwise pay off or cancel
intercompany accounts prior to Closing. In addition, Sellers may take any and
all actions necessary or advisable in order to convert to limited liability
companies prior to the Closing Date.
5.4 PRESERVATION OF BUSINESS. Each of Sellers and the Subsidiaries will
use reasonable commercial efforts to keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
5.5 FULL ACCESS. Sellers will permit, and will cause the Subsidiaries to
permit, representatives of Buyer to have full access at all reasonable times,
upon two business days notice and in a manner so as not to interfere with the
normal business operations of Sellers and the Subsidiaries, to all premises,
properties, personnel, books, records (including Tax records), contracts, and
documents of or pertaining to each of Sellers and the Subsidiaries. Buyer will
treat and hold as such any Confidential Information it receives from Sellers and
the Subsidiaries in the
25
course of the reviews contemplated by this Section 5.5, pursuant to the
Confidentiality Agreement.
5.6 NOTICE OF DEVELOPMENTS. Sellers will give prompt written notice to
Buyer of any material adverse development causing a breach of any of the
representations and warranties in Article 4. Buyer will give prompt written
notice to Sellers of any material adverse development causing a breach of any of
Buyer's representations and warranties in Article 3.
5.7 ACQUISITION PROPOSALS. Sellers shall not, and shall not authorize or
permit any of the Subsidiaries or any of their or the Subsidiaries' officers,
directors, employees or agents to, directly or indirectly, solicit, knowingly
encourage, participate in or initiate discussions or negotiations with, or
provide any non-public information to any Person (other than Buyer or any of
their affiliates or representatives) concerning, other than the transactions
contemplated by this Agreement, any proposal or inquiry relating to any merger,
consolidation, tender offer, exchange offer, sale of 10% or more of any of the
Sellers' assets, sale of 10% or more of the shares of capital stock or other
securities of any Seller or similar business combination transaction involving
any Seller or any Subsidiary. Any purported assignment by Sellers of the
Publishing Assets or the Record Assets other than as provided herein shall be
void from inception.
5.8 HSR FILINGS. As promptly as possible after the date of this Agreement
(but in any event no later than twelve (12) days hereafter), Buyer and Sellers
shall make, or cause to be made, all filings, notifications and applications
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act") required to be made by them and take all necessary corporate and
other action and use commercially reasonable efforts to obtain promptly all
required consents, approvals, authorizations, exemptions and waivers of the
Federal Trade Commission and the Antitrust Division of the Justice Department
necessary to consummate the transactions contemplated by this Agreement. Buyer
shall cooperate with Sellers (including taking all actions requested by Sellers
to cause early termination of any applicable waiting period under the HSR Act)
and provide to Sellers such information as Sellers may reasonably require to
make such filings and notifications and prepare such applications required by
the HSR Act. Sellers shall cooperate with Buyer (including taking all actions
requested by Buyer to cause early termination of any applicable waiting period
under the HSR Act) and provide to Buyer such information as Buyer may reasonably
require to make such filings and notifications and prepare such applications
required by the HSR Act. Buyer shall pay all filing fees of Buyer and Sellers
payable in connection with the filings under the HSR Act.
ARTICLE 6.
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing:
6.1 GENERAL. In case at any time after the Closing, any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under Article 8). Sellers acknowledge and
agree that from and after the Closing, Buyer will be entitled to possession of
all documents,
26
books, records (including Tax records), agreements, and financial data of any
sort relating to the Assets, except as provided in Section 2.1(b). With respect
to the resolution of audit claims, Buyer agrees to resolve such claims
consistent with its past practice in the ordinary course of business of its
music publishing business.
6.2 LITIGATION SUPPORT. In the event and for so long as any Party or
Affiliate actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, judgment or demand
in connection with (a) any transaction contemplated under this Agreement or (b)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any Seller or any Subsidiary, each of the other
Parties will cooperate with such Party and such Party's counsel and cause its
Affiliates so to cooperate in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, at the sole cost
and expense of the contesting or defending Party or Affiliate (unless the
contesting or defending Party is entitled to indemnification therefor under
Article 8).
6.3 TRANSITION. Seller will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of any of Sellers or the Subsidiaries from
maintaining the same business relationships with respect to the Business with
Buyer after the Closing as it maintained with Sellers and the Subsidiaries prior
to the Closing.
6.4 CONFIDENTIALITY. The terms and conditions of that certain letter
agreement dated February 21, 2002 by and between Buyer and Sellers (or their
affiliates) are incorporated by reference herein and shall be binding on Buyer
and Sellers, and shall survive the Closing indefinitely, but after the Closing
Buyer shall be permitted to disclose information relating to the Assets as they
exist on and after the Cut-off Date in the ordinary course of business.
6.5 EMPLOYEE BENEFITS MATTERS. Buyer agrees to offer employment to at
least 7 employees of Sellers and the Subsidiaries as of the Closing Date on
terms and at a salary and benefit level commensurate with "Sony/ATV/Nashville"
employment policies. Buyer will consider hiring, on a preferred basis, other of
Sellers' employees for all other vacant positions at Buyer or its affiliates
that arise as a result of the transactions contemplated hereby. On or before
July 31, 2002, Buyer will make reasonable best efforts to inform Sellers of the
names of those persons to whom Buyer intends to offer employment. Effective as
of the Closing, the Subsidiaries and each of their present and former employees
shall cease participating in Sellers' Employee Benefit Plans, but Sellers shall
be responsible for benefits for periods prior to the Closing Date, subject to
the reimbursement provisions herein.
6.6 BULK SALES. Buyer acknowledges that Sellers are not complying with the
provisions of the bulk sales or similar laws of any and all states, and Buyer
hereby waives compliance by Sellers therewith.
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ARTICLE 7.
CONDITIONS TO OBLIGATION TO CLOSE
7.1 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Article 4 shall
be true and correct in all material respects at and as of the Closing
Date;
(b) Each of Sellers and the Subsidiaries shall have performed and
complied with all of its covenants hereunder in all material respects
through the Closing;
(c) no injunction, judgment, order, decree, ruling or charge shall
be in effect which purports to prevent consummation of any of the
transactions contemplated by this Agreement;
(d) Seller shall have delivered to Buyer a certificate to the effect
that each of the conditions specified in Section 7.1(a) through 7.1(c) is
satisfied in all respects;
(e) the waiting periods under the HSR Act shall have expired or been
terminated early;
(f) the relevant parties shall have executed and delivered (or
tendered subject to Closing) the (i) Assignment/Assumption Agreement, (ii)
the Real Estate Conveyances, and (iii) the IP Assignments;
(g) Buyer shall have received the resignations, effective as of the
Closing, of each director and officer of the Subsidiaries; and
(h) all actions to be taken by Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Buyer.
Buyer may waive any condition specified in this Section 7.1 if it executes a
writing so stating at or prior to the Closing.
7.2 CONDITIONS TO OBLIGATION OF SELLERS AND THE SUBSIDIARIES. The
obligation of Sellers and the Subsidiaries to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:
(a) the representations and warranties set forth in Article 3 shall
be true and correct in all material respects at and as of the Closing
Date;
(b) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
28
(c) no injunction, judgment, order, decree, ruling or charge shall
be in effect which purports to prevent consummation of any of the
transactions contemplated by this Agreement;
(d) Buyer shall have delivered to Seller a certificate to the effect
that each of the conditions specified in Section 7.2(a) through 7.2(c) is
satisfied in all respects;
(e) the waiting periods under the HSR Act shall have expired or been
terminated early;
(f) the relevant parties shall have entered into the (i)
Assignment/Assumption Agreement and (ii) Real Estate Conveyances; and
(g) all actions to be taken by Buyer in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to Sellers.
Sellers may waive any condition specified in this Section 7.2 if it executes a
writing so stating at or prior to the Closing.
ARTICLE 8.
INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of Sellers contained in Article 4 shall survive the Closing
(unless Buyer knew of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect for a period of two years
thereafter. All of the representations and warranties of Buyer contained in
Article 3 shall survive the Closing (unless Sellers knew of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect for a period of two years thereafter. Buyer acknowledges
that, except for the representations and warranties of Sellers specifically set
forth in Article 4 and the Schedules, Buyer has not relied on any information
provided by Sellers or the Subsidiaries in connection with the transactions
contemplated by this Agreement as constituting a representation or warranty of
Sellers or the Subsidiaries.
8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. In the event Sellers
breach (or in the event any third party alleges facts that, if true, would mean
any Sellers have breached) any representations, warranties, covenants or
agreements of Sellers contained herein, and, provided Buyer issues a Claim
Notice (as hereinafter defined) within any such survival period, then, subject
to the terms hereof, each Seller jointly and severally agrees to indemnify Buyer
from and against the entirety of any Adverse Consequences Buyer may suffer
through and after the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or the
alleged breach) regardless of when the Adverse Consequences may occur.
8.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLERS. In the event Buyer
breaches (or in the event any third party alleges facts that, if true, would
mean Buyer has breached) any
29
representations, warranties, covenants or agreements of Buyer contained herein,
and provided Sellers issue a Claim Notice within any survival period, then Buyer
agrees, jointly and severally, to indemnify Sellers from and against the
entirety of any Adverse Consequences Sellers may suffer through and after the
date of the claim for indemnification resulting from, arising out of, relating
to, in the nature of or caused by the breach (or the alleged breach).
8.4 PROCEDURE FOR MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Article 8, then the Indemnified Party
shall promptly issue a Claim Notice to the Indemnifying Party with respect
thereto.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 30
days following the receipt of the Claim Notice that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of any
Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third
Party Claim, and (ii) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8.4(b), (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party, which consent will not be
unreasonably withheld and (iii) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party, which consent will not be unreasonably withheld, except the
Indemnifying Party may consent to the entry of judgment or settlement
without the consent of the Indemnified Party if the judgment or settlement
is solely for money damages.
(d) In the event any of the conditions in Section 8.4(b) is or
becomes unsatisfied, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain
any consent from, any Indemnifying Party in connection therewith), (ii)
the Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including attorneys' fees and expenses), and (iii) the Indemnifying Party
will remain responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in this
Article 8.
30
(e) Notice of Claim. A Party suffering Adverse Consequences or a
Party that determines that any occurrence or claim may result in Adverse
Consequences that gives or could give rise to a claim for indemnification
under this Article 8 shall promptly notify each other Party thereof in
writing (a "Claim Notice") in accordance with Section 11.7. The Claim
Notice shall contain a brief description of the nature of the Adverse
Consequences suffered and, if practicable, an aggregate dollar value
estimate of the Adverse Consequence suffered. No delay in the issuance of
a Claim Notice shall relieve any Party from any obligation under this
Article 8, unless and solely to the extent such Party is thereby
prejudiced.
8.5 LIMITATIONS ON SELLERS' INDEMNIFICATION LIABILITY.
(a) Ceiling: Sellers' collective aggregate liability for
indemnification claims under this Article 8 shall not exceed the amount of
the Purchase Price for Claim Notices delivered until the date that is nine
months after the Closing Date (the same day of the month) (the "First
Period"). Sellers' collective aggregate liability for Claim Notices
delivered from the date that is nine months after until the date that is
eighteen months after the Closing Date (the same day of the month) (the
"Second Period") shall not exceed one-half of the Purchase Price, minus
the dollar amount with respect to Claim Notices delivered during the First
Period. Sellers' collective aggregate liability for Claim Notices
delivered from the date that is eighteen months after the Closing Date
until the third anniversary of the Closing Date (the "Third Period") shall
not exceed one-fourth of the Purchase Price, minus the dollar amount with
respect to Claim Notices delivered during the First Period and the Second
Period.
(b) Basket/Threshold: No Seller shall have any liability for
indemnification claims under this Article 8, unless and until the
aggregate Adverse Consequences claimed under Section 8.2 exceed One
Million Dollars ($1,000,000) (excluding all Adverse Consequences less than
Twenty-Five Thousand Dollars ($25,000)) and then only for an amount by
which such Adverse Consequences exceed One Million Dollars ($1,000,000).
This threshold does not apply to Writer audit claims in excess of
$1,000,000 to be paid by Sellers under Section 2.2(a)(iii).
(c) Period: No indemnification shall be available after the date
that is three years after the Closing Date, except in respect of Adverse
Consequences relating to Claim Notices delivered prior to such date.
8.6 LIMITATIONS ON BUYER'S INDEMNIFICATION LIABILITY.
(a) Ceiling: Buyer's aggregate liability for indemnification claims
under this Article 8 shall not exceed the amount of the Purchase Price for
Claim Notices delivered during the First Period. Buyer's aggregate
liability for Claim Notices delivered during the Second Period shall not
exceed one-half of the Purchase Price, minus the dollar amount with
respect to Claim Notices delivered during the First Period. Buyer's
aggregate liability for Claim Notices delivered during the Third Period
shall not exceed one-fourth of the Purchase Price minus the dollar amount
with respect to Claim Notices delivered during the First Period and the
Second Period; provided that the limit in this
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Section 8.6(a) shall not apply to any failure to close and pay the
Purchase Price as required hereunder.
(b) Basket/Threshold: Buyer shall have no liability for
indemnification claims under this Article 8, unless and until the
aggregate Adverse Consequences claimed under Section 8.3 exceed One
Million Dollars ($1,000,000) (excluding all Adverse Consequences less than
Twenty-Five Thousand Dollars ($25,000)) and then only for an amount by
which such Adverse Consequences exceed One Million Dollars ($1,000,000);
except this threshold shall not apply to any failure to close and pay the
Purchase Price as required hereunder or to pay the Assumed Liabilities.
(c) Period: No indemnification shall be available after the date
that is three years after the Closing Date, except in respect of Adverse
Consequences relating to Claim Notices delivered prior to such date.
8.7 DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall take into
account the time cost of money (using the Applicable Rate as the discount rate)
and Tax benefits and/or consequences in determining Adverse Consequences for
purposes of this Article 8.
8.8 BREACH OF REPRESENTATIONS OR WARRANTIES OF COPYRIGHT OWNERSHIP BY
SELLERS; DAMAGE CALCULATION. Sellers recognize that Buyer employs unique and
special resources in exploiting the assets Buyer owns or in which Buyer has an
interest and that the purchase price paid by Buyer for the Assets hereunder is
based upon Buyer's determination of the future income Buyer could derive from
the Assets by employing Buyer's unique and special resources. Accordingly, each
party agrees that it is extremely difficult and impractical to ascertain the
extent of the detriment which would be caused in the event of any material
breach of the warranties or representations of Sellers contained in this
Agreement with respect to the Compositions or Masters or of any interest therein
and the sale, assignment and transfer to Buyer of all of Sellers' right, title
and interest therein as provided for in this Agreement. To avoid the problem of
quantifying damages in any such event, if any of the Compositions or Masters or
any interest therein is not effectively transferred to Buyer by virtue of a
defect in Sellers' title therein or other breach of a warranty or representation
of Sellers contained in this Agreement (including, without limitation, failure
to effect transfer resulting from any claim that an Asset or the exploitation
thereof infringes on some other party's rights, provided the claim concerned has
been settled with Sellers' consent, which consent shall not be unreasonably
withheld, or reduced to final judgment; it being understood that Buyer shall
have no obligation to appeal any adverse judgment), then Sellers and Buyer agree
to fix compensatory damages in an amount equal to the average annual NPS/NRR
attributed to the Compositions or Masters in question (or portion thereof not so
transferred) for the thirteen (13) quarters ending March 31, 2002 (computed by
dividing the total NPS/NRR for such periods by 3.25), multiplied by eighteen
(18). (It is understood that such compensatory damages shall be reduced by the
amount of any income received by Buyer with respect to such Asset after the
Cut-off Date and not paid to a third party, including, without limitation,
songwriters, Artists, other royalty participants or the owner(s) of the work
infringed by such Asset.) Such end product shall, in the absence of fraud,
constitute Buyer's sole compensatory damages for such breach, subject to Section
8.5(b) above.
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8.9 EXCLUSIVE REMEDY. Buyer and Seller acknowledge and agree that the
foregoing indemnification provisions in this Article 8 shall be the exclusive
remedy of Buyer if and after the Closing has occurred with respect to the
transactions contemplated by this Agreement.
ARTICLE 9.
TAX MATTERS
9.1 TAX PERIODS.
(a) Tax Periods Ending on or Before the Cut-off Date. Sellers shall
prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Subsidiaries for all periods ending on or prior to the
Cut-off Date which are filed after the Cut-off Date. Sellers shall pay or
cause to be paid when due any and all Taxes due on each such Tax Return.
(b) Tax Periods Beginning Before and Ending After the Cut-off Date.
Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of the Subsidiaries for all periods which begin before the
Cut-off Date and end after the Cut-off Date, and shall pay when due the
Taxes shown on such Tax Returns. Buyer shall permit Sellers to review and
comment on each such Tax Return prior to filing. Sellers shall indemnify
Buyer for Taxes paid in respect of such Tax Returns equal to the portion
of such Taxes that relates to the portion of the taxable period ending on
the Cut-off Date. For purposes of this Section 9.1(b), in the case of any
Taxes that are imposed on a periodic basis and are payable for a Tax
period that includes (but does not end on) the Cut-off Date, the portion
of such Tax which relates to the portion of such Tax period ending on the
Cut-off Date shall be deemed equal to the amount which would be payable if
the relevant Tax period ended on the Cut-off Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a
manner consistent with prior practice of the Subsidiaries.
9.2 REFUNDS AND TAX BENEFITS. Any Tax refunds of the Subsidiaries that are
received by Buyer and any amounts credited against Tax to which Buyer or the
Subsidiaries and any Subsidiary become entitled that relate to Tax periods of
the Subsidiaries or portions thereof ending on or before the Cut-off Date shall
be for the account of Seller. Buyer shall use reasonable efforts to obtain any
such refund or credit and shall pay over to Seller any such refund or the amount
of any such credit within 15 days after receipt or entitlement thereto less the
allocated portion of direct costs incurred.
9.3 CERTAIN TAXES. Seller and Buyer agree that inasmuch as the Assets
purchased hereunder include substantially all the operating assets of Sellers,
the sale and purchase of the Assets, other than the motor vehicles and the real
property, may be exempt from sales and use taxes or other transfer taxes in the
jurisdictions in which the Assets are located pursuant to the bulk sale or
occasional sale provisions in the applicable statutes in such jurisdictions, and
Buyer and Sellers shall treat the transfer of the Assets provided for herein as
a bulk or occasional sale for all purposes; provided, however, that to the
extent it shall be determined after the date of the Agreement that, through no
fault or misrepresentation on the part of Sellers, the sale by Sellers, and the
purchase by Buyer of all or any portion of the Assets (including the vehicles
and the real
33
property) is subject to a sale, use or other transfer tax or recording tax, then
such tax shall be paid by Buyer. The parties shall cooperate with each other in
the preparation, execution and filing of any Tax Returns that may be required in
connection with such Taxes and any related filing fees, notarial fees and other
costs.
9.4 COOPERATION ON TAX MATTERS. Sellers, Buyer and the Subsidiaries shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of any Tax Returns for the Subsidiaries. Such
cooperation shall include the retention and (upon the other party's request),
the provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Buyer, Sellers and the Subsidiaries agree to
retain all books and records with respect to Tax matters pertinent to the
Subsidiaries relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and to the extent notified
by Buyer or Sellers, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any Taxing
Authority.
9.5 TAX AUDITS.
(a) Sellers shall have the sole right to represent the interests of
the Subsidiaries in any Tax audit or administrative or court proceeding
relating to Tax Returns for periods ending prior to the Cut-off Date and
to employ counsel of its choice at its expense; provided, that, (i) Buyer
shall be entitled to participate in any such audit or proceeding at its
own expense, and (ii) Sellers shall not be entitled to settle any claim
for Taxes that would adversely affect the liability for Taxes of Buyer or
the Subsidiaries without the prior written consent of Buyer, which consent
shall not be unreasonably withheld. If any Taxing Authority asserts a
claim, makes an assessment or otherwise disputes or affects any Tax for
which Sellers are responsible hereunder, Buyer shall, promptly upon
receipt by Buyer or the Subsidiaries of notice thereof, inform Sellers
thereof.
(b) Buyer shall have the sole right to represent the interests of
the Subsidiaries in any Tax audit or administrative or court proceeding
relating to Tax Returns for periods ending after the Cut-off Date and to
employ counsel of its choice at its expense; provided, that Sellers shall
be entitled to participate, at their own expense, in any Tax audit or
administrative or court proceeding relating to any Tax Return for any
period that begins before and ends after the Cut-off Date.
ARTICLE 10.
TERMINATION
10.1 TERMINATION OF AGREEMENT. Certain of the Parties may terminate this
Agreement as provided below:
(a) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
34
(b) Buyer may terminate this Agreement by giving written notice to
Sellers at any time prior to the Closing
(i) in the event Sellers have breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, Buyer has notified Sellers of the breach, and the breach
has continued without cure for a period of 30 days after the notice
of breach; or
(ii) if the Closing shall not have occurred on or before
October 31, 2002, by reason of the failure of any condition
precedent under Section 7.1 (unless the failure results primarily
from Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement).
(c) Sellers may terminate this Agreement by giving written notice to
Buyer at any time prior to the Closing
(i) in the event Buyer has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, Sellers have notified Buyer of the breach, and the breach
has continued without cure for a period of 30 days after the notice
of breach; or
(ii) if the Closing shall not have occurred on or before
October 31, 2002, by reason of the failure of any condition
precedent under Section 7.2 (unless the failure results primarily
from Sellers breaching any representation, warranty, or covenant
contained in this Agreement).
10.2 EFFECT OF TERMINATION; SPECIFIC PERFORMANCE. If any Party terminates
this Agreement pursuant to Section 10.1, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then committing willful
default or willful breach); provided, however, that the confidentiality
provisions contained in Section 5.5 and Section 6.4 shall survive termination.
In the event that Buyer breaches its obligation to close and pay the Purchase
Price pursuant to the terms hereof, Sellers would suffer irreparable damage and
therefore shall be entitled to specific performance of the terms hereof in
addition to any other remedy at law or in equity. If any Party terminates this
Agreement other than as permitted by Section 10.1, the non-breaching party would
suffer irreparable damage and therefore shall be entitled to specific
performance of the terms hereof in addition to any other remedy at law or in
equity.
ARTICLE 11.
MISCELLANEOUS
11.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of Buyer
and Sellers; provided, however, that any Party may make any public disclosure it
determines in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its best efforts to advise the other Parties prior to
making the disclosure).
35
11.2 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.3 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and, except as
provided in Section 6.4, supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof.
11.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of Buyer and Sellers; provided, however, that Buyer may (a) assign any or all of
its rights and interests hereunder to one or more of its Affiliates and (b)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
11.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Sellers: ▇▇▇▇▇-▇▇▇▇ Music Publishing, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
AmSouth Center, Suite 2700
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: F. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
36
If to Buyer: Sony/ATV Music Publishing LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Senior Vice President, Business Affairs
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy or ordinary mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change the address
to which notices, requests, demands, claims, and other communications hereunder
are to be made available by giving the other Parties notice in the manner herein
set forth.
11.8 GOVERNING LAW. Except to the extent preempted by federal law (e.g.,
ERISA), this Agreement shall be governed by and construed in accordance with the
domestic laws of the State of Tennessee without giving effect to any choice or
conflict of law provision or rule (whether of the State of Tennessee or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Tennessee.
11.9 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Sellers. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
11.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.11 EXPENSES. Except as provided herein regarding indemnification
matters, each of the Parties will bear their own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. Buyer shall pay the cost of any title policies
or surveys it elects to obtain, and shall pay all recording costs. Without
limiting the foregoing, the parties shall pro rate (as of the Cut-off Date), if
applicable, real estate payments, and real estate and personal property taxes.
37
11.12 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
11.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
BUYER:
SONY/ATV MUSIC PUBLISHING LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------------
Title: President
----------------------------------------------
SELLERS:
▇▇▇▇▇-▇▇▇▇ MUSIC PUBLISHING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
Title: Vice President and Secretary
----------------------------------------------
▇▇▇▇▇-▇▇▇▇ MUSIC, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
Title: Vice President and Secretary
----------------------------------------------
MILENE MUSIC, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
Title: Vice President and Secretary
----------------------------------------------
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SPRINGHOUSE MUSIC, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
Title: Vice President and Secretary
----------------------------------------------
HICKORY RECORDS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
Title: Vice President and Secretary
----------------------------------------------
40